IntroductionAbout the AuthorDanielle M. Dewey is a Project Manager for an $8.1M US DOL TAACCCT Consortium Grant at the University of Alaska Fairbanks. She graduated Magna Cum Laude with her BBA in Accounting from Savannah State University, an AACSB accredited program at the oldest HBCU in Georgia. She is in her final year of MBA Studies at the University of Alaska Fairbanks School of Management. She is grateful that she has been able to live around the United States with her spouse and son, compliments of the US Army. In her free time she enjoys art and studies medieval history, clothing and textiles. Organizational Theory and Design is a complex subject and a necessity for anyone in the field of business management. Aside from core competencies in all the fields of business management and application, a strong understanding of how and why organizations work is what will set someone apart from the masses as their career progresses. The blogs posted on this site during September and October of 2017 are assignments for MBA Course F617 Organizational Theory for Managers taught by Professor Nicole Cundiff, Ph.D. Throughout the semester students applied learning objectives to an organization. This case study is a culmination of months of focus on Google, and its parent Alphabet Inc. Organizational DescriptionGoogle’s origin story begins at Stanford in 1995. Google founders Larry Page and Sergey Brin met during a campus tour and started working together on a search engine initially called “Backrub”. The project was renamed Google to everyone’s relief; the name change was “a play on the mathematical expression for the number 1 followed by 100 zeros and aptly reflected Larry and Sergey's mission 'to organize the world’s information and make it universally accessible and useful.'"(Google, "How we started and where we are today"). Within a couple years incorporation paperwork was filed and Google Inc became another Dot Com in a Silicon Valley garage. The week before the incorporation occurred another Google history landmark happened, the first Doodle. Google grew and the origins of Google’s mantra “Don’t be evil” go back to the beginning. “By 2000, Google had become the largest search engine in the world, with an index of one billion pages”(Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017). In 2001, Google brought Eric Schmidt on board as CEO and things only grew from there. (Rothaermel, F., & Zahrt, C., and King, D., 2015) “Google outgrew the garage and eventually moved to its current headquarters (a.k.a. 'The Googleplex') in Mountain View, California.“(Google, "How we started and where we are today"). This is where Google operations remain headquartered today. Google made its Initial Public Offering in 2004 on the NASDAQ exchange. “Google stock was initially offered to the public at $85 per share” (Rothaermel, F., & Zahrt, C., and King, D., 2015) and as of the market closing on October 20, 2017 the stock was trading at $988.20. (Yahoo!Finance, 2017). In 2006 the Oxford Dictionary added the word ‘Google’ as a verb (Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017). “In March 2015, Google hired Wall Street banker Ruth Porat to serve as CFO.”(Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017). 2015 would be a landmark year for Google with a huge change occurring later in the year; that fall “Google announced it would restructure and create a new holding company named Alphabet...The Google subsidiary included its Internet-related businesses, such as search, advertising, maps, YouTube, and Android phones. The non-Google subsidiaries included DeepMind, an artificial intelligence company; Nest, a smart home thermostat system; Fiber, an Internet service; Calico, a longevity research lab; X, the moonshot incubator; Sidewalk, an urban technology project; and two investment arms, GV and Google Capital.”(Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017) As previously discussed in the Efficiency and Effectiveness blog entry, Google’s “vision is to remain a place of incredible creativity and innovation that uses ... technical expertise to tackle big problems” (Alphabet Inc., 2017). As mentioned above Google’s mission has always been and remains to be “to organize the world’s information and make it universally accessible and useful”(Alphabet Inc., 2017).
