‘For Businesses Today, Being Fast is More Important than Being Big’

How does the web change the market? How can users be involved in the development of new products? What principles are there for creating a new product? These were some of the issues addressed by Carlo d’Asaro Biondo, President of Strategic Partnerships for EMEA at Google, during his open lecture at HSE.

Web that has changed the business

The web, which allowed machines to ‘see’ and ‘understand’ each other, has altered approaches to business management. Information management has become a crucial factor for success, and the costs of this process, thanks to continuously developing IT technologies, are constantly decreasing. Every year, people are able to store more and more data at less and less cost.

As a result of the above, Google, according to Carlo d’Asaro Biondo, has made several bets. For example, companies don’t have to invest too much in creating huge machines; they can be replaced by networks of small machines, which helps varying costs. The same is true for software and computing technology. You don’t need to have them on your mobile phone, for example, when you can use them remotely.

This has led to fundamental shifts in business models. For companies, marketing has become a variable cost. ‘If I am a company and I want to sell to the world, I don’t need to create an office everywhere in the world (it was a fixed cost), I just transit on a website and use the tools of the web’, Mr. Biondo said.

Such a shift has changed the rules of market games. Small and medium-sized businesses (SMBs) use web platforms to compete with big, but not very flexible companies which have a lot of employees and offices. In this new situation, market regulators are also facing a dilemma: should they defend the small businesses, which support competition, or traditional companies, which use the models of the past? How to find a balance?

But not only marketing is becoming a variable cost. Thanks to cloud technology, IT costs are also variable now. SMBs don’t have to spend money on purchasing and maintaining a powerful server.

‘You can look at me and say: “He is telling us something that’s obvious”. Well, if it’s obvious, I’m happy,’ Mr. Biondo emphasized, ‘because understanding those things are the rules of the new economy. The companies that developed in the old economy have lots of difficulties to understand what those things mean. And it means that being fast is more important than being big’.

The companies that understand these principles are able to create jobs in the economies of the future. For example, 3.5 million jobs have been created in the past four years to support Android and iOS apps. ‘It changes the logic of the economy we are living in’, the expert noted.

How new products are created

Business plans don’t start by comparing costs and revenues today, Carlo d’Asaro Biondo believes. The first question to ask is: what problem am I sorting out as I offer a product or a service? How important is this problem? Then, you have to understand what will be the cost of its solution. And only after that, do you think about revenue, which is only a ‘consequence of a job well-done’.

Mr. Biondo outlined five principles Google follows in this regard.

First, go back to the roots. Starting from scratch has its advantages, which has been proven by many start-ups that have become a success and changed the economy.

Second, keep it simple. Your product can be complicated for you as developers, but it should be simple for the user.

The third principle is to focus on the user, on how they can make use of your idea or product, and how they could interact with you.

The fourth principle is not to go for instant perfection, but to strive for continuous improvement. Users will tell you what you should change or add to your product.

That’s why the fifth principle is to default to open processes.

From mobile technology to machine learning

So, where is Google going? ‘If I came to talk to you five years ago, I would have said that we are going mobile’, Carlo d’Asaro Biondo assumed, ‘ The principle at Google was “mobile first”. That bet was good, but now the bet we make is machine learning, or “artificial intelligence”, as some people call it’.

Machine learning is particularly important when the cost of data storage is decreasing, and the volume of data is growing. These growing databases should be used smartly. Machines are able to see patterns and detect correlations in huge data arrays, which leads to new services as the outcome.

Machine learning is already actively used, for example, in health care to analyze health indicators and detect possible illnesses. This is merely one example that demonstrates how the development of IT eliminates borders between very different areas of the economy.