Posts about 30dayswwgd

Book as process, not product

I had an absolute ball at Jeff Puliver’s Soccomm confab today not just presenting What Would Google Do? – the PowerPoint – but turning it into a collaborative brainstorming session and jokefest imaging the Googley restaurant.

I didn’t have to ask for suggestions about what makes a Googley restaurant, the room of hypersavvy online social folks started yelling out suggestions and it just got better from there. I saw video cameras going and I hope someone recorded it; the ideas and gags were great (some ended up on Twitter). There was discussion about a marketplace for food, about people who send more business to the restaurant eating for less, and more. And there was one joke about Google having us eat cookies so it knows where we go and another about – pardon me – analyzing the toilet bowl as a source of user-generated content. (Cue rim shot.)

At the end of it, I said this is why books need to become more processes and less products, because the room wrote a great chapter, just as you did on this blog about insurance, which is today’s 30 Days of WWGD? snippet (snippets, actually):

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As I was researching this book, I wrote on my blog that I had come up against a few industries I thought were immune from reform through Googlification. Insurance topped my list (we’ll get to the others shortly).

Insurance is built on getting us to take a sucker bet—a bet even we want to lose. Nobody wants a reason to collect collision, fire, flood, health, or certainly life insurance. Worse than Vegas, we know that insurance companies stack the deck against us; that is the foundation of their business. If we don’t collect, we are losers (we’ve lost our money). If we do collect, we’re still losers (something bad happened). If the insurance company pays out too much and goes out of business, then those of us who paid in still lose. We can’t win. The industry has to suspect that we are liars, making us prove our misfortune and reluctantly giving us back the money we put in the pool. They make the economics overcomplicated so we don’t know just what suckers we are and so we keep making safe bets—safe for the insurance company. Our relationship with insurance is, therefore, necessarily adversarial and built on mutual mistrust. How incurably unGoogley.

My readers disagreed. A few dozen of them left comments on my blog arguing that insurance can reform, and they showed me how. Here are excerpts from the conversation and my education. (Let this chapter be an object lesson in the power of open, collaborative thinking.)

The first comment came from Seth Godin, author of Purple Cow, Small Is the New Big, Tribes, and other business best sellers, who scolded me: “Think bigger, Jeff!” He provided a few examples of social insurance. First:

20 Korean families pool finances and open businesses one at a time?.?.?.??each member of the group has a huge incentive to help each business succeed, so they can get the money when it’s their turn. Imagine insurance being created in a coordinated fashion, with each member of the coop working to decrease the risk of everyone in the pool.

A commenter from France, Bertil Hatt, said the Mutuelle Assurance Instituteur France (MAIF) lives by some of these principles of mutual benefit, providing insurance as well as services, such as home and child care. Premiums are higher than average, she said, but lower for the young, the poor, and students. “How can they make it?” she asked. “Thanks to an implicit contract: When you get richer, you stay with them not only for the service, but because you believe in their way.” Insurance becomes a collective, though private, good.

Godin next talked about smart devices that might need less insurance. Cars with better brakes can cost less to insure if they keep us safer and also cost less to repair and to warranty—which, again, is a form of insurance. Godin took the idea a step farther and suggested that “smart products come with their own insurance because they’re so much better and talk to each other.”

When cars know where they are and where trouble might be, or when they integrate with each other and their drivers and the roads and the police, shouldn’t insurance get better? . . .

Scott Heiferman, founder of Meetup, also brought historical perspective to the discussion, writing a brief manifesto for change in the coming decade, chock full of hip blog references (the “social graph” to which he refers is what Mark Zuckerberg calls the architecture of personal connections on Facebook):

Historically, when people are free to assemble & associate, they self-organize insurance, cooperatively. Later it became the centralized, professionalized industry we know today. I predict there’ll be some kind of massive craigslistification of insurance by April 27, 2018. It’s about de-institutionalization—not from the government borg (social security), not from the corporate borg (AIG). The New Social [graph] Security. Decentralized, self-organized. Not just DIY, but DIO (Do It Ourselves). That is the big theme for everything now.

There is the great promise and power of the Google age: DIO. . . .

