Wired magazine has an in depth story about Alphabet’s Moonshot Factory and it got me thinking of why it has been successful. Google’s core business is still search, maps and advertising, but it also has branched out into many new services such as Waymo. Because technology companies are in the platform business creating services, they have to continually search for new types of value for future growth.

This is nothing new. Bell Labs in the 1920s was created to explore ideas such as the transistor, solar cells, and DSL. Xerox’s Palo Alto Research Center also was an incubator of ideas, but not many of them became released to the public and ended up influencing visitors who then created new businesses based on their ideas like Apple Computers. The difference is these organizations took years to invent concepts when there were few untraditional competitors and no pressing need to get to market.

Google has for years had employees use part of their work week to explore ideas that could become a business idea. Alphabet’s Moonshot Factory has codified exploration and created an operational model to support all the diversity of ideas. Google is branching out into all aspects of the physical world and integrating digital technologies with it. Its charge is to ” . . . ensure that the mother ship, Alphabet, never has to stop expanding.” So it is a pipeline incubator.

They have a two stage process for filtering employee ideas. First is the Rapid Evaluation Team which determines if the idea is a near term or long term bet. It also looks at how the problem is framed which has to focus on benefits, not technologies with three criteria:

• It must involve solving a huge problem.
• It must present a radical solution.
• And it must deploy breakthrough technology.

Once it gets past the RET, it moves to The Foundry which further questions the project and monitors the progress of the idea. Their view is to kill projects early. A common refrain from both groups is “We kept saying, we should do it because it’s awesome—no, we can’t do it, because it’s going to cause more trouble, and it doesn’t solve any real problems.”

This mindset to ween out gratuitous concepts that are essentially technologies in search of a problem is a good thing. Focusing on the physics of something is not enough. It has to be connected to meaning and value to users. Startups in general usually focus on a technology that they think is better than an existing solution. Some are better, but most are ill thought out ideas and cause more problems than the core problem they solve.

Connecting a microeconomic response to larger macroeconomic social, political and economic effects is not easy as it is an inferential exercise. Google unconventional projects can impact macroeconomic issues that will involve a wider set of stakeholders like regulators and try to become a conventional company that offers ” . . . real services and bringing in real customers for real money.”

The question is how companies that have very limited resource pools of time, talent and money can invest in ideas and vette them into viable concepts and services? On one hand, scarcity is a prime driver to innovation as one needs to do more with less and bootstrap resources to move an idea forward.

Google is trying to keep in touch with its early history of innovation and connect it with invention. Most people use these two terms interchangeably, but they are not the same thing. Innovation is the ability to come up with new value which essentially is an idea or framework. Invention is the hard business of creating utility value and making something that has to deal with the physics of how things work.

We live in a world of ecosystems and ecosystem providers. Google is one of the largest platform providers with a dizzying array of companies that are enhancing Google platforms with their specific services. This is great for Google. The question is can companies compete with large enterprises and create their own moonshot ideas that do not enhance Google, but where they are charting out their own area to pioneer, nurture and grow?

Let’s get going.