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How Google's Novel Management System Aids Growth

Posted by ryuzaki0 on from the sprouting-like-weeds dept.

Carl Bialik from WSJ writes "Gary Hamel, visiting professor at London Business School, argues in a Wall Street Journal commentary that Google's 'novel management system seems to have been designed to guard against the risk factors that so often erode an organization's evolutionary potential.' Among Google's advantages: The 20% rule, an 'expansive sense of purpose' and the credo, 'keep the bozos out and reward people who make a difference.' Hamel also traces the company's evolution from Google 1.0, 'a search engine that crawled the Web but generated little revenue,' to Google 5.0, 'an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base. More than likely, 6.0 is around the corner.'"

13 of 156 comments (clear)

  1. Reminds me by Peturrr · · Score: 5, Interesting

    of 'The Seven Day Weekend' from Ricardo Semmler. The CEO of SemCo with revolutionary ideas about business. A lot of his ideas are mentioned in TFA.
    Really great book if you're interested in the ideas behind firms like Google.

  2. WSJ is submitting articles now? by ClamIAm · · Score: 2, Interesting

    Seriously, look at the submitter...

  3. Novel? by rtaylor · · Score: 2, Interesting

    Looks strikingly similar to the models that 3M, IBM and possibly a number of other companies used during their rapid growth periods, particularly in their research/development departments. An emphasis on employee driven product development has high overhead to the number crunchers (lots of work is thrown out) but it really only takes 1 unique application of an idea (all ideas are old) in 100 to more than make that back.

    --
    Rod Taylor
  4. i disagree with the evolutionary steps by moochfish · · Score: 5, Interesting

    Google 1.0 was a search engine that crawled the Web but generated little revenue; which led to Google 2.0, a company that sold its search capacity to AOL/Netscape, Yahoo and other major portals; which gave way to Google 3.0, an Internet contrarian that rejected banner ads and instead sold simple text ads linked to search results; which spawned Google 4.0, an increasingly global entity that found a way to insert relevant ads into any and all Web content, dramatically enlarging the online ad business; which mutated into Google 5.0, an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base. More than likely, 6.0 is around the corner.

    It should be:
    Google 1.0: A nobody search engine
    Google 2.0: Outsourcing search engine
    Google 3.0: Contextual ads in searches
    Google 4.0: Adsense network
    Google 4.1: Information hoarding of users

    My version 4.1 highlights Google's recent overt interest in aggregating data on its users through services like the personalized homepage, Gmail, Gcal, Gchat, and the Google Desktop. Why is it not 5.0? Because these enhance the previously established revenue streams without changing the way they make money. It is not an evolution in Google's financial model, just new ways to better target their contextual ads (3.0 and 4.0).

    In order for a 5.0 to happen, Google has to redefine its primary revenue stream or add a new one that pulls in revenue from a seperate audience. My point is made most clear by highlighting the benefiting party of each evolutionary step:

    Google 1.0: A nobody search engine - You and me
    Google 2.0: Outsourcing search engine - Yahoo/AOL/portals
    Google 3.0: Contextual ads in searches - Web advertisers
    Google 4.0: Adsense network - Web masters
    Google 4.1: Information hoarding of users

    Likely candidates for a 5.0 would be:
    Television or radio advertisement domination
    Online music store, or other type of goods for cash type of business
    Online payment system (clone paypal)
    A novel online service as a subscription service (seems least likely with Google's history)

    Those would be Google 5.0.

  5. Re:The Friendly Giant... by erbmjw · · Score: 4, Interesting

    Another example of a company that utilizes unorthadox business methods, but still manages to please share holders; look at Costco, because they were able to convince their orthodox share holders of the benefits of supporting Costco's unorthdox business methods.

    If these companies continue to communicate to their share holders the sustained benefits of long term gain, we won't see a signifigant change in their unorthadox business methods.

  6. Re:God I hope it lasts... by cyclone96 · · Score: 4, Interesting

    I don't know if it means anything, but one of my former coworkers left a (very good) NASA engineering position to get his MBA from Columbia. He'd been with NASA for about 10 years, and was looking to shift out of engineering for a change. He certainly came from a background that was a lot different and much more technically oriented than almost all of his classmates.

    Google just hired him to do business development. Unlike the stories I hear about how difficult it is to get hired there, he did very little work to get the position except submit a resume - in fact, it was more like they were actively looking for someone like him.

    Anyways, perhaps that's some sort of indicator of the MBA types Google is recruiting.

    --
    Worst...sig...ever!
  7. Re:And in 2016, Google becomes self aware..... by Anonymous Coward · · Score: 1, Interesting

    Evolve? They have one revenue stream. Google is about to tank faster than a drunk me. Check out http://www.fuckedgoogle.com/ or http://www.thomasmaddengroup.com/resources/article s/0001-1.php for a real eye-opener.

