Google is one big of a company. They’ve made it, they are big and it is their time. The Google strategy is worth looking at and also worth following.
It is one company which has become difficult to catch up with. Never an envious position to be a competitor. This piece is just taking a look inside the organisation.
They have been known to magically combine disorganization and rigidity. A part of them say they are not a conventional company and part of them is hard core corporate. Currently beating their nearest competitor Yahoo by yawning margins, Google still intends to lead as the King of Search. It has about 132 million customers, connected to over one million computers and commands 67.5% of searches as compared to Yahoo’s 8.4%.
The start of Google was a weird one. Larry Page and Sergey Brin launched it as part of their project work to improve search engine results. This was in 1998. They quickly gained users and followers and in 2004, they were ready for the stock market. Their initial public offering (IPO) went successful and there has been no turning back. Their style of the IPO birthed their nature of ‘arrogance’ that had defined them till date. They ditched the traditional style of making investment banks determine their share price. Rather the public determined the value of the shares they wanted to buy it for. This was a real ‘public offering’.
Google runs a two-tiered governance system which is very rare in the US. It introduces another layer between management and shareholders which gives management the freedom to operate the way they want to. Being a techie, the flexibility and that freedom was necessary. The governance system is a bit like getting shareholders off their back to enable them (Google) run they way they want to. The governance structure gave them a bit of freedom for Page to write to shareholders thus; Google was not a conventional company and that they did not intend to become one. They have since been running the company ‘their way’.
They run the loose management hands off style. It is stated in a strategic document that they have 1:20 manager to staff ratio contrary to the average 1:10 in an average US company. This is a bit of a loose-management arms-length system of management. That is the Google strategy of management. Their performance management is more of peer-to-peer reviews which bring out the value of their project. The two founders Page and Brin run the company together with a CEO they brought on board. Eric Schmidt is the one that runs the typical administrative functions of the ‘The CEO’. The trio kept the engine running their own way. Now news has it that Page and Brin are stepping out as management members.
However, the co-founders, both aged 46 announced in a blog that they are stepping back from the active management of the company. According to the statement, the two will remain “actively involved as board members, shareholders and co-founders”, but said it was the “natural time to simplify our management structure”.
They both agree that “there’s a better way to run the company. Aphabet and Google no longer have two CEOs and a President”, according to the blog. As a result they hope to “assume the role of proud parents- offering advice and love. But not daily nagging”.
This leaves Sundar Pichai in the helm of affairs.
Google is still looking to lead pushes for development of in-house solutions, but they will also buy if they don’t have an in-house solution. Leading them to buy Youtube as part of the many acquisitions. This is very contrary to the rigid Apple who would only want to develop in-house. Between 2001 and 2009 Google has acquired about 50 companies many of whom are start-ups, the biggest being Youtube which cost $1.65 billion. Growth by acquisition is the Google strategy for growth. Their dominance in the smart gadget space is an envy for Huawei who undoubtedly has Google as their benchmark. Their market value crossed the trillion-dollar mark in 2019 and they hope to keep things there. This is a position oil giant Aramco comfortably occupies.
Disorganisation and Rigidity
In their magical combination of disorganization and rigidity, Google manages to keep the about 16,000 employees working and accountable for their time and hire. Staff are not kept in a bureaucratic schedule. In an interview, Eric Schmidt explained Google further,
Google is run by its culture and not by me. . . . It’s much easier to have an employee base in which case everybody is doing exactly what they want every day. They’re much easier to manage because they never have any problems. They’re always excited, they’re always working on whatever they care about. . . .But it’s a very different model than the traditional, hierarchical model where there’s the CEO statement and this is the strategy and this is what you will do, and it’s very very measured. We put up with a certain amount of chaos from that.’ Sometimes one is not really sure who does what and some important things can slip the entire organisation. That is how disorganized they can be.
Their rigidity stems from the way they recruit. Only the best can find their way into Google. Engineers would either have completed Masters or Doctorates. The series of aptitude tests is enough to tell it. It is a highly scientific process and individuals who make it would have to possess quite predictable attributes that make them to fit in well.
Google is in a world of its own offering all manner of services from advertising, blogging, Radio & TV Advertising, Online Payment, Services, Social Networks and Mobile Phone Operating Systems and others that may evolve later. The Google strategy so far is working.
Well done Google! Ghanaian and African techies would look to emulate Google in a number of ways.
Parts of this article was taken from a publication by Gerry Johnson et al on Exploring Strategy, Text & Cases