How has Google changed today’s business environment – in what can be termed the “Internet Century”?
How Google Works, the book written by Google’s Executive Chairman and ex-CEO Eric Schmidt and former SVP of Products Jonathan Rosenberg aggregates experiences and lessons gained about strategy, communications, talent, decision-making, disruption, and innovation.
The authors, part of the supremely talented Google team, helped the company grow from a greenhorn to a global icon. They present in a narrative form all those factors that surprised and impelled them to lead Google to technological excellence and superiority.
The authors dissect the business environment to explain how the balance of power has shifted from firms to consumers with the convergence of “disruptive technologies” like mobile, internet and cloud computing.
This new condition has given rise to a new type of working dynamic, referred to as “smart creatives” who are considered to be exceptionally qualified and creative, responsible for the innovation of the highest order.
These people with the greatest massive impact within companies, have the knowledge to use technology to achieve amazing things in incredible ease. For companies to attract and use smart creatives, a combination of culture, strategy, talent pool, decision-making, communication, and innovation is needed. Google credits its excellence to its ability to attract smart creatives and to create the proper working environment for them to thrive at scale and not just to follow some business plan.
The book is organized into eight chapters, in each the authors take us through the obvious ingredients of a corporate menu, meaning culture, strategy, talent, decisions, communications, and innovation.
Lessons Learned from the Front Row
In the first chapter authors present the conception of the product Google and now the whole idea was realized. They describe the complete route of envisioning the research engine and its materialization in terms of people, organization, plans and competition.
Eric Schmidt confesses also in this chapter how he first decided to put in words and write down the whole experience of creating Google.
Culture—Believe Your Own Slogans
The authors address the means to draw the greatest smart creatives, with the more important culture.
Organizational culture must be well established, deliberately and purposefully planned and grew, well understood by people who must be living up to its ideals.
It must be everyone’s moral compass. According to authors culture is important for one very important reason: like attracts like.
When organizational culture is created by the smart creatives of the founding team, it will attract like-minded individuals in the future.
Strategy—Your Plan Is Wrong
Not only are the ways how to attract smart people but also how to keep them by creating a high energy work culture.
The strategy realizing the need for smart creatives to ground their big ideas in a solid strategic base. Google does not implement a business plan set in stone, it allows people to figure things out and to adjust as the landscape changes.
The authors support their belief that the pillars upon which a business plan is built are far more important than the business plan itself.
The three foundational principles on which Google builds its business plan are:
- Bet on technical insights and solutions
- Optimize for scale, not revenue
- Grow the market for everyone with products
“The right strategy has a beauty to it, a sense of many people and ideas working in concert to succeed. Start by asking what will be true in five years and work backward.” Eric Schmidt & Jonathan Rosenberg
Talent—Hiring Is the Most Important Thing You Do
Communication strategies and approaches apply to the hiring process of organizations. Google’s founders realized the better hiring model to use was that of academia – peer-based with decisions being made by committees who focus attracting the best possible candidates for the company.
“In a peer-based hiring process, the emphasis is on people, not organization. The smart creatives matter more than the role; the company matters more than the manager.” Eric Schmidt & Jonathan Rosenberg
According to the authors, to hire smart creatives there are really just four ongoing activities which will be involved:
- Sourcing – you’ve got to make it everyone’s job to be watching for outstanding talent and bringing them to the attention of the recruiters.
- Interviewing – where the rubber meets the road when it comes to acquiring great talent.
- Hiring – have at least three and at most five people interview the candidate and form an opinion. The final hiring decision is made by a committee rather than a hiring manager and the committee bases their decisions on data, not relationships or opinions.
- Compensation – once a decision is made to hire, the aim of compensation negotiations will be to create a package which offers disproportionately high rewards for superior results.
Decisions—The True Meaning of Consensus
The decision-making process underlines the great importance of team communication.
According to Schmidt and Rosenberg, productive teams are considered to be those when all levels of a business hierarchy are involved in the decision-making process.
People from all ranks are encouraged to be forthcoming with their thought and ideas. Consensus-driven decisions generally have three important elements:
- Inclusion – you invite all stakeholders to participate in making the decision.
- Cooperation – everyone needs to be aiming for the best decision for the group rather than being proven right.
- Equality – you have a meritocracy where the best idea wins out no matter who suggests it.
Communications—Be a Damn Good Router
Communications according to the author’s comprises the most vital element as the organization grows. Effective business communication is recognized as the heart of organizational operation and success. It maximizes the flow of information and encourages open and candid interrelations.
