Strategic Management Overview: The article reviewed here, ‘Google CEO Offers Management Strategies’ by Mylene Mangalindan, provides a brief look at the structure of Google [www.Google.com]. The first portion of the article is a description about how Google got started, who its owners are, and how big Google is. The rest of the article focuses on interviewing, Eric Schmidt, the CEO of Google. Mr. Schmidt is asked major questions that help one to understand Google’s strategic approach to future business. By the end of the article, one has the notion that Google is a company that is constantly aware of its positions in a fast moving business world. It appears that the management believes in making strategic moves to be in the best position for long-term benefits.
According to the article reviewed, Google’s vision has been sketched out. This may be asserted because of some of the elements that the CEO of Google, Mr. Schmidt, highlighted. To go back to Mr. Schmidt’s beginning with Google, he first of all said that there "wasn’t much of an infrastructure". With only three basic individuals in the decision-making process, Mr. Schmidt asserts, "two people have to agree". After this, the third one has to be convinced or the third one may try and work his thoughts against the two that agree. Aside from decision-making that decides a number of things, Google’s vision is to be prepared. This is why they consider the future and also consider reasons for an IPO, such as "either liquidity, venture returns, the ability to do acquisitions". However, Mr. Schmidt says that Google does not have any such "pressure", and so, they think about what they can do to finance newer projects of Google with lower risk.
According to Mr. Schmidt, Google had one objective from day one, which was to "build a culture". Indeed, Google has achieved this over its period of existence. However, the job is not done yet, as there is a more that this company can do. Also, with increasing competition, due to Google’s success "drawing attention", there is need to act carefully. This explains why Google’s "strategic understanding" … "changes every nine months". It is this strategy that helps to include more people in its culture.
Google’s strategy is one that is kept as simple as possible. This avoids intricacies that are more time consuming. The decision-making strategy involves the basic three individuals. the CEO, Mr. Schmidt, and the two founders, Larry or Sergey. They all have to agree on actions to be taken. The founders "lead the employee meetings" with Mr. Schmidt’s assistance. Mr. Schmidt leads "the management meetings". For a wealthy company, this is a simple strategy for management. In addition to this, the more complex and dynamic strategy includes Google’s "strategic understanding" that "changes every nine months".
Mr. Schmidt and the founders act together. In "most of the issues", they "operate together". This shows that there is a coordinated effort in what they do. They "do the product reviews together". they "do business reviews together". they "do the deal reviews together". Finally, they also act together, and this is observed through the shared effort when all three key individuals handle employee meetings.
With as much information given in the article reviewed, it is not possible to present a complete evaluation. However, with Google’s revenue earned, their strict view of mining information, and their preparedness, one would expect a positive result. This result would be in the form of more people worldwide being included in Google’s developments.
Mangalindan, M. (2004). Google CEO Offers Management Strategies. Wall Street Journal. Available at http://www.startupjournal.com/howto/management/20040405-mangalindan.html
Google CEO Offers
Management Strategies (04/05/2004)
Staff Reporter of The Wall Street Journal.
From The Wall Street Journal Online
Technology start-ups typically call in "adult supervision" when they emerge from the two-guys-in-a-garage stage and attract venture capital. Google Inc. is no different.
The company was founded in 1998 by Larry Page and Sergey Brin, Stanford graduate students with a better way to search through the Internet’s ever-expanding material. Three years later, Silicon Valley veteran Eric Schmidt joined as chairman and chief executive to bring some structure to the unorthodox — some might say anarchic — start-up.
Mr. Schmidt, 48, says he was given one instruction by Google’s board: "’Don’t screw this up now, Eric. This is a really, really good starting point. … So it doesn’t require some gross change.’" Google’s venture backers wanted the company to grow without introducing cumbersome bureaucracy.
Grow it has. Google (www.google.com) is the preferred site for Internet searches, and has built a thriving business placing ads near its search results. More recently, Google has branched into shopping, news and a "community" site that links users to friends. Mr. Schmidt has added process and rigor to the Mountain View, Calif., company, introducing enhanced financial systems and taming Google’s famously unwieldy hiring process. The company has been profitable since 2001 and revenue may have approached $1 billion last year. (It won’t disclose the figure.) Its success is drawing attention, and countermoves, from a growing list of rivals, including Microsoft Corp., Amazon.com Inc., and Yahoo Inc.
