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Google’s organizational structure and culture greatly foster innovation and creativity

Executive Summary:

To fathom the size, importance, and impact of Google is no easy task. This start-up search engine has made its way into our daily lives and even into our speech. Today, most people use the word “Google” as a verb meaning to search on the internet (the word has actually been incorporated into the Merriam Webster Collegiate Dictionary). As a matter of fact, Google represents the world’s largest Internet search engine. It provides its end-users with the most useful and relevant information from over eight billion web pages. It generates revenues by providing online advertising for businesses. In response to its competitors, Google has also launched an array of new products/services such as Gmail, Google Earth, Android...

The success of Google is not random. It is traced back to several factors that have been carefully manipulated and managed. Google’s organizational structure and culture greatly foster innovation and creativity. The latter have been crucial to the company’s success. They have allowed Google to constantly satisfy its end-users, and even to delight them at times. Just like any other business, Google has undergone many changes as a result of internal and external triggers. The company’s prompt adaptation and clever solutions have propelled it further ahead from its competition. Today, Google keeps on overcoming the many challenges it faces and continues to reign the vast search kingdom.

The Role of Creativity and Innovation at Google

Two of the most important prerequisites for the long-term success of a business are the concepts of creativity and innovation.   According to Wikipedia, creativity is defined as a mental process involving the discovery of new ideas or concepts – or new associations of the already existing ideas or concepts – fuelled by the process of either conscious or unconscious insight. True creativity makes the impossible possible. Henry Ford once said: "If I'd listened to customers, I'd have given them a faster horse," and the T-model would have never seen the light. According to Marissa Ann Mayer, vice-president for search products and user experience at Google, creativity can revolutionize a product, a business, the economy, and the world around us – just like Henry Ford’s creativity did. Innovation, on the other hand, can be defined in several manners. On the whole, innovation is the formation of a new idea, method or device.  As stated in BusinessWeek, innovation today is much more than novel products. It is also reinventing business processes and building totally new markets that meet customer needs. Businesses have to choose and implement the right ideas, while bringing them to the market in record time.  

One of the most creative and innovative businesses in the world today is Google. The company regularly ranks among the Top 2 most innovative companies in Business Week’s annual survey. It’s no surprise! Google is an exceptional business that manages its innovation in a very distinctive way. After numerous tries to structure their development process, Google has arrived at the 70-20-10 resource management model, pioneered in 2005 by Eric E. Schmidt, CEO of Google. This business model states that to maximize innovation in a company, employees should make use of their time in the following ratio: 70% of the time should be dedicated to core business tasks, 20% to projects related to the core business, and the remaining 10% to projects unrelated to the core business (Wikipedia.org). This model has greatly helped fuel Google’s creativity and innovation engine because, also according to Schmidt, the latter comes from unexpected places; so the key condition for innovation to occur is to simply listen to people who are given the time to get in touch with their creativity. Harvard Business Review blogger Teresa Amabile has said that, “without the creativity that produces new and valuable ideas, innovation—the successful implementation of new ideas—withers and dies.” Not only is Google totally aware of this, it acts upon it every day.

As a result, Google’s emphasis on creativity and innovation has allowed it to become the number one search engine in the world. These two concepts have given Google the ability to look for new ways to expand its offering which resulted in new programs like Gmail, Google earth; Google Maps, Froogle, Google blogs, Google videos, Desktop Search... to name a few. The cultivation of innovation and creativity has also resulted in new ways to increase revenues by coming up with inventive ways to charge for advertisements. These two concepts have also helped Google challenge the status quo, leverage the creativity of each employee, focus on talent - not process, and change the paradigm around information gathering. All of this innovation/creativity is backed up by results. In 2005, Google officially became the biggest media company in the world — valued at $80 billion — surpassing Time Warner at $78 billion. (Nussbaum).

