Searching for Good Reasons Behind Google Labs' Demise

Unlike the recent shuttering of Google Health, the closure of Google Labs – announced on July 20 – comes as a genuine surprise. As a brand equity investment, innovation playground and a novel way to interact with millions of curious customers, Google Labs was a brilliant initiative.

Of course, Google’s expressed desire to sharpen the focus and streamline the company’s product offerings is perfectly reasonable. “Putting more wood behind fewer arrows” is CEO Larry Page’s prioritisation prerogative. And no one who knows him doubts Page’s unwavering commitment to the innovation culture of the company he co-founded. But the move suggests that Google’s leadership may think of Labs as more of an organisational distraction than an innovation engine.

That possibility raises an important question that cuts to the core of Google’s values and success. Google is an innovator brimming with people with provocative ideas. But the company’s leadership insists that "data" – not gut feel – should be the ultimate driver and determinant of innovation success.

So one has to ask: How data-driven was the decision to wind down Google Labs? One of Google Labs’ main missions was to generate useful, insightful data. So how important were these tests and experiments in giving top management the information they needed to make critical investment decisions? Did Labs generate more wasted effort than valuable data?

Presumably, Page addressed questions like these. If a review revealed that product managers could get comparable data, in terms of quantity and quality, by running their own Labs, then there might be less need for a more centralised innovation venue. But there’s also good reason to believe that venues like Google Labs create different innovation expectations, attract different users and facilitate different genres of innovation interaction – thus generating qualitatively different data than more product-oriented laboratories. Isn’t that what Google says it wants and needs?

It’s almost impossible to know whether the innovation insights and data derived from a more product-aligned laboratory will, on average, be superior to those generated by entities like Google Labs. But Labs certainly represented a different innovation marketplace for exploring and assessing innovation. Killing it will likely deprive Google of a potentially valuable source of data.

(Michael Schrage is a research fellow at the Sloan School’s Center for Digital Business at the Massachusetts Institute of Technology. He is the author of "Serious Play" and the forthcoming "Getting Beyond Ideas.")

© 2011 Harvard Business Publishing