“When you start a new position, for the first three weeks don’t do anything. Listen to people, understand their issues and priorities, get to know and care about them, and earn their trust. So in fact, you’re doing something: You are establishing a healthy relationship. And don’t forget to make people smile. Praise is underused and underappreciated as a management tool. When it is deserved, don’t hold back.” Eric Schmidt & Jonathan Rosenberg
Innovation—Create the Primordial Ooze
The importance of innovation and the tools to deal with disruptions and the steps required to develop a business. The authors begin with how to be innovative, how to devote effort and time for maintenance and improvement, how to estimate the cost of the risk taken for new innovations and finally how to design the route to the future.
Only through providing excellent products, flexible and enhanced working environment can organizations achieve and maintain performance at a high level.
Google bets on thinking big despite failures. The authors discuss Google’s successful ventures like Gmail, Google Earth, and Google Books, as well as failed ventures like Wave, Buzz and Notebook, and a glimpse into Project Loon, possibly the next big offering from Google that has the potential to disrupt the internet space.
Smart creatives always want to be in on the next big thing – or more to the point, they live to create them. The best way to create conditions for that to happen is to encourage your smart creatives to go for it.
Google creates a pool of “primordial ooze” where new ideas can bubble up to the surface and then be allowed to evolve and grow organically.
To drive that home, Google’s CEO is always the company’s CIO (Chief Innovation Officer). To create and maintain the primordial ooze from which innovations will emerge and evolve, Google does lots of different things:
- Everyone is actively encouraged to think big – to come up with 10X breakthroughs rather than incremental advances.
- Google is an OKR-driven culture – or in other words big-picture objectives (O) are always matched with highly measurable key results (KR) so progress can be tracked.
- Google follows its own 70/20/10 Rule – 70 percent of the company’s resources are dedicated to the core business, 20 percent on emerging products and 10 percent on radical new ideas.
- All Google employees can spend 20 percent of their time working on whatever they choose – which has spawned Google Maps, Google Suggest, Google Now, Gmail and more.
- People are encouraged to ship and iterate – to get products out there where people can use them and make suggestions rather than endlessly slaving over them in the lab until they are perfect.
- Googlers are also encouraged to “Fail well” – and most importantly learn from your mistakes.
- Google provides innovators with recognition but not direct monetary rewards for 20 percent projects – which ensures everyone draws their rewards from the work rather than the prize.
Google has three simple rules when it comes to whether or not it will pursue an interesting idea:
- The idea has to be something which affects millions or even billions of people.
- The new idea has to be radically different rather than an improvement on an existing way of doing something.
- The idea has to be feasible in the not-too-distant future rather than requiring something theoretical like time travel for example.
Conclusion—Imagine the Unimaginable
The authors conclude with some thought on incumbents and how to drive the company to the unimaginable future. Somewhere out there, the next generation of smart creatives are already at work figuring out ways to unseat the leading business of today.
“So it seems to us that incumbent businesses have a choice to make. They can continue to operate as they always have, existing in a world where technology is something to be used not as a tool of transformation but simply to optimize operational efficiency and maximize profits. There is an alternative for incumbents, though: Develop a strategy that takes advantage of platforms to consistently deliver great products. Use that strategy as a foundation to attract a team of smart creatives, then create an environment where they can succeed at scale. Simple, right?” Eric Schmidt & Jonathan Rosenberg
To stay relevant in the future, according to Schmidt and Rosenberg, there are 10 questions an organization should be figuring out the answers to right now:
- What do the ongoing changes in technology mean for us?
- What will be true in our industry five years from now?
- Do our customers love our product – and if not, what could we do better that would make them love what we sell?
- What would a smart and well-funded competitor do to take away our business?
- Is hiring smart creatives a top priority for us?
- What percentage of our new products in the pipeline are built on unique technical insights?
- Do our internal decision-making processes lead to the best decisions or the most acceptable decisions?
- Are our employees free to try something genuinely innovative?
- Who does better in our company – information hoarders or routers?
- Do internal silos facilitate the sharing of information or restrict it?
In short, this book could be evaluated by readers from different levels of a company, as an important and practical guide of organizational behavior. For professionals and managers, there is insightful advice on how to manage business differently, how to help people to think and act positively and how to create a rising culture of innovation. The heart of each lesson related to employees is communication within organizations and all the tactics employed for a more productive organization. This book is also of great use to academics since it provides an important knowledge into the fields of strategy, recruitment, decision-making, and communication.
Laszlo Bock – Work Rules! – Insights from Google That Will Transform How You Live and Lead