Keeping Google Googley

Keeping Google “Googley”

SYSM6332- Summer 2014. Final Exam

David Reboredo

Background:

• Google was founded in 1998 by Larry Page and Sergey Brin while they were Ph.D. students at Stanford University.  They developed a search algorithm that ranked internet web pages based on the number of links directed at them, and presented search results based on this ranking. Fueled by the success of its search engine, the company had a rapid growth. By 1999 they were responding to 500 000 searches per day, and by late 2000, 100 Millions.

• In 2000 Google introduced it keyword-targeted advertising program, called AdWords. This program allowed advertisers to buy keywords and have Google display their text ads when users entered those words in the text box.  This program allowed the company to make money and by 2001 the company was already profitable. From that point on the company continued to grow at a stelar pace.

• Google was designed and built in a way that favored innovation and entrepreneurship. Almost every aspect about Google is part of the system that supports these.

Case Overview:

• The Case provides an overview of the company’s situation in 2008, presenting it as a rapidly growing company, with a very entrepreneurial and innovative work environment supported by several aspects like its strategy, company structure, culture and human resource management systems, that was facing increasing challenges around the growing bureaucracy that resulted from its expansion and late growth slowdown.

• The company strategy is covered on the high-level, but enough to show the important role that it had on the success of the company since it strived to cover the needs of the two prominent customer groups it served, search users and advertising business.

• The company structure is described as a rather flat organization, engineering-centric, with each area being managed by teams more than by unique people.  And where the decision making process was consensus based.

• Elements of the human resource management system at Google, like recruiting, compensation, benefits, performance reviews and training are covered in a way that shows the contribution that each has had on the successful creation of a very entrepreneurial, thriving and innovative culture an work environment.

• Creativity and Innovation are presented as core values at the company. The case describes how the founders encouraged, supported and expected their engineers and employees in general to take risk, innovate, pursue and implement their ideas and have an impact on the world around them. Support included reward systems, contests, recognitions and awards.

• To a great extent, the case also describes the kind of challenges that the company is facing as a by-product of its growth, like bureaucracy, slower decision making processes, decreased visibility, decreased perception of career growth opportunities.

                Question 1.

                How would you assess the “Entrepreneurial Intensity” of Google since its beginning? What factors made it entrepreneurial? What did Google founders do to perpetuate innovation and entrepreneurship at the company?

• Google showed a high level of entrepreneurial intensity from the begging.  The company itself was created around an innovative search algorithm that allowed for better results on web searches.  From that point on the founders placed a high level of attention to the creation and development of a culture that rewarded innovation and continuous improvement supported by several different factors.

• From the perspective of the different categories of firms studied in class, Google can be classified as a Star, due to the following reasons:

• Google founders and the CEO were heavily involved in fostering innovation.

• The company identified innovation as critical to its long-term success.

• The company had a very challenging vision, to organize all the information available in the world and make it accessible to users.

• They demonstrated openness to outside ideas. A new hire, despite his short term in the company, was encouraged to propose ideas and implement them, with focus on making Google a better place to work.

• There were formal programs for idea generation and problem-solving like the idea database and the “Avoiding Dilbertville” quarterly meetings.

• There was a very strong emphasis on cross-function communication in order to foster cross-pollination of ideas. The campus was even designed in a way that would increase the opportunities for people to meet and establish social connections within the company that could be later on capitalized on.

• There was a strong focus on product development. The company had over 40 different products, services and applications which were developed or acquired and further developed by Google in a less than a 10-year period of time since its creation.

• There was high investment on R&D, with 9 to 16% of the revenues dedicated to this activity from 2002 to 2007.

• There was a budget exclusively dedicated to innovation, not only in terms of money but also in terms of time, since the employees were encouraged to spend 20% of their time on self-defined projects aimed at innovating within the company.

• There was a solid system that rewarded individual creativity and innovation.  The system ranged from recognition to compensation. People were valued and recognized for their ideas. The compensation included stock grants, which in some cases amounted to more than employees annual salaries.

• Decisions were made mostly by consensus during meetings. This did not prevent the company to move at a fast pace or in an agile manner, hence the meetings were effective.

• Due to the high frequency and degree of entrepreneurship at Google, it can be said that the company continued to ranks high (during the time frame covered by the case) on the  entrepreneurial grid, and could be located on the regions denominated Dynamic and Revolutionary.

• Google founders implemented a series of strategies in order to foster and perpetuate innovation and entrepreneurship within the company, these included:

• Promotion of an informal culture, which had creativity and innovation values at the core, designed to encourage collegiality and break down the barriers to rapid idea development. As part of this culture, employees were expected and encouraged to take the initiative, take risks and learn fast from failure.

• Allocation of budget to R&D that represented between 10 to 16% of annual revenue.

• Definition of a challenging and inspiring mission: “organize the world’s information and make it universally accessible and useful”

• Implementation of a rigorous hiring process that looked for specific characteristics on applicants that would make them fit within the culture and do well within the company.  These people needed to be flexible, show initiative, have a collaborative spirit, and be constant learners.  This lead to the selection of high achievers, self-managed, self-motivated people who once inserted on the challenging and motivating work environment would had high chances of displaying innovative and entrepreneurial behavior.

• Creation of a system of compensation, benefits, perks and rewards that attracted, motivated and retained top talent people.

• Campus designed in a way that favored cross-pollination of ideas by facilitating that people from different functions and groups could interact with each other.

• Creation of a flat and loose organizational structure, which reduced the formal and structural barriers that oftentimes have a negative impact on innovation and entrepreneurship. Ideas were at the center in Google and things got done through  shared goals, common vision and personal responsibility.  

• Development of a collaboration centered work culture and consensus based decision making style, spamming all levels in the organization.  This ensured that work was defined and done with perspectives from different groups and functions in mind and the decisions were made after careful evaluation from different angles.

                Question 2.

                Are there any shortcomings in their approach? Are there any concepts we learnt in the course about innovation and entrepreneurship within a corporation that Google is not applying? Are there things they could be doing better and how and why?