Leading Strategic Decision Making, Google Case

Study
Leading Strategic Decision Making
Google Case Study
Analysis
In the following presentation, Ill attempt to analyze Googles
corporate level strategy, approaching the SM process and the
strategic decisions taken within the organization, identifying how the
following four stages are applied: setting the long term direction,
conducting a strategic position analysis, selecting strategic choices
and implementing these strategy choices through strategic actions.
The Ashrigde mission context / definition, is the model which will be
used to evaluate Googles current mission:
To Organize the worlds information, and make it
universally accessible and useful.
The Purpose

What is the company for, what are the companys business

principles, what are the companys statements of purpose, for
whose benefit is all the effort being put in?

Companys combined commitment to its stakeholders,

shareholders, and a purpose aimed at a higher ideal, its mission
statement.
The Strategy

The strategy which explains how the companys purpose will be

achieved in competition with its rivals (competitive position /
advantage and distinctive competence). Googles strategy as a
commercial rational (left brain logic) and the principles around which
the organization will achieve its ambitious goals.
Behavior Standards
The conversion of Googles purpose and strategy into actionable
policies and standards.
As an example we evaluate the collaboration, cooperation and
structure in diversified assignments, development projects, between
teams and peers (recognizing each others skills and achievements).
Well also observe that in order to capture the emotional energy of
the organization, the mission needs to provide some ideal or moral
rationale for behavior to run alongside the commercial rationale
(strategy), emotional and moral (right brain logic).
Values
The corporate values of the organization, how are compared to
those of employees personal values, and how those beliefs and
moral principles give meaning to behavior standards to Google and
act as the right brain of the company. Strategy and values
constitute the left and right brain of Googles mission, and purpose
is linked with norms and behavior standards via strategy and values.

Googles definition of mission includes both these rationales linked

together by a common purpose.
-How emotional attachment and commitment (sense of mission) of
employees to the company is achieved?: Attracting, recruiting and
keeping high quality committed employees, with compatible values,
Google fosters to a sense of mission.
Transformational, Creative leadership in Google involves
novelty and newness, fresh and unfamiliar ways in achieving
opportunities, helping constituents deal with the often perplexing
challenge, creative and cooperative ways of problem-solving.
1.

Evaluation

of Googles mission and how it achieves a

sense of mission through its

approach to leadership and

management.
Google is an organization known as famously unstructured with a
unique style of operation, and a CEO stating we dont really have a
five year plan, and our strategy is based on trial and error.
Google is unusual, organized from the bottom up, approaching
novelty their way, focusing on whats new, exciting, and how can
you win with your new idea.
Founders Lary page and Sergey Bin, from the companys
incorporation to IPO to set its governance structure with a two-tier
board of directors, and from then to 2013, followed an unusual
route.

Their intention was to increase their managerial freedom, and they

informed accordingly, with an open letter, their shareholders, that
Google was not a conventional company and that they did not
intend to become one.
Managing the company the Google way, they hired Eric Smidt, an
already successful CEO, from Novell Inc. and shared management
at the top, Smidt dealt with administration and investors whilst Page
mainly focused to social structure and Bin with the area of ethics.
It is obvious from the very beginning, that the characteristics of their
management style, are those of transformational leadership, striving
for fresh & unfamiliar ways to achieve goals, such as their guiding
principle in acquisition: if you cant innovate something in- house
buy it. This is in contrast to Apple, for example, who seek to
innovate in-house.
Created novel and new paths of developing products, launching
part-finished products, letting Google fanatics find them, experiment
them, essentially error- check and de-bug them, collaborating with
end users, permiting a significant release control.
Inventing creative and cooperative ways of problem-solving,
encouraging the creation of small autonomous teams, where the
produced work is quality assured, using peer review and support,
and not a classical supervision.

Their purpose and aim is to retain the leading position as King of

search following the same Mantra, broadcasted in every
opportunity by its executives, To organize the worlds Information.
Within Google the technology itself is the strategy and strategy is
technology.
Their core strategy is all about information, to capture it, record it,
analyze it, using the data of their user and customer groups,
applying their internal technical platform, which is a major part of
Google success.
The company has never seen itself as an internet search engine, the
mission was clearly stated, to organize the worlds information and
make it universally accessible and useful.
In their IPO brochure have elaborated their intention:
We serve our users by developing products that enable people to
more quickly and easily find, create and organize information. We
place a premium on products that matter to many people and have
the potential to improve their lives, especially in areas in which our
expertise enables us to excel.
A series of behavior standards have also been created since the
incorporation of the company, transforming purpose and strategy in
to actions, hiring their first employees, acquiring the first assets,
hiring a CEO, organizing Googles way of life within Googleplex,
using creativity and innovation.

