Innovation By Design: Lessons From Google And Microsoft

I often hear variations of the same question from people on my team: “If we have so much to do in Microsoft Azure, why have a team focused on quantum computing?” The answer to this and other questions involving experimental or seemingly futuristic projects is simple. Every company needs to invest in longer-term learning horizons if it doesn’t want to risk losing its competitive edge.

I remember Microsoft CEO Satya Nadella always saying: “I need my technology leaders to see around the corner.” I share this same philosophy. Nurturing environments that encourage the emergence and development of ideas is the only antidote to companies focusing attention and resources on what they already do well. If they only stay within their comfort zone, they’re susceptible to being overtaken by more agile competition.

To encourage the flames of innovative to burn brightly within your organization, consider these strategies:

1. Allow dedicated time for new ideas.

Google, founded in 1998, formed with little focus on management. To achieve its initial intention of making a search engine, Google set out to hire the best people on the market. These hires were made so rapidly that, at one point, the technology managers didn’t know who among the large teams were their direct reports.

When I worked there from 2011 to 2013, the organizational structure was still very flat, with few hierarchical levels.

With so many innovative people working at Google, it’s no surprise that new ideas were constantly springing up. This was especially true considering that there was an official company policy allowing people to devote 20 percent of their time to any project they wished to pursue. The seeds of interesting projects, such as Google News, came from these untethered moments. Andrei Broder, currently Distinguished Engineer at Google, refers to this management model as simply “let the flowers bloom.”

If full-time innovation policies like Google’s 20-percent time aren’t feasible, consider structured innovation windows—such as quarterly hackathons or dedicated R&D initiatives—to ensure creative ideas have a space to grow.

2. Ensure teams have standardized engineering tools and frameworks.

At Google, an average of three or four people generally worked together on small projects. Google eventually began implementing a slightly more top-down management hierarchy to consolidate some of these small projects. However, it kept alive the principle of giving autonomy for new ideas to circulate between teams.

Standardized processes and engineering tools allow innovation to scale efficiently without causing unnecessary fragmentation. In technology companies in which processes are consistent and uniform, communication is efficient and collaborative teamwork becomes embedded in the culture.

3. Maintain a strategic buffer in engineering capacity.

Microsoft always put a greater focus on organizational hierarchy and planning compared to Google, with well-thought-out scenarios that become implemented. From the outset, managers had, and still have, the mission of figuring out what problem needs to be solved and how to organize the teams to deliver solutions to that problem in the next planning cycle. It’s a model focused on efficiency—the engineering leader plans the project in detail and allocates people according to what will be developed in that cycle.

Despite this apparently more rigid management structure, we always had room to innovate at Microsoft. This happened because engineering teams were designed with a small buffer of additional capacity, allowing them to explore new ideas without compromising their core work. This created a hybrid between top-down and bottom-up management.

A good way to enable exploratory work while at the same time ensuring core commitments remain on track is to ask the engineering teams to create 10-to-20-percent gains in efficiency. In pursuing this goal, teams explore ways of optimizing code or processes, and invest the savings into this buffer.

4. Define clear, low-friction approval paths.

Promising prototyped ideas eventually are intended to become official projects. For this to happen, they require approval from management.

At Google, engineers had a lot of autonomy to validate an idea and put it into production without needing formal approval from higher-ups. This was possible because the directive was that engineering processes and tools must be guaranteed not to negatively impact customers.

For example, if someone at Google had an idea of how to make the search stack cheaper, reducing service costs without changing search quality, the change would be approved through the usual, unbureaucratic code review process. However, if the idea reduced costs but impacted the quality of search results, it would require discussions with the system’s leaders.

Establish a streamlined approval process for non-user-impacting changes in facilitate adoption of innovative ideas. At the same time, require structured discussions for any customer-facing modifications.

5. Institutionalize A/B testing and phased rollouts.

Comparing two versions of a product or feature to see which performs better (A/B testing) was a core part of the development process at Google. A new feature would be tested with one group of users while another group continued using the old version, which allowed data-driven decisions. The testing ultimately determined whether the change should be rolled out broadly. Institutionalizing these methods encourages experimentation while mitigating risk.

Determining the right management style

In comparing these two management styles—bottom-up with team autonomy at Google, and top-down with structured planning at Microsoft—both allow for innovation. Yet a hybrid model could also work well in many technology companies. Not everything in an organization must be planned rigidly with well-defined delivery deadlines, but not everything can be left completely up to developers either.

To find the right balance, use structured planning for core services and infrastructure reliability. At the same time, encourage autonomy and experimentation in new product development and internal tooling.

Innovation doesn’t just happen. It requires intentional effort to create an environment where ideas can surface, undergo testing, and evolve without excessive bureaucracy. Companies that fail to invest in a long-term innovation strategy risk falling behind, while those that strike a balance between execution and exploration will continue to lead in their industries.