How Google Works

TOP 20 INSIGHTS

1. With vast information and infinite consumer choices, selling a mediocre product has become nearly impossible. Product excellence is the only pathway to success. As Jeff Bezos says, “In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.”
2. Traditional command-and-control management structures were designed for the 20th century when information was scarce and mistakes were costly. At a time of fast-paced acceleration, however, this architecture actually works against businesses. The primary focus of businesses today must be accelerating the speed and quality of product development.
3. Business plans can’t help you achieve continuous product excellence. Companies must attract top-notch talent and give them the freedom to create. This is the era of self-driven Smart Creatives who have technical knowledge, creativity, business savviness, and a hands-on approach. Management has to create an environment where they want to work, but not to tell them how to think.
4. With the democratization of information, computing, connectivity, and manufacturing, global scale is within everyone’s reach. To stand out in the Internet Century, leaders have to create and grow platforms that connect users and create multi-sided markets.
5. While conventional management thinking values competitive advantage, the Internet Century rewards open sharing of intellectual property, using open standards, and giving customers the freedom to exit. Openness can be a powerful way to dislodge entrenched incumbents as it drives innovation and reduces the costs of complementary products.
6. Hire for intelligence and learnability rather than specialized knowledge. In a world of rapid change, today’s skills will become obsolete tomorrow. Once you hire, consistently create new opportunities for learning new skills, even those not directly related to work. Those who don’t respond well to this are probably not good hires.
7. Recruiters merely manage the process and can therefore be tempted to hire average talent just to meet targets. It is then the company that bears the consequences. Finding talents should be everyone’s job and one way to encourage this is to make recruitment part of the performance appraisals.
8. Google’s internal research found that after four interviews, the cost of an additional interview outweighs the extra value created. Limit interviews to 30 minutes to enhance focus. No-hire calls can be easily made within that duration. If a candidate is good, you can always schedule another interview.
9. Hiring decisions must be based on data and left to committees, not managers. The manager only has veto power. Five-member committees with diversity across seniority, skills, strengths, and background is a suggested composition. Similarly, promotion decisions are decided by committees, while the manager can only make recommendations.
10. The right decision is the best one, not the lowest common denominator that everyone agrees with. Encourage Smart Creatives to voice strong opinions through solution-oriented open debates.
11. CEO’s should make very few decisions. These should center on core issues like product launches, acquisitions, and public policy issues. On other matters allow leaders to arrive at decisions and intervene only when it’s a very poor call. For critical issues, leaders can use their convening power to hold regular meetings, even daily ones if necessary.
12. Spend 80% of time on the products that generate 80% of the revenue. While it’s tempting to focus on innovations, an organization can take a fatal hit if the core business is neglected.
13. The business should always outrun the processes. So when things look smooth and organized, it means that processes have overtaken the business. Since the steady state of the Internet Century is chaos, leaders must understand their employees and earn their trust.
14. To create platforms, companies will have to work with partners who may be competing with them in certain markets. These relationships should be managed pragmatically by clearly acknowledging differences. For key partnerships, create roles that can keep both the external partner satisfied and your company interests furthered.
15. 500 incremental improvements to Google search in a year can be just as radical as a team that works on a self-driving car. This inclusive outlook on innovation gives the entire organization – not just the R&D department – the possibility to innovate.
16. Google uses three criteria to decide whether to pursue an idea or not. First, it must address a challenge affecting hundreds of millions. Second, it must be radically different from existing market solutions. Finally, the technologies required have to be achievable in the near future.
17. Innovation resists traditional management as it cannot be owned, mandated, or scheduled. It has to evolve organically. The company should therefore create a favorable environment that encourages risk-taking innovators and also the risk-averse employees to participate.
18. Allocate 70% of resources to the core business, 20% to emerging products, and 10% to completely new initiatives. This ratio retains focus on the core business while protecting promising new initiatives from budget cuts. Overinvesting can be problematic as million-dollar bets are harder to kill than smaller initiatives.
19. The job of management is not to reduce risks or prevent failures, but to create an environment resilient enough to take these risks and handle the missteps.
20. Studies show that extrinsic rewards, such as extra money, do not improve creativity. In fact, they inhibit it by making people see an inherently rewarding endeavor as a money-earning chore. This is why that while Google engineers can spend 20% of their time working on anything they choose, they’re not explicitly rewarded when these projects succeed.