How Google Works is a must-read for any tech entrepreneur

Have Eric Schmidt and Jonathan Rosenberg fallen for their own hype, wonders Rob Goffee.

by Rob Goffee
Last Updated: 04 Dec 2015

Google grew out of a Stanford University research project in 1996, was incorporated in 1998 and managed an IPO in 2004. Today, it is a $50bn company with more than 45,000 employees in 45 countries. It has come a very long way in a short time, diversifying from its internet search origins into video and digital marketing, and is now promising cars that will drive themselves.

The Oxford English Dictionary added Google as a word in 2006. Business school professors often use it as a paradigm for the new world corporation. Arguably, it is the most powerful company on the planet, and it has changed the world.

Inevitably, it is rarely out of the spotlight. But the news is not all good. As I write, one newspaper reports the company is threatened with a lawsuit for $100m over nude celebrity photos. Another revisits the UK tax payments controversy, reminding us that on sales of £3.5bn, Google paid just £21m in corporation tax. Then there's China, data privacy... and do we really want one company 'to organise the world's information' – even if it is 'universally accessible and useful'?

If you've ever wondered what the Google machine looks like from the inside, pick up a copy of How Google Works by Eric Schmidt, who was CEO from 2001 to 2011, and Jonathan Rosenberg, who led design and development in consumer advertiser and partner products and now acts as adviser to CEO (and co-founder) Larry Page. On arrival, both were seasoned Silicon Valley executives who, in their words, relearned everything they knew about management at Google. This book, emerging from internal classes they ran for employees, tells us what they learnt.

You could call it the Google playbook. It's intended as 'fun' and 'easy to read', and chapters cover – in this order – culture, strategy, talent, decision making, communication and innovation. The order mirrors, they say, the development stages of any successful growing business. So this is not for a hi-tech audience - it's for leaders of all organisations.

All of us must cope with a world that is shaped by three seismic technological changes: the internet, mobile and cloud computing, which the authors argue shifts power to consumers and places a premium on a new type of worker, whom they call the 'smart creatives'. The opening chapter surveys this scene provocatively and with insight.

But are the authors ahead of themselves? 'Provide a bad product or lousy service at your peril,' they say. Have they tried booking an airline ticket, managing an online bank account or hiring a car recently? There still seems to be plenty of bad service out there to me.

And what of the smart creatives? Smarts are analytical, business savvy, competitive and user oriented. Creatives are innovative, curious, self-directed, collaborative, communicative risk takers. Is this you? If so, you may be 'hunkered down in a conference room, office, cafe, apartment or dorm room... you think about your idea when you are supposed to be doing something else'. Brave new world or slightly scary?

Go from the opening chapter to the conclusions and more unrestrained optimism emerges. 'We see most big problems as information problems, which means that, with enough data, virtually any challenge can be solved.' Really? Those newspapers I referred to carry plenty of 'bad news' that seems highly unlikely to get resolved by data.

But the meat in this sandwich – the core chapters - largely deliver. Those on culture and strategy provide detail and anecdotes that bring well-informed observations to life. Those on talent (hiring, retaining and firing), decision making and communications are suitably pragmatic. While the insights are not quite as novel as the authors appear to think – great people attract great people, share don't hoard knowledge, conflict is OK, etc – they are nevertheless addressed persuasively.

And, like it or not, there really are more smart creatives around, inevitably in knowledge economies. They generate disproportionate value, they need a special place to work and a different kind of leadership. The book provides good insight on what this might look like. The autonomy typically associated with university professors, the celebration of great engineering and focus on the user ('figure out the money stuff later') loom large in the story.

The authors say they are inspired by the notion that readers may use their ideas to create a company that will make Google irrelevant. But in almost cult-like, obsessive workplaces such as Google's, the real enemy is often within. It's believing your own hype. Is this book evidence of a wonderfully successful organisation falling into a familiar trap?

Rob Goffee is emeritus professor of organisational behaviour at London Business School

How Google Works by Eric Schmidt and Jonathan Rosenberg. Published by John Murray Publishers, £25

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