This vision came from my readers. They applied the internet’s new ways to old problems to see what could be improved. They believed that more transparency in marketplaces would yield greater value. They believed that adding social elements—the interests and pressures of a community—would increase value. They told me that handing control to the market would increase trust, and insurance is about trust. So they proposed networks of mutual need and service that diminish if not eliminate the middlemen.

I’m proud to say that I didn’t come up with these ideas. My generous readers did. They were my insurance against an empty chapter.

30 Days of WWGD? – The googley restaurant

I’m a few days behind on 30 days of WWGD? Sorry; took the weekend off. Today’s snippet: imagining the Googley restaurant:

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What would a restaurant run according to Googlethink look like—other than being decorated in garish primary colors with a neon sign, big balls for seats, and Fruit Loops and M&Ms on every table?

Imagine instead a restaurant—any restaurant—run on openness and data. Say we pick up the menu and see exactly how many people had ordered each dish. Would that influence our choice? It would help us discover the restaurant’s true specialties (the reason people come here must be the crab cakes) and perhaps make new discoveries (the 400 people who ordered the Hawaiian pizza last month can’t all be wrong?.?.?.??can they?).

If a restaurateur were true to Googlethink, she would hunger for more data. Why not survey diners at the end of the meal? That sounds frightening—what if they hate the calamari?—but there’s little to fear. If the squid is bad and the chef can hear her customers say so, she’ll 86 it off the menu and make something better. Everybody wins. She’ll also impress customers with her eagerness to hear their opinions. This beats wandering around the tables, randomly asking how things are (as a diner, I find it awkward and ungracious to complain; it’s like carping about Grandmother’s cranberry sauce on Thanksgiving). Why not just ask the question and give everyone the means to answer? Your worst diner could be your best friend.

The more layers of data you have, the more you learn, the more useful your advice can be: People who like this also like that. Or here are the popular dishes among runners (a proxy for the health-minded) or people who order expensive wines (a proxy for good taste, perhaps).
If you know about your crowd’s taste in wine, why not crowdsource the job of sommelier? Have customers rate and describe every bottle. Show which wines were ordered with which dishes and what made diners happy. If this collection of data were valuable in one restaurant, it would be exponentially more valuable across many. Thinking openly, why not compile and link information from many establishments so diners can learn which wines go best with many kinds of spicy dishes? If you want to be courageous, why not reveal that people who like this restaurant also like that one? Sure, that sends the other guys business—it’s linking to them—but in an open pool of information, they will also send business back. Nobody eats at the same place every night (well, there was the time when I went to McDonald’s entirely too often). Even a restaurant can think as a member of a network in a linked information economy.

Networks force specialization. In a linked world, you don’t want to be all things to all people. You want to stand out for what you do best. That’s why chef Gordon Ramsey focuses the menus of the restaurants he fixes on his show, Kitchen Nightmares, so they know the business they’re in. Serve your niche instead of the mass. Do what you do best.

Now, as Emeril would say, let’s kick it up a notch: Open-source the restaurant. Put recipes online and invite the public to make suggestions and even to edit them on a wiki. Maybe they’ll suggest more salt. Maybe they’ll go to the trouble of cooking the dish at home, trying variations, and reporting back. In the early days of the web, I worked on the launch of Epicurious?.com, the online site for Gourmet and Bon Appétit magazines, where I was amazed to see people share their own recipes—there’s the gift economy—and also share their comments and variations on the magazines’ recipes. For example, a Gourmet adaptation of a bakery’s recipe for Mexican chocolate cake brought suggestions to replace the water with espresso (many commenting cooks liked that idea, tried it, and shared their endorsements); double the cinnamon; add Kahlua or rum to the glaze; use cream-cheese frosting instead of the glaze; use neither topping but serve it with whipped cream and berries; toast the nuts; substitute milk and orange juice for buttermilk; coat the cake pan with cocoa powder (helps with the sticking, you see); and even add cayenne pepper (pepper?). With these adaptations, you could argue the dish is no longer the same; could be better, could be worse. I’m not suggesting that recipes or menus become ballots; see the preGoogle rule about too many chefs spoiling the broth. It’s the chef, not the public, who will be held to account if the cake is too peppery. So I’ll violate Jarvis’ First Law—I won’t hand over complete control. But why not gather and use the wisdom of the dining room? A good restaurant has people who appreciate and know good food. It should respect their taste and knowledge, the Google way. . . .

