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How Google Works

I've bought but yet to read Eric Schmidt's new book on How Google Works. In the meantime comes this handy slideshare summarising some of the key points. Lots to take from it, and lots of good validation for many of the things that I consult with companies about and have written about here over the past few years. I've paraphrased a transcript of what the deck says below (largely for my own benefit) but you can see the slides above.

Eric starts by talking about the new business rules that make a company successful in the 'internet century'. Technology, he says, is transforming virtually every business sector, with all the world's information and media online, and the supercomputer-in-your-pocket anyone/anytime/anywhere that is mobile. Barriers to entry in just about every sector are reducing, and the threat from new disruptive entrants into markets concurrently increasing. And it's all happening at an accelerating pace ('like Moore's Law has run amok').

The power shift from organisations to consumers, and the greater transparency in product and customer service (fuelled by technological empowerment) mean that customer expectations are dramatically increasing (Adam Morgan talked about this in a fascinating way at the APG's recent Big Thinking conference, pulling extracts from his new book The Pirate Inside).

Meanwhile, inside companies the power has shifted as well – individuals and small teams can have a massive impact. They can experiment, fail, try again, and more easily get their successes to a global market (I loved this point). The people that can have the biggest potential impact – so-called 'Smart Creatives' are the product folk who combine technical knowledge, business expertise and creativity ('when you put today's technology tools in their hands and give them lots of freedom, they can do amazing things, amazingly fast').

Yet most companies are run today to minimise risk, not maximise freedom and speed – information is hoarded, not shared, decision-making power lies in the hands of the few: 'Their design is a vestige of an era when failure was expensive, and deliberation was a virtue'. They are slow by design.

So the only way that businesses can consistently succeed is to attract smart creative employees and create an environment where they can thrive at scale. And the only way to do that is by having the right company culture. People need to care about where they work, so thinking about and documenting your purpose, the way you work and make decisions is important. And then live by them. Make them real in everything the company does. Hiring is one of the most important things a company does so everyone should invest time in it. The decision-making environment should empower by letting smart creatives know that they can make a difference (rather than killing their spirit). Then work in small teams, find ways to encourage serendipitous connection between them, and organise the company around the people whose impact is the greatest. 

And don't let formal business plans hamper the freedom of smart creatives: 'Don't base your future on a plan…instead base it on a strategic foundation…the plan is fluid, the foundation is stable'. Such a foundation has three main pillars: 

  • Create superior products based on unique technical insights
  • Optimise for growth, not revenue
  • Know the competition, don't follow it

Most companies, says Schmidt, fail to understand what a consensus-driven approach should really mean: 'It's not about everyone agreeing, it's about everyone being heard and then rallying around the best answer'. Communication is likewise something that most leaders think that they do well, but is also often executed poorly. It should default to open, and maximise the velocity and volume of information flow.

Innovation can't be owned or ordained, it needs to be allowed (personally I'd say enabled was a better word but there you go). So set attainable goals, fail well, 'lab-coats' not suits, prototypes not slides. But ideas can come from anywhere. Imagine the unimaginable (because unimaginable things are happening a lot):

'Opportunity is everywhere

Smart creatives are everywhere

Ambitious people who want to build a team of the latter to pursue the former are everywhere'

Good stuff.

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