Despite our rapid growth, we still cherish our roots as a startup and wherever possible empower employees to act on great ideas regardless of their role or function within the company. We strive to hire great employees, with backgrounds and perspectives as diverse as those of our global users. We work to provide an environment where these talented people can have fulfilling careers addressing some of the biggest challenges in technology and society.”(Alphabet, 2017) This statement from the most recent Annual Report shows both Google’s organizational structure and organizational culture. Google would classify as an organic design even though their size is immense. “An organic design means that the organization is much looser, free-flowing, and adaptive” (Daft, 2016). The blog Organizational Complexity further discusses structure, "Google's organizational configuration is that of a Matrix. This is when an organization is both functional and divisional. Organizational Theory & Design 12e states that matrix structure 'is a strong form of horizontal linkage. The unique characteristic of the matrix organization is that both product divisions and functional structures (horizontal and vertical) are implemented simultaneously' (Daft, 2016)" (Dewey, 2017). As previously discussed in the blog entry on Environmental Complexity, “Google has 'many competitors in different industries, including general purpose search engines and information services; vertical search engines and e-commerce websites; social networks; other forms of advertising and online advertising platforms and networks; companies that design, manufacture, and market consumer electronic products; providers of enterprise cloud services and digital video services; and digital assistant providers.' (Alphabet, 2017). The other stocks most watched according to Yahoo! Finance in addition to Google’s stock are Apple, Facebook, Amazon, Netflix, and Tesla. (Yahoo!Finance, 2017)”(Dewey, 2017). Google’s primary industry is categorized as the Technology Industry. "On February 1, 2016, Alphabet surpassed Apple to become the most valuable company on the planet" (Simmons, R. & Lobb, A., 2016) Problem StatementGoogle faces identity challenges as a global organization in staying true to its roots following a huge reorganization. How can they continue to grow and dominate and still be Google? How can they maintain their innovative culture and avoid an excess of bureaucracy?
“One engineer who left the company in 2012 said the former 'innovation factory' had become preoccupied with beating rival Facebook in advertising. 'The Google I was passionate about was a technology company that empowered its employees to innovate,' he wrote. 'The Google I left was an advertising company with a single, corporate-mandated focus.' Another cited 'creeping bureaucracy' as the reason she left Google. A third said she wanted to run her own show: 'Google is a great training ground for how to build an amazing culture and an amazing product. But Google is not that good at teaching you how to build a business.' An eight-year Google veteran felt too sheltered from failure at Google. 'Google teaches you so much, but it also buffers and protects you.' Some executives left to start their own firms, many of which Google funded through its venture capital department, Google Ventures (GV). One ex-Googler who went on to start a company commented, 'Google has always wanted to have a major impact on the world. Having us go to other companies is an extension of that.'”(Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017) AnalysisCritical EvaluationLooking at Google critically, growth is both a huge asset and a huge challenge. The major issue facing Google is with the exponential growth from a small search engine in a garage to a global dominating force, how does Google maintain its balance and innovative nature. The first step to solve this problem was taken in 2015 with the announcement of the Alphabet reorganization. Structurally Google is as discussed above structured in an organic matrix. The problem of too much bureaucracy and trying to maintain an innovative spirit is still present despite efforts to the opposite effect. The Alphabet reorganization was a positive move, it decentralized Google’s efforts even further. Alphabet Inc is a global corporation, the biggest international challenges that Google faces are from privacy laws and internet censorship. Net-neutrality is a huge issue for Google. Alphabet is very diverse in its technology efforts, they do a little of everything including some things that most people have not even dreamed up yet, their primary revenue source is advertising. This is discussed further in the SWOT blog. Aside from high employee turnover, all major stakeholders seem to be satisfied with Google. The author is a devout Google advocate and is one of Google’s top stakeholders as discussed above; the author is a Google user. Google has fantastic public relations and is outspoken politically. Google is a socially liberal organization that supports diversity, equality, and freedom of information. This only gains loyalty from their employees and consumer base. The only negative publicity is from socially conservative groups that disagree with those platforms. Google’s market share is outstanding, “In 2015, Google had 64% of the U.S. market share of search; no other competitor had even 20%” (Alcacer, J., & Sadun, R., & Hull, O., & Herman, K., 2017). Recommendations Recommendation one:Perhaps Alphabet Inc should take a page from Zappos CEO Tony Hsieh’s management manual and try bringing some holacracy into Google. Maybe not