30 days of WWGD? – Googley toilet paper?

For today’s snippet from What Would Google Do?, we bring you the question of whether toilet paper – like other consumer products (Coke or clothes) – could be Googley. Note that this mentions the magical Davos toilet. Here’s the video I made last year of that toilet:

On my latest trip, I noticed this cautionary note about the limits of the technology posted above the magic machine:

Davos toilet sign

In the excerpt below, I also speculate about publishing on toilet paper. In the same restroom, I found the next best thing: ad-supported paper towels:

davos towels

Now the snippet:

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OK, consumable goods, gadgets, and fashion could be Googlified. But what about Google TP? Surely it is not possible to bring Googlethink to toilet paper. There won’t be communities around toilet paper. I shudder to imagine TP 2.0 after seeing a commercial for toilet paper whose USP (unique selling proposition) is that it doesn’t leave little paper bits on your butt. Boy, that must have been a tough sales conference. I can’t think of a better reason for advertising not to exist.

As with newspapers, perhaps it’s time for the TP industry to get out of the paper business and ask what business it is really in. Cleanliness, right? When I was in Davos, what amazed me almost as much as hanging out with heads of state and industry was seeing an automated, self-cleaning toilet seat in the conference center. After flushing, a motorized arm comes out and grabs the seat, cleaning it as it rotates. It’s mesmerizing. I took video of it to share on YouTube. (Google “Davos toilet” for my video. Or for a more entertaining if politically incorrect demonstration, search on YouTube for “Swedish toilet seat Gizmodo”). The company that makes that product is not in the paper business. It’s in the clean-seat business.

Toto, a Japanese plumbing manufacturer, has decided that the business is neither paper nor clean seats but clean bums and happiness. Toto invented the Washlet automated, computerized toilet seat, a marvel of technology that heats the seat to a cozy 110 degrees and spritzes you with warm, clean water after you’ve done your business. Then it dries you with gentle, warm air even as it magically eliminates odors. (On YouTube, search for “Toto Washlet FlushTV” to see a demonstration by W. Hodding Carter IV, son of the former Carter administration official and author of Flushed: How the Plumber Saved Civilization.) Before you laugh, know that Toto has sold 17 million Washlets (they advertised on my Buzzmachine with smiley faces superimposed on naked, happy, clean butts). The Toto is hot on YouTube with videos that have tens, even hundreds of thousands of views. Hollywood actor Will Smith has bragged on TV that he has the deluxe, $5,000 model and doesn’t spend a dollar on TP. Here we have the perfect convergence of problem and solution, hardware and software, technology and life with bottom-up marketing. This is the post-TP Googley toilet.

Even in atom-based enterprises, the connections the internet makes possible can bring business benefits. No end of consumer products would be helped from a more open conversation: tool makers listening to craftsmen, cooking-utensil companies opening up to cooks, athletic equipment companies watching out for what athletes and trainers want. One should find opportunities to make more targeted products and to partner with customers to design, support, and sell products. Google and the internet change everything, even factories.

30 days of WWGD? – Networks

Today’s snippet reprises Tom Evslin’s great lesson about the economics of networks:

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In 2005, I joined a roundtable held by the venture-capital firm Union Square Ventures in New York to talk about peer production and the creation of open networks and platforms. Counterintuitive lessons swirled around the room as entrepreneurs, investors, and academics analyzed the success of companies built this way. Across the table sat Tom Evslin, the unsung hero of the web who made the internet explode when, as head of AT&T Worldnet, he set pricing for unlimited internet access at a flat $19.95 per month, turning off the ticking clock on internet usage, lowering the cost for users, and addicting us all to the web.

Evslin gave a confounding lesson on networks. Explosive web companies—Skype, eBay, craigslist, Facebook, Amazon, YouTube, Twitter, Flickr, and Google itself—don’t charge users as much as the market will bear. They charge as little as they can bear. That is how they maximize growth and value for everyone in the network. Evslin used an ad network to illustrate the value of building scale in this manner. An ad network that extracts the minimum commission it can afford out of ad sales for member sites will grow larger because more sites will join this network than its greedier competitors. Ad networks need a critical mass of audience before they can sell to top-tier advertisers, which pay higher rates. So charging less commission to grow larger can yield more ad sales at better prices.

