Google—The 21st Century Company
My Babson colleague Bala Iyer and I have written an article on Google in the current issue of Harvard Business Review. While there is no shortage of words written about GOOG, I hope this piece says some unique things. To me, what is truly distinctive about Google is that it is the prototypical 21st century organization. It’s driven by data and fueled by knowledge work.
I don’t have a position on what Google’s stock price should be (I confess to thinking it was
expensive at the $85 IPO price, and it seems to be headed back in that direction) or whether the company will succeed in coming up with another big hit product to supplement search and advertising. What impresses me is Google’s approach to management. If you set out to design the ideal organization for doing knowledge work in the new millennium, you’d probably come up with something like Google.
If your ideal organization cared about getting new ideas and products from your employees, you’d strongly encourage your people to spend a specified chunk of time on innovation. You’d ensure that there were few barriers to getting innovation into the marketplace, and you would let customers decide what innovations are truly useful to them. If you cared about productivity, you’d provide a rich array of (mostly free) services to your knowledge workers so they could concentrate on their work. One of them, for example, would be providing interesting and high-quality food in the cafeteria, so they wouldn’t be distracted by looking for restaurant food. You’d make heavy use of analytical decision-making, and take advantage of the vast amount of data at your disposal. You’d hire the best quality people in the first place, and you’d go to considerable effort to determine analytically what “best quality” means. If you wanted to get and keep those people, you’d provide a very stimulating intellectual environment at work, and you’d make the workplace fun. You’d think carefully about both the technology environment for your people, but also their physical environment—because the physical workplace still matters. Since your people in this ideal organization are smart and connected, you’d ask them to participate in prediction markets and online suggestion programs.
Google, as you may have guessed, does all these things. Of course, it’s not perfect. The company only allows technical and managerial employees to devote specified time to innovation, so it’s not likely to come up with lots of breakthroughs in nontechnical business processes. And Google hasn’t figured out how to keep its best people as it grows into a large organization; some prominent executives, for example, have recently departed for Facebook and elsewhere.
The world would be a better place if Google can accomplish its goal of organizing all the world’s information. I’m not holding my breath until that happens, but I am happy that Google is trying. I can’t think of another organization that is more likely to eventually achieve that distant goal.
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I don’t have a position on what Google’s stock price should be (I confess to thinking it was
If your ideal organization cared about getting new ideas and products from your employees, you’d strongly encourage your people to spend a specified chunk of time on innovation. You’d ensure that there were few barriers to getting innovation into the marketplace, and you would let customers decide what innovations are truly useful to them. If you cared about productivity, you’d provide a rich array of (mostly free) services to your knowledge workers so they could concentrate on their work. One of them, for example, would be providing interesting and high-quality food in the cafeteria, so they wouldn’t be distracted by looking for restaurant food. You’d make heavy use of analytical decision-making, and take advantage of the vast amount of data at your disposal. You’d hire the best quality people in the first place, and you’d go to considerable effort to determine analytically what “best quality” means. If you wanted to get and keep those people, you’d provide a very stimulating intellectual environment at work, and you’d make the workplace fun. You’d think carefully about both the technology environment for your people, but also their physical environment—because the physical workplace still matters. Since your people in this ideal organization are smart and connected, you’d ask them to participate in prediction markets and online suggestion programs.
Google, as you may have guessed, does all these things. Of course, it’s not perfect. The company only allows technical and managerial employees to devote specified time to innovation, so it’s not likely to come up with lots of breakthroughs in nontechnical business processes. And Google hasn’t figured out how to keep its best people as it grows into a large organization; some prominent executives, for example, have recently departed for Facebook and elsewhere.
The world would be a better place if Google can accomplish its goal of organizing all the world’s information. I’m not holding my breath until that happens, but I am happy that Google is trying. I can’t think of another organization that is more likely to eventually achieve that distant goal.
Sign up for the Harvard Business Weekly Hotlist, a new weekly email roundup featuring the top highlights from HarvardBusinessPublishing.org.
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Tom Davenport holds the President’s Chair in Information Technology and Management at Babson College, where he also leads the 
Comments
About Google there are lots of things i find very interesting there ability to keep pursuing different goals at the same time with a big picture always in mind. The reason i say that is because they have interest from environment( Go Green!!!) to high end technology. The way i think they go about doing this not considering the traditional business model which were used to run organization.