Google’s Organizational Structure

Description:

Google’s organizational structure is very diffrent from most other corporations. In my opinion, it is best described as: dynamic, atypical, and bureaucracy-averse. The structure is not a typical formal one as is found in most large corporations. No one executive has absolute control at Google. In 2001, Eric E. Schmidt was hired as a CEO to provide experienced leadership. But his dynamic role, as he describes it, sounds more like a chief operating officer's than a CEO's. He says he handles "the day-to-day stuff," making sure the right people are talking and reaching out to partners (Elgin). Schmidt also hired a Human Resources manager. He also subdivided employees into teams based on product or function.

Furthermore, decisions at Google are a result of three-way negotiations between Schmidt and co-founders Larry Page and Sergey Brin. It's the founders who map out Google's trail, exercising veto power on strategy and technology moves. It is worth noting, though, that Google does, in fact, – just like any other large corporation – have a board of directors that ensures accountability, fairness, and transparency in its relationship with all its stakeholders.

In recent years, Google, who receives an average of a 1000 resumes per day, has hired hundreds of engineers and a great number of top-ranked PhDs. These engineers work in the same environment of "controlled chaos" that built the startup. They are all free to follow up pet projects. Google's managers hardly ever tell their engineers what projects to undertake. Instead, executives keep a "Top 100" priorities list (which today numbers more than 240 items), and engineers gravitate to issues that interest them, forming fluid working groups that can last weeks or months. Engineers are urged to spend about one day a week working on their own personal research projects, no matter how offbeat, in hopes of sparking the next big thing. (Elgin). "We're encouraging creativity and tolerating chaos," says Wayne Rosing, Google's vice-president for engineering. "We turn that dial all the way over to loud." Management at Google believes that if its employees operate without suffocating constraints and with very little bureaucracy this will encourage them to develop better ideas at a faster rate.

Its Impact On Creativity:

Executives at Google think that the company’s freewheeling management is an asset rather than a liability. According to Schmidt, Google's consensus-management structure, while maddening at times, is highly effective. It combines Page and Brin's technology expertise and his own operations experience. "We try to run as a group, because partnerships make better decisions," he says, adding, "It's very, very lonely if you're the only person with a very hard decision to make."

By giving employees the freedom to pursue new ideas, Google expects to come up with new products that keep its major competitors on their heels. "What we really talk about is how we can attract and develop this creative culture," says Schmidt. "Innovation comes from invention, which you cannot schedule."

Google’s organizational structure has allowed the concepts of innovation and creativity to become part of its DNA. According to Marissa Mayer, Google Vice President, all groups within the company aren't willing to accept that the only people who get to have fun and be innovative are the product managers and the engineers. It has created "innovation envy" throughout. So what happens is, the Human Relations department wants to be innovative. They want to build HR policies like no one's ever had before. Some of these people want to build facilities like no one's ever had before. The finance team wants to bring the company public in a way that no one ever has before ... (Mayer)

Google’s organizational structure has also increased the satisfaction of Google’s partners and customers. Whereas before, teams of continuously changing members took care of a single customer, today, each customer has one contact at Google. Issues get dealt with immediately and more professionally (Gitman and McDaniel).

As a result, Google’s organizational structure has helped create a productive environment that advocates generating innovative results that are in line with financial objectives and outcomes.

Google’s Organizational Culture

Description:

Google has grown dramatically since 1998 from two founders to more than 10,000 employees worldwide. In spite of that, it still maintained a small company feel. During lunch break, for example, almost everyone eats in the office café, sitting at whatever table has an opening and engaging in conversations with fellow Googlers from different teams. Because Google’s culture is highly committed to innovation, the company makes sure that everyone is comfortable sharing ideas and opinions with others. Every employee is a hands-on contributor, and everyone wears several hats. Each Googler is an equally important part of Google’s success, and no one hesitates to pose questions directly to Larry or Sergey in the weekly all-hands “TGIF” meetings – or even to spike a volleyball across the net at a corporate officer. (google.com)

Google’s diverse work force constitutes another major part of its culture. At Google, recruiters are aggressively inclusive in their hiring – favoring ability over experience. Google has offices around the world and dozens of languages are spoken by its staffers. The result is a culturally diverse team that reflects the global audience it serves. (google.com).