It gets even more head-scratching: Evslin argued that if the company that runs the network is too profitable, it will attract competitors that will undercut it and steal market share. “If you’re doing well but running at or close to breakeven,” he explained later on his blog at TomEvslin?.com, “you’ve made it impossible for anybody to undercut you without running at a deficit.” To sum up Evslin’s law of networks: Extract the minimum value from the network so it will grow to maximum size and value—enabling its members to charge more—while keeping costs and margins low to block competitors.

That’s not how many old networks operate. Cable companies wrap their wires around us to squeeze maximum fees out. Ditto for phone companies, newspapers, and retailers. Charging what the market would bear made perfect sense for them. But now they face competition from next-generation networks. Skype—which at the end of 2007 had 276 million accounts in 28 languages—exploded as a free service before it added paid features that drastically undercut old phone companies. Its founders pulled value out of the business when eBay bought it. eBay itself had created a new retail marketplace by extracting little from each sale. Once eBay thought it was alone at the top, though, it started raising fees—but that allowed online retail competitors Amazon and Etsy to steal away merchants.

Evslin’s poster child for network growth is craigslist. It foregoes revenue for most listings in most markets—charging just for job listings and for real estate ads in a few cities—and that made it the marketplace for most listings. “If Craig now attempted to maximize revenue by charging for a substantially higher percentage of ads, a door would be cracked open for competition,” Evslin said. “There is no chance at current rates for a competitor to steal Craig’s listings (and readers) by charging less.” This is the economy in which Google operates. It had no revenue model for its first few years until it happened into advertising. “Bank users, not money,” was Google vice president Marissa Mayer’s advice on building new products and networks. She said in a 2006 talk at Stanford that Google doesn’t worry about business models as it rolls out products. “We worry a lot about whether or not we have users.” That is because on the web, “money follows consumers.”

At the New York roundtable, an entrepreneur quoted legendary Israeli investor Yossi Vardi, who said that when he launched the pioneering instant-messaging service ICQ (later bought by AOL), he cared only about growing. “Revenue was a distraction,” he decreed. This doctrine of growth over revenue was mangled in the web 1.0 bubble, when new companies spent too much of investors’ money on marketing so they’d look big, only to collapse when money ran out and users vanished. Today’s web 2.0 method for growth is to forgo paying for marketing and instead create something so great that users distribute it—it goes viral. Once it’s big, then it can find the revenue. That money may not come directly from users in the form of fees or subscriptions but may come from advertising, ticket sales, merchandise sales, or from the value that is created from what the network learns—data than can be sold. I discuss such side doors for revenue later in the book.

Network economics may be confounding, but networks themselves are simple. They are just connections. You already operate in many networks. Go find the biggest whiteboard you can and draw your networks from various perspectives: First draw your company with all its relationships: customers, suppliers, marketers, regulators, competitors. Now draw a network from your customers’ perspective and see where you fit in. Next draw your personal network inside and outside your company and industry. Draw your own company not as a boxy organizational chart but as a network with its many connections. In each, note where value is exchanged and captured (when you sell, you get revenue; when you talk with customers, you gain knowledge; when you meet counterparts, you make connections). Now examine how these networks can grow, how you can make more connections in each, how each connection can be more valuable for everyone. No longer see yourself as a box with one line up and a few lines down. Instead, put yourself in a cloud of connections that lights up each time a link is made, so the entire cloud keeps getting bigger, denser, and brighter—and more valuable. Then your world starts to look like Google’s.

30 days of WWGD? – What about Apple?

John Gapper in the Financial Times reviewed What Would Google Do? today and argued against my core concept of following Google’s lead. I’d link to the review, but it’s behind the pay wall. Irony #1. Gapper complains about my suggestion that free is a business model (note to Chris Anderson: Hope that Gapper doesn’t review your next book, Free!), saying that advertising won’t replace subscription revenue. That’s a classic view of those who think that old models can be replicated in the new world. The point of the book is that the world has changed fundamentally and old models won’t work anymore. It’s ironic — that’s Irony #2 — that the review came out today, when I attended a panel run by Gapper’s boss, the editor of the FT, here in Davos about peril to the Fourth Estate. The discussion was filled with efforts to replicate old models. I debated the point there and I’d be eager to debate Gapper.

