Is Google focused on the right things?

Google recently launched a new social networking service called Buzz. The launch reveals blind spots for Google that have resulted from a corporate culture focused on engineering excellent but lacking in the type of insight necessary to develop new value for existing and potential customers.

The concerns raised by users were fairly predictably related to privacy issues but were overlooked by Google. Google’s unprecedented success in its core business has given it the luxury of exploring a wide range of new business from productivity and communications software to a recent entry into the handheld device market. However, to date it has arguably failed to have any significant impact with the new businesses apart from Android which is certainly getting the attention of Apple (Apple recently sued HTC a maker of Android operating system phones).

To me this points to a need to balance Google’s product culture with a stronger emphasis on the external environment, in particular customer behavior in order to better anticipate how customers will react to new products and services.