IT companies are special when it comes to the way things are developed and brought to market.
Technology and stuff available tend to change that fast that you cannot make millions on only one idea (yea - not 100% true). And you cannot plan in advance. Chaos and uncertainty is inherent in your development process.
To avoid being overtaken you have to innovate. Work with your customers and foster the only thing you got: Your capable employees and their brains - aka the innovation potential of your company. Hint: If your employees do not like your company they will leave it. And you loose.
Google imho does an excellent job on fostering innovation.
Some key ideas:
The insight that innovation is not optional but a key success criteria
Many companies do not invest in innovation. 20% time for private projects? Only Google can afford that. Boom. No. Any company in IT must do that. Otherwise you will quickly loose your products, customers and employees at the end. Google demonstrates that the model is working. And it's simple. Start innovating now. It's not optional.
Flat management hierarchy
No comment on that one. 60 people reporting to one manager is quite normal. And it should be.
Chaos as source of innovation
If a product is planned 100% in advance and executed 100% like the plan there is no potential for innovation. People get bored. The project fails because reality in IT always is different. People are different. Without a certain degree of chaos the company looses at the end. Accepting chaos also means that there is a certain level of code and project duplication. At Google that is not only tolerated but fostered. Chaos accelerates time to market and the collection of feedback. "Let more flowers bloom".
20% time to form mini start-ups.
Google is famous for the success of its 20% time projects. Googlers are allowed to spend approx. 20% of their time on their own ideas and projects. They can form 20% teams and do what they want. They can collect their 20% time and work for 2 months on a project - or they work one day a week for their private project. Many things fail - what is 100% normal for an innovative process. But some things are huge successes. Namely News, Gmail, Maps and much more. 20% spare time for your employees: A huge source of innovation.
Excellent tools
Test driven and such. No comment on that one.
One gigantic code base
I did not know that one. But it clearly tells employees: We trust you. Plus it omits that there are code silos.
Launch and iterate early
Saying at Google: "If you are not embarrassed by your first launch, you have not launched early enough."
More on innovation at Google in an excellent article at Computing now:
http://www.computer.org/cms/Computer.org/ComputingNow/homepage/2011/0411/T_CO2_EntrepreneurialInnovationGoogle.pdf