In their search to meet the information needs of society, assed

opportunities to provide information, through different media
channels, wireless telephony, radio, TV, and video Games, sources
of information beyond third-party websites, Image Search, maps,
academic articles, books, satellite imagery, news, patent Search,
video (YouTube), finance (Google Finance), and other.
In that eye-watering pace expansion, they needed employees,
sharing the same mission. This was achieved through a rigid
recruitment processes and criteria.
Engineers must have either a Masters or Doctorate from a leading
University and they must pass through a series of assessment tests
and interviews. The result of the above processes was, to hire and
retain a fairly predictable employee population, much easier to
manage, implementing technics, such as psychometric profile of
googleness.
They continued to create and implement innovative norms and
standards: control of workflow, quality and to a large extent the
nature of projects that are under way is down to employees and not
to the management, offering also additional benefits such as free
meals, swimming pool and massages etc..
In fact, the laissez-faire attitude, toward the management of
employees, the peer review of performance, the small flexible work
teams appointing their own leaders, the freedom of self-initiated
project work (allocation of 20% of their work time to personal

projects), the transfer from team to team without prior permission

from HR, have had as a result not only to stimulate innovation and
create new knowledge as well as potential products, but also to
create a strong sense of mission, corporate values are aligned to
personal values of employees, and indeed an emotional and deeply
personal feeling is created thanks to Googles culture and work
environment as a whole.
2. Critically

assessment of Googles approach to strategic

decision-

making practiced at

Google and its potential

transferability to other organizations.

The organization its structured from bottom up, with its employees
in all levels playing an important role in strategy development
process.
Google is a dynamic environment where decentralized authority for
strategic decisions is required, and as Garry Hamel identified,
indeed, Google is dramatically flat, radically decentralized
organization, its highly democratic, tightly connected, and flat. The
source of the companys culture and radical decentralization can be
traced back to Brin and Page, both of whom attended Montessori
schools and credit much of their intellectual independence to that
experience.
Within the organization a strategic planning it is designed to work in
conjunction with bottom-up emergent processes of strategy
development (emergent strategy), approximating to the logical
incrementalism process. Strategic planning is becoming more
project-based and flexible.

As we can clearly see there is a kind of intended strategy which

has been transformed in strategy emerging from below. On other
words the Triumvirate has deliberately cultivate a bottom-up,
experimental basis for strategies to emerge.
It is explained, that Googles management is applying a strategy
development by experimentation and learning (logical
incrementalism), by creating small self-managed teams, where
knowledge is readily shared and experimentation is the norm,
applying the rule 70-20-10 which stipulated that Google would
devote 70% of its engineering resources to developing the core
business, 20% to extend that core into related areas, and 10%
allocated to fringe ideas.
As a result, Google employees are able to spend a significant
amount of their time working on stipulated projects of their own
choosing.
The organization may have an issue to further explore, which is that
the engineers spent more like 30% (based on inside reports) of their
time on labor of their own choice, a lot of invention and creativity
but also of chaos.
Progressing incrementally gives Googles management, the
opportunity to gain staff acceptance and commitment to the
strategy, and a sense of mission is also created.

It is clear that strategy results from learning which allows for

creativity, interaction and invention, where internal resources of
innovation capabilities are used.
Google is a learning organization, defined by Johnson et al (2011, p.
406) as an organization that is capable of continual regeneration
from the variety of knowledge, experience, and skills, within a
culture that encourages questioning and challenge. Says Mayer:
Brin and Page understand that breakthroughs come from
questioning assumptions and smashing paradigms.
Analyzing Googles rapid growth expansion, some critical points
have raised on both, their strategy formulation as well as their
internal controls, procedures and policies. As lary Page has also
mentioned, there is a need to effectively manage their growth,
which as a result has placed significant demands on their
management, operational and financial infrastructure. One of the
major issues, is Googles too many acquisitions, in a very rapid
pace, shifting organizations efforts from operating its business, to
acquisition integrating challenges.
There is a clear need, Lay Page continuous, of implementation of
new, or remediation of companys infrastructure, immediate
integration of the acquired companys accounting, human resource,
and other administrative systems, and coordination of product,
engineering, and sales and marketing functions.
The strategic decisions which are developed, is the outcome of
continuous testing and experimentation, using the organizations