Gapper says that Apple is the company to follow, instead of Google. I don’t argue that quality is always a way to win and Apple wins on quality. Indeed, I make the point in the book. So here’s today’s snippet from my chapter about Apple:

* * *

Is there any entity that is untouched? Is there an anti-Google, one institution that has become successful by violating the rules in this book? I could think of one: Apple.

Consider: Apple flouts Jarvis’ First Law. Hand over control to the customer? You must be joking. Steve Jobs controls all—and we want him to. It is thanks to his brilliant and single-minded vision and grumpy passion for perfection that his products work so well. Microsoft’s products, by contrast, operate as if they were designed by warring committees. Google’s products, though far more functional than Microsoft’s and built with considerable input from users, appear to have been designed by a computer (I await the aesthetic algorithm).

Apple is the opposite of collaborative….

Apple is a cult company and its customers are its best marketers—that much is Googley….

Apple is the farthest thing from transparent. It has sued bloggers for ferreting out and revealing its secrets. Attacking its own fans was unbloggy and uncool, but Apple didn’t care about the bad publicity. It’s Apple.

Apple abhors openness. That’s another reason its products work so well, because it controls what can run on them, how it runs, and how it makes money….

Apple does not think distributed. It makes us come to worship at its altar….

Apple does not manage abundance. It creates scarcity. Witness the fanatics who camped out overnight to get each version of the iPhone….

Free as a business model? The gift economy? Apple is not generous. It charges a premium for its quality….

Apple follows just a few Google rules. Lord knows, it innovates. And nobody’s better at simplifying tasks and design.

How does Apple do it? How does it get away with operating this way even as every other company and industry is forced to redefine itself? It’s just that good. Its vision is that strong and its products even better. I left Apple once, in the 1990s, before Steve Jobs returned to the company, when I suffered through a string of bad laptops. But when I’d had it with Dell, I returned to Apple and now everyone in my family has a Mac (plus one new Dell); we have three iPhones; we have lots of iPods; I lobbied successfully to make Macs the standard in the journalism school where I teach. I’m a believer, a glassy-eyed cultist. But I didn’t write this book about Apple because I believe it is the grand exception. Frank Sinatra was allowed to violate every rule about phrasing because he was Sinatra. Apple can violate the rules of business in the next millennium because it is Apple (and more important, because Jobs is Jobs).

So then Apple is the ultimate unGoogle. Right?

Not so fast…..

30 days of WWGD? – The link changes everything

Here’s a second day’s snippet from What Would Google Do? I’m going to jump all around the book, picking bits here and there. Today’s is on advertising. But first, here’s a link to a Newsweek Q&A about WWGD?

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For more than a century, the public face of companies has been their advertising, slogans, brands, and logos. How much better it would be if a company’s public face were that of its public, its satisfied customers who are willing to share their satisfaction, and its employees who have direct relationships with customers. Brands are people.

If that’s the ideal, then here’s the goal: Eliminate advertising. Or at least fire your ad agency. Oh, you won’t get rid of advertising entirely. You should be so lucky. But every time a customer recommends you and your product to a friend is a time when you don’t have to market to that friend. It is possible today to think that one good word can spread as far as an ad would. This scenario is not hypothetical. When I had my problems with Dell, I could see them losing sales as people came to my blog and left comments saying they’d just decided not to buy a Dell, often adding that they’d told their friends their vow as well. There’s no telling how much one pissed-off customer costs you today. The contrary is also true. A happy customer can sell your products. Now that bloggers are praising Dell online, new sales accrue as customers reconsider the company. When Dell started offering discounts to users of Twitter, who passed the word to more users, the company added $500,000 in sales in no time.

The more your customers take ownership of your brand, the less you will spend annoying people with your ads. I can hear your agency: You can’t hand messaging over to the people; they’ll be off-message. Well, tell your agency their message may be off. Your customers have always owned your brand.

Advertising is your last priority, your last resort, an unfortunate byproduct of not having enough friends?.?.?.??yet. Learn this lesson from Google, which spends next to nothing on advertising. It became the fastest growing company in the history of the world without marketing. It grew thanks to its friends, not through ads. In its “10 things Google has found to be true,” the company says its “growth has come not through TV ad campaigns but through word of mouth from one satisfied user to another.” The generation that has that damned “Yahoo-ooo” sound stuck in their heads thanks to untold millions spent on commercials is the same generation that used and spread Google instead, for free.