Google’s corporate headquarters, proudly nicknamed the Googleplex, greatly reflects its culture as well. Today it’s one of Google’s many offices worldwide. While its offices are not all the same, they all tend to share some important elements such as local spaces for self- expression; bicycles or scooters for efficient travel between meetings; dogs; lava lamps; massage chairs; large inflatable balls; huddle rooms; laptops everywhere; foosball; pool tables; volleyball courts; assorted video games; pianos; ping pong tables; and gyms that offer yoga and dance classes... to name a few.

How It Fosters Creativity/Innovation at the Workplace

Today, a few organizations give their employees a chance to do what they love in service of a meaningful mission. Alternatively, as it continues to grow, Google constantly looks for talents who share a commitment to creating search perfection and having a great time doing it (google.com). Its unique organizational culture greatly fosters creativity and innovation. Employees are given all the freedom to express their ideas and voice their concerns. As a result, creative and innovative thoughts are never suppressed, and almost always make it to a manager. This encourages Googlers not to simply think – but to rather think outside the box!

Research for the Harvard Business Review has shown that employees are most creative and innovative when they are on a mission, inherently motivated by a love for what they are doing. Due to its culture, employees at Google find immense interest, enjoyment, satisfaction, and challenge in "dreaming, proving and making things that had never been done before." (Anthony) For Googlers, indulging their passion is so exciting, and so much fun, that they work their "tails off"; while these days people are more likely to find work frustrating than fun.

Specific Corporate Values That Encourage Creativity/Innovation

Google’s "Ten Things" constitute a significant part of its philosophy and organizational culture. These core principles summarize the roles, values, and assumptions that both managers and employees should abide by and remember every single day. In other words, these ten principles highlight the specific corporate values that encourage creativity and innovation at Google.

Focus on the user and all else will follow: Google believes that if it takes good care of its end-users, provides them with solutions to their needs, and safeguard their best interest, customer satisfaction and loyalty in addition to market share and profits will definitely follow.

It’s best to do one thing really, really well: Although Google has ventured into other new products to keep up with its competition, it still has its core competency – search – at heart.

Fast is better than slow: Google takes pride in the fact that its average response time on a search result is less than a fraction of a second. It highly respects the value of the time of its end-users and employees.

Democracy on the web works: Google feeds on the democracy of millions of individuals who rate sites across the web by “voting”. Freedom of expression is a value that Google treasures both within the company and across its business operations.

You don’t need to be at your desk to need an answer: Google is totally aware of the mobile nature of its end-users. As a result, it is pioneering new technologies (such as Android) to reach its consumers wherever they are.

You can make money without doing evil: Google believes in conducting its business ethically. It serves all its clients equally and will never manipulate rankings or data to make more money. To Google, customer trust is worth much more than any money generated on a specific search.

There’s always more information out there: Google is constantly undergoing creative and innovative efforts to make sure that MORE of the world’s information is delivered to people who are seeking answers.

The need for information crosses all borders: Google believes that ALL its end-users, no matter where they are, are entitled to its services. As a result it has offices worldwide and its sites are available in many different languages.

You can be serious without a suit: In spite of its relatively “laid-back” atmosphere, work at Google is very challenging. When new ideas are proposed, they are traded, tested and implemented with great speed.

Great just isn’t good enough: This last principle reflects Google’s ambition. No one at Google simply settles with the solution at hand. Everyone believes in “reaching for the stars” and nothing less.