Now, Mr. Schmidt is leading Google through another tricky phase: toward an anticipated initial public stock offering that could raise $2 billion. He recently discussed the challenges of steering a successful, small company with such a unique culture. Excerpts:
WSJ: What was the management structure like when you arrived at Google
Mr. Schmidt: There wasn’t much of an infrastructure at all when I showed up. There was a staff meeting on Wednesday for two hours, which was fascinating because it would wander from interesting topic to interesting topic. But somehow out of that, decisions were made.
WSJ: So how has that changed
Mr. Schmidt: Whenever we have something important, two people have to agree. I really, really like this approach. It typically means that you get a kind of check and balance in the decision-making process. Now, often the two are the founders. When it’s managerial things, things Larry and Sergey aren’t as focused on, we try to get two of the vice presidents to agree. The other thing that happens is decisions are made in front of people. We don’t like people to go off and make a decision. We try to make decisions in as large a group as possible by as few people as possible.
You do not want to take big-company structures and apply them to small companies. You want to evolve small-company structures on a need-appropriate basis.
WSJ: The founders are famous for saying ‘do no evil.’ What does it mean and how does it affect the company
Mr. Schimdt: There’s enormous opportunity to mine the information we have for financial gain and those would be examples of evil.
I thought they weren’t really serious about it . . . [but] as I was learning the business, someone made a proposal that involved using some of the advertising information in some way that was iffy and Larry or Sergey [got] very rough: ‘No, that’s completely counter to our principles, there’s no way to do this, it’s completely unacceptable.’
This had been a perfectly calm meeting. I go, ‘Wow.’ And this is one of those changes which would’ve magnified revenue. I thought, ‘These guys are really serious.’
WSJ: How do you choose people to work at your company
Mr. Schmidt: The principle that Google operates under is to hire very, very strong-willed, sort of driven persons. We have relatively little management and the management is very, very thoroughly vetted. They both have the intelligence and the history of working in high-tech and they want to work, they want to change the world.
We always talk at Google about how brilliant the engineering teams are, which is indeed true. It’s just as important to have corresponding managers or leaders who have the strategic understanding of what we’re trying to do because it changes every nine months.
When we recruit people, we make the managers write an essay on how they’re going to add value to Google. And it’s quite interesting. It’s very hard to write an essay as a candidate for a job that you haven’t been offered yet. And we actually read them! Just like if you’re applying to a university. And so the programmers do programmer tests. the marketing people do marketing tests. the salespeople have to do a sales pitch to the salespeople! Can you imagine!
WSJ: As the CEO, do you make decisions in consultation with the two founders
Mr. Schmidt: We run as a triumvirate. … The way it really works is that if it’s really important, (one of us) drives the three of us to agree. It has been a great personal partnership. When I was recruited, the goal was to build a culture that could scale from this extraordinary thing that Larry and Sergey had built. And so it required a different management function, a leadership approach.
WSJ: Has there been an example where you’ve had to override the founders
Mr. Schmidt: The word ‘override’ is the wrong word. We, in fact, drive to consensus. Now, if two people agree, then the third person is yelled at for a while and vice-versa. And by the way, it rotates around. Think about partnerships — a three-person partnership is just more complicated than a two-person partnership. But the fact of the matter is that there are many things that I told Larry and Sergey I just want them to own.
Most of the issues, we operate together. So we do the product reviews together. we do business reviews together. we do the deal reviews together. They typically lead the employee meetings, with me assisting. I lead the management meetings.
WSJ: But you’re the CEO. Doesn’t the buck stop with you
Mr. Schmidt: It does because the CEO has legal responsibilities to the board and we will make sure that I meet those responsibilities. You’re talking about edge cases that just don’t come up.
WSJ: You’ve been quoted saying that an IPO would simply be a financing event. If you’re profitable, why do you need a financing event
Mr. Schmidt: What I always say is that we are fortunate at Google that our business generates enough cash that we have not had the kind of pressure to raise money that many other companies have legitimately had. And the board had the wisdom to not do anything prematurely.
There are always other reasons to go public — either liquidity, venture returns, the ability to do acquisitions. These are well-known. But one that typically forces it is not present at Google and we don’t foresee it to be present. So we’ve had the luxury of thinking about this question and we continue to think about it.
We’ve told the company that we will run the company the same way, whether it’s a private or public company.
WSJ: Has the preparation for a possible IPO gotten in the way of running the business
Mr. Schmidt: The IPO discussion has not materially changed the way we do anything except that we’re more careful within public settings. I think inside the bigger change has been that we now have hundreds of engineers and so it’s not quite as informal a communication style. But that’s not related to this IPO question. At the board meetings, in the management meetings, we don’t talk about the elephant in the room. I know this is hard to imagine.