What Would Google Do? on sale today

What Would Google Do? goes on sale today. Yay! You can buy it it (please) from Amazon, Barnes & Noble, or Borders. Here’s the audiobook.

I hope to continue the conversation that went into the book and comes out. So I’ll be putting up 30 days of WWGD? – a snippet a day from all over the book. (There’ll also be a way to read the text in a HarperCollins widget; we’ll be offering a video synopsis, an v-book (e-book with videos); I’ll also put up a free version of WWGD? – The PowerPoint. There’ll be a larger excerpt — two chapters — on Business Week later this week; I’ll link when they’re up.

For the first snippet, there’s no better place to start than the beginning:

* * *

It seems as if no company, executive, or institution truly understands how to survive and prosper in the internet age.

Except Google.

So, faced with most any challenge today, it makes sense to ask: WWGD? What would Google do? In management, commerce, news, media, manufacturing, marketing, service industries, investing, politics, government, and even education and religion, answering that question is a key to navigating a world that has changed radically and forever.

That world is upside-down, inside-out, counterintuitive, and confusing. Who could have imagined that a free classified service could have had a profound and permanent effect on the entire newspaper industry, that kids with cameras and internet connections could gather larger audiences than cable networks could, that loners with keyboards could bring down politicians and companies, and that dropouts could build companies worth billions? They didn’t do it by breaking rules. They operate by new rules of a new age, among them:

• Customers are now in charge. They can be heard around the globe and have an impact on huge institutions in an instant.
• People can find each other anywhere and coalesce around you—or against you.
• The mass market is dead, replaced by the mass of niches.
• “Markets are conversations,” decreed The Cluetrain Manifesto, the seminal work of the internet age, in 2000. That means the key skill in any organization today is no longer marketing but conversing.
• We have shifted from an economy based on scarcity to one based on abundance. The control of products or distribution will no longer guarantee a premium and a profit.
• Enabling customers to collaborate with you—in creating, distributing, marketing, and supporting products—is what creates a premium in today’s market.
• The most successful enterprises today are networks—which extract as little value as possible so they can grow as big as possible—and the platforms on which those networks are built.
• Owning pipelines, people, products, or even intellectual property is no longer the key to success. Openness is.

Google’s founders and executives understand the change brought by the internet. That is why they are so successful and powerful, running what The Times of London dubbed “the fastest growing company in the history of the world.” The same is true of a few disruptive capitalists and quasi-capitalists such as Mark Zuckerberg, founder of Facebook; Craig Newmark, who calls himself founder and customer service representative—no joke—at craigslist; Jimmy Wales, cofounder of Wikipedia; Jeff Bezos, founder of Amazon; and Kevin Rose, creator of Digg. They see a different world than the rest of us and make different decisions as a result, decisions that make no sense under old rules of old industries that are now blown apart thanks to these new ways and new thinkers.

That is why the smart response to all this change is to ask what these disrupters—what Mark, Craig, Jimmy, Jeff, Kevin, and, of course, Google—would do. Google generously shares its own philosophy on its web site, setting out the “10 things Google has found to be true.” They are smart but obvious PowerPoint lines helpful in employee indoctrination (especially necessary when your headcount explodes by 50 percent in a year—to 16,000 at the end of 2007 and to 20,000 before the end of the following year): “Focus on the user and all else will follow,” Google decrees. “It’s best to do one thing really, really well.?.?.?.??Fast is better than slow.?.?.?.??You can make money without doing evil.?.?.?.??There’s always more information out there.?.?.?.??The need for information crosses all borders.?.?.?.” These are useful, but they don’t tell the entire story. There’s more to learn from watching Google.

The question I ask in the title is about thinking in new ways, facing new challenges, solving problems with new solutions, seeing new opportunities, and understanding a different way to look at the structure of the economy and society. I try to see the world as Google sees it, analyzing and deconstructing its success from a distance so we can apply what we learn to our own companies, institutions, and careers. Together, we will reverse-engineer Google. You can bring this same discipline to other competitors, companies, and leaders whose success you find puzzling but admirable. In fact, you must.