  8. Usenet Death Penalty for Google Groups by Parker51 · · Score: 3, Interesting

    Google's apparent indifference to the use of Google Groups by anonymous posters to wreck Usenet with SPAM, off-topic posts, and overall abuse has led some to call for a Usenet Death Penalty (configuring news servers to drop all articles originating from a given site). See:

    Call for UDP against Google Groups

  9. Keep the Bozos out by neves · · Score: 1, Interesting
    Arguing for the "Keep the Bozos out" mantra, the very smart Peter Norvig posted a stupid post at Google Research Official Blog. He describes Google hiring strategy as "hiring above the mean" and plot some graphics showing how great it is.

    The premisse is that you can reduce all the richness of human beings to an unidimensional measure. The best teams I worked with have a diversity of talents, each one contributing for the success.

    1. Re:Keep the Bozos out by vidarh · · Score: 3, Interesting
      I assume the point of the poster you replied to is that you shouldn't always hire the best people. Many jobs require little skill, and hiring top skilled people and assigning them gruntwork achieves two things: You pay more than you have to, and those people are likely to leave.

      Hiring above the mean makes sense for jobs where a better employee means a potentially higher return for the company - it does not make sense for positions where a better employee means higher costs and no higher return and higher turnover.

      In fact, for a large number of positions, it makes sense to look for the weakest candidate that can do the job satisfactorily within reasonable margins, assuming you get a chance to hire them at a matching salary, because such candidates are more likely to have a possible career ladder (and so be more likely to stay) and/or are more likely to stay because it's harder for them to move elsewhere, and are likely to be cheaper than the alternatives.

      Even if you're looking purely at developer jobs, if you keep hiring above the mean, it means eventually you'll have people with PhD's and umpteen years experience doing routine maintenance programming for trivial, non-critical systems that you could have safely handed to some intern.

  10. Re:I would take issue with one point from the arti by gutnor · · Score: 2, Interesting

    A friend of mine run a small company.

    He tried to hire only the best of the best for a while and after gave up.

    You cannot reward everybody in the company otherwise reward loose its meaning. So you must choose. If you have a team with a guy who is 2 times beter than an average employee in another company, he is still mediocre compared to his colleague who is 2.1 times beter.
    In addition, the less performant employees are the 'disposable' percentile. At the next company difficulty they know they are terminated, so even if they are top-performers by other companies standards, they still are under basic underperformer pressure.

    Even by paying top-salaries for less performing, they were leaving because of the pressure and the lack of consideration.

    Ironically, even the top performer were leaving, because in his company they were yet another genius ...

    Finally he managed beter results keeping some looser in his company ( buffer/fuse employees ). It happened very quickly for him but off course his company was not google, there was no hype to keep employees working there. And also people having his company on their resume were not automatically considered as half-god by concurent companies.

  11. Add 'enormous hubris' to the Google motto by utki · · Score: 2, Interesting

    Huh? Lets keep a perspective here.

    Let's wait 5 years to see if Google is indeed so wonderful, ground-breaking, innovative blah blah blah.

    The rapid growth trajectory they are on at the moment has been traced by many tech and other companies in the past, and along the way things get more complicated and organisations and their environment can change dramatically, often for the worse. G. are not unique in this or any respect, and don't live outside of history.

    I'd also like to dispute statements that Google is "an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base "? There is nothing innovative about the items in that list at all - Google didn't invent (nor even significantly improve) web-based email, nor web-based database front-ends, nor good search algorithms nor desktop search nor photo-sharing on the web nor web-based satellite mapping nor the delivery of contextual web-based advertising etc etc etc. And to call the 'Google Desktop' an innovation when it is just a round up of basic software tools (many of which aren't even Google's) is especially dumb.

    There is, in fact, very little that Google has done in terms of products or its business model that is 'innovative' by any stretch of the imagination. Let's face it, they haven't really invented much at all.

    They are indeed very good at buying up other small innovative companies, they do web search well, they run a good ad banner network in AdSense, and offer good software like GDS, Picasa, SketchUp and other titles for free. I thank them for that, and their business has indeed successfully delivered those things to me and millions of other people, but I'm not going to lose my sense of judgement about the company because of these nice but hardly innovative achievements.

  12. Enron by sean.geek.nz · · Score: 3, Interesting

    Another company that hired only A-level talent, robustly avoided B-level talent, ran strong internal competitions to try and attract other employees onto your star project, and talked a lot about "darwinian" processes running between internal projects was: Enron

    Like Google now, Enron back in the day had management consultants writing magazine articles about the wonders of their "fluid" structure, the way petty beaurocrats were kept out of people's way, and their hiring practices. It was The Way Of The Future. Enron was the best, was going to take over and Rule Supreme. Like Google, Enron was proud that it didn't just keep to one boring idea of what they did, the company could perpetually reinvented itself.

    Those standard management structures exist for a reason. If google finds a way to work without them long-term, then good for them. But it's harder than it might seem.