going fully holacratic, Google culture is Google culture not Zappos culture, but “The Zappos Insights website, clearly states why CEO Tony Hsieh decided to implement Holacracy at Zappos; to prevent creativity and innovation stagnation” (Dewey, 2017). This would certainly help to cut bureaucracy inside Google. GUIDELINES FOR IMPLICATIONS AND MANAGERIAL APPLICATIONThe recommendation to implement some holacracy into Google's organizational structure and environment is applicable to the bureaucracy issues that they are facing. Google is already operating as a decentralized organization and organically. As a theoretical manager of Google, implementing some holacracy would be achievable. It is unlikely that switching to a fully holacratic organization would work with Google's existing strong culture. However, there are enough organic similarities that lessons could be learned. The first thing that managers within Google would have to do to implement this recommendation would be to learn more about holacracy. Some workshops or retreats could prove beneficial. Holacracy.org offers many training seminars worldwide and online that managers could take advantage of. If a global giant like Google wanted to explore holacracy it is highly probably that personalized training sessions could occur at the Googleplex. To reiterate, the recommendation and implementation is not for a complete shift at this time, only to learn more and possibly implement some tools. Google-cracy could very well evolve out of this recommendation. Recommendation Two:Alphabet Inc. should strive to generate revenue through other enterprises besides advertising. Marketing and advertising supports all of Google's other ventures, but it is not very "Googley". It is counterintuitive to state that, as it is the primary revenue source, and a very substantial one. All the things that make Google what it is to the users are all of the amazing innovations that come out of the Googleplex. The Google Home and Nest sector is a good move in this direction. Digital life integration has great potential right now. GUIDELINES FOR IMPLICATIONS AND MANAGERIAL APPLICATIONThe recommendation to focus on revenue diversification is extremely applicable to Google's organization and environment, but it would require a shift. When all the money comes from one stream and it funds all these other cool, fun, things, it can be a challenge to try and make money in other ways, because that first stream flows so well. As a theoretical manager at Google implementation of this recommendation would be a high priority. Alphabet's reorganization began some of this, but the focus and effort is not as strong as it needs to be. As stated above the Google Home and Nest integrations are a good start, but Google needs more. Google has some of the brightest minds in the world on its payroll, Google needs to find the next big thing before it happens and monetarily capitalize on it. This is what research and development is for, but there needs to be a branch focused on the monetary capitalization. As a theoretical manager this would be primary focus. The feasibility of this recommendation is difficult to acertain, as Google does revolutionary, amazing things, but most of them don't earn a profit. That shift would be the most challenging to implement with the history and culture of Google. Recommendation Three:Google needs to reduce the quick employee turnover and encourage longevity. While spending several years at Google then leaving to be an entrepreneur makes sense, the employees that leave in the first three years are the talent that Google needs to retain. Google could implement some sort of longevity bonus program. Although there are not many perks left to offer. Guidelines for Implications and managerial applicationThe recommendation to reduce employee turnover by implementing a longevity bonus program could prove the most difficult as simply working for Google seems to be full of perks on its own. As a theoretical manager of this organization this approach would be feasible as long as the right program was developed. This recommendation poses no issue to the corporate culture. Alphabet Inc. could develop a cross-divisional task force focused on employee retention and use an entrepreneurial think tank model to come up with the best implementation. Once implemented the employee longevity bonus program should reduce the workforce turnover that Google is currently experiencing. ConclusionGoogle is one of the most revolutionary organizations out there. No organization is perfect, and improvements can always be made, however there is little doubt that Google will go down in history for everything that makes Google the global presence that it is. Google is in a time of change right now, and it is learning how to grow and still stay the same. That would be a challenge for any organization. The brilliance that comes out of Google daily is support that the problem of growing bureaucracy will be one that Google will overcome, likely before any of these recommendations could even reach the right audience. There is little doubt that Google is aware of their short falls, the issues they face are acknowledged in their Annual Report and in their actions. There is very likely already a secret task force within the Googleplex dedicated to solving these problems. Google will evolve, Google will persevere Google is the voice of this generation. BibliographyAlcacer, J., & Sadun, R., & Hull, O., & Herman, K. (2017). Alphabet Eyes New Frontiers HBS No. 9-717-418. Boston, MA: Harvard Business School Publishing.
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