These “10 things” were written by Google management several years ago. They are occasionally revisited to check if they are still in line with the company’s culture and values. (google.com)

Change at Google (1998-2010)

External and Internal Triggers of Change

If there is anything that is constant and unvarying, it is change itself. Change is bound to happen sooner or later, and the organizations that don’t adapt or keep up with it are doomed to become unstable, vulnerable, and troubled. Since its inception in 1998, winds of change have been hitting Google full force from every direction. Consequently, it was of great importance for the company to remain alert and ready to respond to all the changes in its micro and macro environments.

Google has undergone change caused by various external and internal triggers. The external driving forces that caused change in Google are: intensified competition, transformations in its end-user behavior, economic factors, political and legal influences, and globalization. The internal driving forces, on the other hand, are: modifications in Google’s organizational structure and updates in its technological capacity. Examples on both triggers are presented in the following section.

Examples

External driving forces have caused Google to constantly update its offerings. Since Google's 1998 debut, its search results page has been through seven subtle redesigns. The most recent, in May 2007, saw the addition of images and video in what was dubbed "universal" search. On May 5, Google unveiled its eighth iteration, which Marissa Mayer, vice-president of search products and user experience, calls "particularly large and particularly important". "The Web is always changing, evolving, and innovating," says Mayer. "It's important even for sites that people use every day and are very familiar with, like Google, to update their look." (Walters)

Furthermore, pressures from Microsoft’s Bing, Yahoo, and social networking sites such as Facebook and Twitter have caused Google to update its search engine and launch its eighth version (V8) that indexes the web in real time as opposed to conducting search based on outdated relevance rankings in addition to numerous additions mentioned below.

As William Knudsen once said, “In business, the competition will bite you if you keep running; if you stand still, they will swallow you!” Google totally adopts this philosophy and has launched more than 20 new tools such as: Gmail, SideWiki, FastFlip, Google Listen, Chrome OS, Google Wave, Google News Timeline, Wonder Wheel, Google Voice, Google Moderator, Google Audio Indexing, Knol, Google Health, GOOG-411, SketchUp, Picasa, Patent Search, Google Code Search, Google Mars, Google Buzz, Android, …(The latter has been in response to the increasingly mobile nature of Google’s end-users).

Google’s rapid growth and its dominance of the market has resulted in its crticism regarding issues such as monopoly, privacy, censorship, storage of cookies, page rank manipulations, and copyright. All these issues have caused Google to impliment changes in response to these accusations.

Last but not least, globalization has driven Google out of the U.S. and into many different countries around the globe. As a result it now handles more than a million servers in data centers around the world, it has many international offices, and it provides its services in many different languages through its international webistes.

Google has undergone internal changes as well. These changes could be summarized by modifications in its organizational structure and updates in its technological capacity. Google’s organizational structure has undergone many changes in the past 12 years. Schmidt was hired as CEO, Page who had been CEO stepped down to president of products, Brin stepped down from chairman to president for technology, a board of directors was assigned, employees were divided into functional groups, many top executives (such as Benjamin Ling, Sheryl Sandburg, Ash ElDifrawi...) left the company in 2007 and early 2008… all of which triggered changes within Google. Furthermore, Google has also increased its techological capacity by acquiring new databases worldwide which allowed it to impliment its new products.

The Challenges Google Faces

In spite of its ground-breaking success, Google faces many challenges today. Primarily, due to its rapid growth, problems such as harvesting all innovative ideas from its employees have risen. "We were concerned that some of the biggest ideas were getting squashed," said Google CEO Schmidt in an interview. Up until recently, Google has lacked a formal process for top executives to review innovative propositions. At times, suggested ideas have faded away or even no longer existed when the employees left the company (Another challenge Google is facing is losing its best people and talents to competition). Furthermore, due to its global expansion, communication- especially of new ideas - has become increasingly difficult among 50+ locations. As a result, Google has recently started internal "innovation reviews" meetings where executives present new ideas from their departments to CEO Schmidt and co-founders Page and Brin. The meetings are designed to "force management to focus" on promising ideas at an early stage, Mr. Schmidt said. (Vascellaro).

