afr.comWhy Google ditched the MBA playbook

In a new book, How Google Works, two of the company’s architects have analysed what they think worked and why. Photo: Tamara Voninski

As a service, Google has become indispensable to people’s interactions online. As a business worth $400 billion after 16 years, its success has been breathtaking. Yet in terms of management, it has set up radically different ways of organising itself from those of traditional businesses. Few people have focused on this.

Now two of Google’s architects have analysed what they think worked and why. Eric Schmidt, the current chairman and former chief executive (and also a board director of The Economist Group), and Jonathan Rosenberg, a former senior manager, decrypt the firm’s methods for other business leaders to learn from.

Most important is thinking extremely big – the “moonshot”, as it is called in Silicon Valley.

Google’s leaders often have to wrest employees away from seeking a 10 per cent improvement and towards finding one that is “10X” (that is, ten times better) – something that requires them to do things in an entirely new way, not just optimise what already exists. Most 10X attempts will fail, but that is accepted.

The second insight of the Google method is to “fail fast”. That way, people can learn from failure and move on, perhaps turning some aspect of the setback into the seedling of a new success. In this respect, “learning” trumps “knowing”, since nobody can foresee the future. “Iteration is the most important part of the strategy,” the authors advise.

The third element is the primacy of data over experience, intuition or hierarchy in the making of decisions. Other books have explored Google’s data fetish, for everything from hiring to choosing the shade of blue in its toolbar, but they have only scratched the surface. Sadly, How Google Works also treats this topic superficially. And it passes too fast over the way employees measure their output through a system called OKRs (for “objectives and key results”, adapted from Intel, a chipmaker).

The core of Google’s method is the empowering of employees. Bosses at all firms talk of this, but the search giant takes it to heart. It has devised systems to enable good ideas from any quarter to get an airing. Many of Google’s biggest products and features (like Gmail) have emerged from this, and also from a policy that lets staff work on pet projects for 20 per cent of their time.

Such a culture places huge emphasis on the quality of employees. Among the authors’ best pieces of advice is that companies should ape academe and form hiring committees to vet candidates and make offers. This helps eliminate the biases of line-managers and encourages the staff to think as a team; new hires owe their allegiance to their peers, not only their supervisors. Unlike firms in most other industries, Google has to enfranchise its employees: if they feel stymied, they will simply take their creativity and ambition elsewhere.

… reprinted from The Economist

The Australian Financial Review



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3 thoughts on “Why Google ditched the MBA playbook

  1. If Google can do this with such a complex organization asa $ 400 company surely we can apply this to our own lives and make them x10 better