Please read the following case and answer the questions followed by it. Why Goog
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Question
Please read the following case and answer the questions followed by it.
Why Google’s new Alphabet is a corporate game-changer…….
Only Google could change the meaning of the word “alphabet” in one day. The tech giant announced yesterday that it has re-organized the company’s corporate structure under a newly formed umbrella company it is calling Alphabet Inc.
This is big news. When a company of this magnitude makes such a substantial move, it is sure to be subjected to much scrutiny as to the motivation and merit of the new plan.
Under the new model, Google’s more mature businesses, such as search and advertising, Google Maps, YouTube, Chrome and Android will remain under Google Inc., which will be managed by Sundar Picha (who had been running Android and Chrome). Google co-founder and current CEO Larry Page will manage Alphabet.
The companies that are not part of Google Inc. will be the more innovative bets such as Life Sciences (a glucose-sensing contact lens project) and Calico (focused on aging), Google X, Nest, Sidewalk, Fiber and Wing (the drone delivery project) as well as Google Ventures and Google Capital.
Here are some of the justifications provided by Larry Page for the reorganization.
“Our company is operating well today, but we think we can make it cleaner and more accountable.”
“Sergey and I are seriously in the business of starting new things.”
“We also like that it means alpha?bet (Alpha is investment return above benchmark), which we strive for!”
One explanation for the move, provided by New York Times, is that the change is primarily driven by a desire to maintain Google’s lead as an innovator. Another perspective from TechCrunch says that the change in structure makes it easier for Google to retain top talent.
The Wall Street Journal, on the other hand, suggests that the creation of Alphabet combined with Page’s commitment to continue to report on Google’s results provides investors with a better understanding of the business, with a nod to investor darling Berkshire Hathaway’s management model (strong CEOs in place for each of their operating entities).
Google and the three innovation horizons
My interest in Google is primarily because of its leading position as an innovative organization. With its many “moonshot” initiatives—ideas that tackle huge problems with radical and breakthrough solutions—Google has long been a model organization for its ability to balance profits in the core business with forward-thinking investments in the future. Using McKinsey’s Three Horizons framework, Google’s portfolio investment strategy has often been described as the ideal 70/20/10 distribution, where:
70% of resources is spent on Horizon 1 – Defending and extending the core business.
20% is spent on Horizon 2 – Emerging businesses.
10% is on Horizon 3 – Disruptive businesses.
Google is also where organizational concepts such as “Google time”—where employees are encouraged to spend 10% of their time on a pet project—became a manifestation of innovative culture.
The reality is that most corporations struggle with consistent allocation of funds to moonshot ideas or staff time for pet projects, and that is why Google is such an interesting case from a corporate innovation perspective.
It mainly depends on how founders Sergey Brin and Larry Page decide to run their non-Google Inc. portfolio of initiatives. Is there room and encouragement for cross-fertilization? Are they able to avoid moonshots from being contaminated by the efficiency-oriented culture required to run the core business while still maintaining a focus on exploration, learning and experimentation within the rest of the Alphabet companies?
Yesterday’s announcement seems to suggest that the latter certainly is part of the founders’ motivation for the change to the Alphabet structure; we’ll have to see about the former.
Meanwhile, other corporations that are seeking to improve their innovation outcomes should consider whether an ambidextrous model is right for them. At MaRS, we work with many corporations that seek improved innovation outcomes, and a clear understanding of how organizational structure fosters and supports their innovation efforts is required to succeed.
Do an environment analysis for “Google” using the appropriate tools.
What are the unique strategies deployed by “Google” to sustain in the market? Discuss.
Explanation / Answer
SWOT Analysis for Google
Strengths - Google is innovative, technology leader, customer oriented, user friendly, smooth operations and has a great work culture
Weaknesses - Google is vulnerable to use for security reasons for its easy access and wide scale operations, there is lack of awareness about its various businesses, only online presence creates a disconnect between the users and its various services, vagueness of its objectives and operations.
Opportunities - Leveraging technology to customize services for business and technology, improving quality of life by taking various social initiatives like online education or apps for use, colloborating with other technology based businesses for synergy, developing newer web based technologies by studying online customer behavior, offering various support services to the customers for improving web experience.
Threats - Competition in technology space, changes leading to technology becoming outdated, privacy invasion , security threats, laws and regulations.
Apart from SWOT the other tools for analyzing external environment like PESTLE (Political, Economic, Social, Technology, Legal, Environmental factors) offers many opportunities for Google with use of technology in political areas, need for customized and effective technology which is inexpensive to use, technology aligning with social needs of people, technology changes making the Google services competitive and accessible, Legal challenges making the business more cautious and compliant in approach, Environmental factors gaining from Google services which are oriented towards better quality of life and opportunities for global citizens.
The unique strategies deployed by Google to sustain in the market are offering its various innovative technologies without charging for them. It earns revenues by advertisements only. Google services are developed on enormous scales and have a wide scope of utility by businesses and customers around the globe. These features makes Google unique. It has innovations in various areas which are of common use to public other than commercial technology which makes it very popular and user friendly.
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