Secondly, Google's spectacular success has lured fierce competitors such as Microsoft and Yahoo! into the search kingdom. Those companies view search as the command center of the Internet, and they plan to wrestle Google for it. Yahoo, for example, has pioneered customized search. So, instead of today's one-size-fits-all searches, queries are tailored for an individual's tastes, interests, even location; and Advertisers are ready to pay generously to reach this type of targeted audience (Elgin). Microsoft, on the other hand, is working hard to embed search capabilities into nearly every aspect of future versions of Windows without the need to pay a visit to a search site. If Microsoft makes good on this sweeping expansion, it could turn Googling into a quaint ramble down memory lane. (Elgin)

Thirdly, Google’s giant rivals are not only knocking off its search engine, they're trying to surpass it by offering other products and services. Social networking sites, that have already taken a lot of the internet traffic, like Facebook, have introduced an e-mail service for its users thus increasing its competition with Google, Yahoo!, and Microsoft. (MacMillan) In response, Google has launched GoogleBuzz which is supposed to compete with Facebook and Twitter. Further, analysts say that Google could still improve on at least one area of social media where Facebook and Twitter have lagged: advertising. While Facebook was expected to make more than $500 million in revenue from advertising in 2009, marketers have complained that ads on the site have lower performance than on other types of sites, like e-commerce stores or search engines. Twitter has only introduced very minimal advertising to its site. (MacMillan). With such competitive pressure, Google's management may be stretched to the breaking point. Google executives, however, are betting their technological expertise will help them make up the difference.

Fourthly, Google's biggest threat may not be Microsoft or Yahoo or Facebook or Twitter. In fact, one of the most threatening challenges facing Google today is likely in your purse or pocket. It's your cell phone! As more end-users use their mobile phones to access the Internet, Google and its fellow online advertisers will have less space, or what's called ad inventory, to place marketing messages for customers. Google makes money selling ad inventory. And its ad inventory is diminished on a cell phone (Kunz). It was Apple that started the trend by launching the iPhone. The computer maker wasn't the first to put the Web on phones, but for many consumers, the iPhone made the experience richer. As a result, Google will try to expand ad "shelf space" by redesigning cell-phone software such as Android. A few wondered why Google would get into the cell-phone interface business. But now it's clear; Web screens will soon be two inches wide, and Google wants a say in what fits on that tiny screen.

Last but not least, Google’s widening empire worldwide has caused it to become more vulnerable to global competition and legal battles. Its global expansion definitely came at a cost. Google may be the number one search engine in many countries such as Australia and India, but it definitely ranks 2nd to Baidu in China (Rayport). Further, Google has been drawn into legal battles with many different countries and governments reagrding issues of security, privacy, copyright, censorship… (MacMillan).

In the end, in spite of the many challenges that Google faces everyday from within and without its company, it all comes down to whether it could gather as much talent as it could without falling prey to what's known as Big Company disease, a condition that can leave a once-fleet-footed business complacent, overstaffed, and bureaucratic (Hof)

Conclusion

In conclusion, today, Google still provides the best search experience on the web. While several competitors are hot on its trail, they offer better services only in a few areas. According to many experts, Google was, and still is today, the "Wal-Mart" of search. However, should its core competence slow down or fall behind at any point, the door will be wide open for new technologies that are ready to claim the throne and devour all associated revenues. As a result, to safeguard its competitive advantage, Google has to continue to invest in search and search quality.

No one can deny Google’s presence in the physical world or on the virtual internet. This start-up has gone a very long way since its inception in a Stanford dorm room. Google’s organizational structure and culture highly foster creativity and innovation – two building blocks for the long-term success of a business. In addition, a major key to Google’s success today is its adaptation to its dynamic external environment. Today, Google is successfully sitting up high on a hill watching on others from above. In light of the ever-so changing world, though, the ultimate challenge for Google remains in making sure it’s not on top of the wrong hill!

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