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Google's Innovative Culture Not Paying Off

There is no doubt that Google has been one of the country's most successful -- if not the most successful -- public company over the last 10 years, as its revenues climbed from $220,000 to $20 billion. That's a big number even by federal bailout standards.

There's just one problem for the Search King. Despite its reputation for fostering innovation and a willingness to let its employees explore creative projects on company time, Google has not built new lines of business beyond search-generated advertising, which accounts for 97 percent of its income.

According to Scott Anthony, the innovation blogger on Harvard Business Publishing, Google is at a crossroads. Eric Schmidt and his executive team need to figure out where future growth is going to come from.

"There's a hidden lesson in Google's moment of truth,"" he writes. "When a company's core business is on a roll, everything about that company looks great. However, that growth can often obscure underlying weaknesses."

In the short run, Google is cutting expenses and thinking more about the bottom line when it authorizes staff blue sky projects. Longer term, though, does Google have a sustainable model of profitable innovation?

If Google does not, what tech company is doing it right?

Sean Silverthorne

Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.

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