How Google Fuels Its Idea Factory 

Leading up to Google's first-quarter earnings report on Apr. 17, investors couldn't have been more bearish. They had knocked the stock down 35% since the start of the year, concerned that a weak economy ... would finally hurt the search giant's advertising business. But Google ( GOOG ) defied skeptics—and the economic downturn—with a surprisingly strong showing that sent the stock soaring 20% the next day. More than anything, Google's continued prosperity is a testament to its ability to keep innovating, both in search and advertising operations and in new lines such as online office-productivity software. Many companies, says Chief Executive Eric Schmidt , can skirt downturns entirely by coming up with innovations that change the game in their industries—or create new ones. (When asked if Google's strategy would change as the economy heads into a likely recession, he replied: "What recession?") In a recent interview in a tiny meeting room next to his Mountain View (Calif.) office, Schmidt   [More...] [Less...]