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How Google Works, by Eric Schmidt & Jonathan Rosenberg
GOOGLE, a company founded in 1998 by Sergey Brin and Larry Page, is worth $50bn, has over 45 000 employees, and operates in over 40 countries. “How Google Works” is the account of how this company grew into such a large and valuable organisation.
Author Eric Schmidt, who has a PhD in computer science, joined Google as its CEO. His experience at Sun Microsystems, Bell Labs and Novell (where he had been the CEO) was widely believed to be a way of bringing “adult supervision” to a chaotic place. The founders, however, hired Schmidt as much for his technological achievements as a Unix expert and a co-creator of Java as for his business acumen.
Co-author Jonathan Rosenberg came from Excite@Home and Apple where he was a product advocate and innovator. As I have pointed out in this column before, great companies do not become great because they have good ideas, but because of the quality management that is designed into the business.
Brin and Page started Google with the belief that the internet was “the technology platform of the future and that search was one of its most useful applications”. From the outset they believed that if they could offer superb products, the money would follow. They also genuinely believed that “their employees are everything”, and structured their company on that premise.
The authors also understood that “the best way to achieve… excellence was not via a prescribed business plan, but rather by hiring the very best engineers we could and then getting out of the way”.
With this approach, Google has been able to build excellent platforms and products that offer higher-quality services. Additionally, Google has made these services easily accessible and attractive to their customers. As a result, the services attracted advertisers who have provided the company's revenue stream.
With the ease of access to knowledge via the internet and the lower cost of producing products and services, competitive advantage has been compromised. Neither information nor distribution can be controlled - only consistently producing excellent products can ensure business success.
To achieve this product excellence rapidly and consistently, the company could not be run using the stifling organisational structures of the past. “The only way to (achieve this product excellence rapidly and consistently), is to attract smart creatives and create an environment where they can succeed at scale.”
The company is designed to attract “smart creatives” who are encouraged to manifest their best ideas. “Smart creatives” are those who possess deep technical knowledge and can see the route from technical expertise to product excellence to business success. These employees would be extremely difficult to manage because they cannot be told how to think. “If you can’t tell someone how to think, then you have to learn to manage the environment where they think.”
The managerial challenge is to create a place where smart creatives want to come every day, and so build a great company. Put in different terms – it entails creating a culture that will attract, retain and stimulate smart creatives. Culture, the authors explain, comes from the founders, “but it is best reflected in the trusted team the founders form to launch their venture”.
The following incident describes the value of culture succinctly. Larry Page was dissatisfied with the adverts that come up when a search is made. He placed a memo on a notice board on a Friday afternoon describing his dissatisfaction.
The authors report that “Jeff and team weren’t even on the ads team. They had just been in the office that Friday afternoon, seen Larry’s note, and understood that when your mission is to organize the world’s information and make it universally accessible and useful, then having ads (which are information) that suck (which isn’t useful) is a problem. So they decided to fix it. Over the weekend.”
It wasn’t the culture that turned the five engineers into problem-solvers whose solution changed the course of the company. It wasn’t the culture that turned the five engineers into employees who achieved this over a weekend, uninstructed. Rather, it was the culture that had attracted people with that initiative, enthusiasm and commitment to Google. That is the power of culture.
Hippopotamuses are among the deadliest animals, unexpectedly fast moving and capable of killing any enemy in their path. In Google, “hippos” refer to a different, but no less dangerous phenomenon – the “Highest-Paid Person’s Opinion”. As a meritocracy, at Google it is the quality of the idea that matters, not who suggests it. “Hippos” who cannot argue for their ideas are more likely to intimidate their way to success.
Sridhar Ramaswamy, one of Google’s ads leaders, tells of a clash of opinion he had with Sergey Brin. Brin initially suggested that as a compromise they try both ideas. After much debate about the relative merits of the competing ideas, Brin’s idea was discarded despite being the HIPPO in the room by a wide margin.
To establish a meritocracy, a culture is needed that obliges people to dissent, not merely allows them to dissent. Some people feel uncomfortable about raising dissenting views in a public forum and that is why dissent must be an obligation, not an option.
The book covers not only organisational culture but how to create a “functional strategy”, hire the right people, arriving at accepted decisions, effect real communication, and, of course, innovation.
The value of this book does not lie in its description of a mighty company, but rather in the many thought-provoking ideas that are behind Google’s success. Little of this book will have direct application to your business, unless you are a tech giant in Silicon Valley.
It will, however, stimulate you into thinking about how your organisation is managed, and how you can get even more output from your people, and they can get more input from your organisation.
Readability: Light -+--- Serious
Insights: High +---- Low
Practical: High -+--- Low
* Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Strategy that Works. Views expressed are his own.