I believe this would be a great learning not only for organization but also for schools to constantly evolve.
Thanks
Vikram
- Posted by Vikram
April 6, 2008 12:41 PM
Most folks aren't innovators, but I think that they can shown how to become such. To facilitate that, I suggest that in addition to providing/insisting on a chunk of time to be spent on innovation, you'd provide training and examples of such innovation, couched in terms and references that made sense to your target audience. Think of it as Junior Achievement for the working set.
- Posted by bill reith
April 6, 2008 4:39 PM
I agree with you that Google is years ahead of its competition. But one think they couldn't do for years (after cool plain text google site) out is bring out a radically different user experience.
For an example, some thing revolutionary with semantic web concepts will eb very promising. I know they try hard on this for quite a some time, but delay might open an avenue for new a startup to take over the search back from the giant.
- Posted by Hasith
April 7, 2008 1:06 PM
Hi All:
Does Google conduct emoployee engagement surveys? If so, how does Google compare to national norms? Moreover, how do the various strata within Google rank on these surveys? What about 360-degree data on leaders? Are they hiring managers with the right stuff, and/or training them to do a good job of managing? It does seem like a happy, productive place. I just wonder about the data to back up the anecdotes. Please advise.
Thanks.
Rob
- Posted by Rob Pernick
April 8, 2008 9:37 PM
Rob,
Interesting question. I would think Google employees (and many others from similarly run organizations) would respond unsatisfactorily to your inquiries. I would think they would say "The proof is in the results of our stock price, continual increase of our workforce, and our culture." What good are employee surveys and 360-degree data on leaders when the stock of a company is not going up and employees are afraid to lose their jobs?
Google is pioneering an agile approach to maturing products iteratively, creating compelling easy to use services, all the while doing almost no traditional brand marketing. If you meet people that work there, they'd probably say they would not want to work anywhere else.
And if you ask them to take an employee survey, they'd probably look at you and ask why they would do such a thing like that. Would it be a good use of their time?
And, many people can game survey results anyways -- it's really hard to adequately gauge good leadership, statistically, especially in a world that is always changing.
- Posted by Alex Sirota
April 29, 2008 12:25 PM
I tend to agree so much that Google is a pioneer in how companies should be treating its people.. Whether its good food in its cafeteria, or variety of drinks instead of one coffee machine or a massage chair to relax between a stressful day, they are different in what they give to their employees, and continue to be on the dream employer list for people like me!
More companies should follow given that talent market in shrinking each day!
Surbhi
- Posted by Surbhi
April 29, 2008 12:52 PM
Google's achievements are indeed outstanding. However, I believe that our sympathy should not overshadow a potential danger for free market economy. Isn't there a risk that they might become a sort of unstoppable behemoth, an unbeatable monopoly?
- Posted by Manuel D Cruz
April 29, 2008 6:24 PM
I beg to defer on Alex Sirota's statement about employee surveys and 360 degree evaluation of leaders. I believe if the survey questions were constructed in a fair format to unveil true information and the results were analysed and announced without any prejudice, we could view the "true picture" about the company's culture and environment. If Google was the ideal and perfect organisation, why then is there an exodus of talented staff to other organisations ? The truth is that there is no perfect or ideal workplace, there are the plus and negatives in every organisation. There is more to than just providing good food or coffee in the cafeteria. I believe staff are looking for new challenges in which they could demonstrate and maximise their true potential. Stock price of a company may not trully reflect the performance of that company, it could be manupilated by other factors ; and it is critical to understand why investors perceive it in a different light. Innovative and creative organisations like Google cannot be complacent to think they are way ahead of the competition in the market. In today's every and rapidly changing world of business and technology, the main question is whether they posses a game plan to remain ahead of its competitors and whether they would be able to re-invent themselves (like Madonna in the music industry)and capture and monopolize that niche business. It boils down to competent leadership and the ability to inspire their team to remain in pole position.
- Posted by Vincent D'cruz
April 29, 2008 6:52 PM
NO doubt, Google is best innovative company.
In my opinion, It is best and successful company just because it allows to their assets (engineers) to think freely and not worry about regular activities which hinders thinking on daily basis. So the baseline is - Free mind, let it flow anywhere, catch their passion ~
If this model emulated and compared to a child, we get lots of innovation in kids than adults.
Let's see who can beat this monopoly ..
- Posted by Kadadi
April 30, 2008 10:08 PM