innovation capabilities, occurring on an on-going basis, in many

cases with rapid, low-cost experimentation, like digitizing the worlds
libraries, by turning book digital photos into digital text, and creating
a software within some days, that could search the book. A simple
example of achieved competitive advantage over its rival
competitors.
Google faces competition in every aspect of its business, search
engines, vertical search engines and e-commerce websites, Web
MD, and Amazon.com and eBay. Social networks, Facebook and
Twitter, mobile applications on iPhone and Android devices, which
allow users to access information directly from a publisher without
using search engines.
The organization is retaining competitive advantage by preventing
imitation, building strategies based in multiple capabilities and
innovation, some examples below:

Highly selective hiring policy, hiring only the brightest of the

bright. Because of their caliber and characteristics, Google is doing
exciting work and make a difference.

Protecting their intellectual property, and increasing their rich

portfolio of patents by acquiring new companies (recent acquisition
of Motorolla), dealing with threats from competitors armed with their
own patents.

Continuously creating new knowledge, and leverage learning

into new innovative products and services (Android, Chrome,
Google+, Google display, TV, Books, Enterprise etc..) staying ahead
of competitors.
Since knowledge and technology (innovation) are protected by
patterns, and gained via experimentation and practice, it is not
easily copied by other organizations, or transferable. In addition the
first mover advantage yields sufficient lead time to the company to
stay one step ahead from the competition.
Googles continuous product launches (Android Chrome web
browser, and many others), as well as the fast growing expansion
with the acquisition of new companies (between its IPO 2004 and
2011, 99 companies have been acquired) gave precedence over its
rival competitors, but on the other hand, these diversifying
initiatives had done little to boost revenue, let alone generate profit.
A major concern of analysts is that Googles many ambitious
Initiatives were adding cost and distracting management at a time
when advertising revenues were being squeezed by the economic
downturn.
Companys undoubtful success, is the power of its search engine
algorithm, the business model that matches text ads to searches,
and the innovative culture of the organization, developing and
delivering high quality products and services.

Over the last years, Google has released high profile products that
seem have little or no relation with its core business, and the
identity of the company has become muddled. With the recent
heavy acquisition of Motorola, Google is entering in another field of
competition and many questions about companys identity and not
only, have raised, what is Google? A web company? A software, a
hardware company, or something different. How the company will
absorb this new multi-billion $12,5 challenging Motorolas
acquisition, without decreasing its profit margins.
With the coming of Lary Page as new CEO, a new era in Googles
governance is starting, it seems he is more product focus, and in
association with the mathematician Sergey Brin and the Support,
where is needed, of Eric Smidt , it is believed, that the company will
accelerate the procedures to integrate the acquired companies,
review its internal control and policies, as well as its rational
corporate strategy and expansion decisions.
Conclusion
Google is established in 1997, its transformational leadership has
guided the organization to a sustainable success, becoming
profitable in 2001 and public company in 2004 with a market
capitalization of $23 bn. Since then the company has rapidly
expanded, with a financial capacity of $7.9 bn operating cash flow in
2008, and a cash pile of $15.8 bn. This financial strength allowed
Google to buy its way through acquisition into almost any market or
area of technology. Googles value in 2011 was $111 billion.

The Triumvirate has successfully adopted an innovative strategic

leadership, establishing a powerful organization, maintaining
flexibility, empowering employees, focusing on achieving
commitment to the mission set, through aligning employees values
to those of the organization.
They have established and successfully managed, purpose,
strategy, behaviors and values and as a result a sense of mission
has been achieved.
Google implemented innovative strategies, such as logical
incrementalism, developing experimentation and organizational
learning. The creation of inventive, team based structures, managed
by using non-conventional techniques, and a new mode of
leadership, had as a result to gain competitive advantage over
competitors via multiple innovative capabilities.
The problem is the rapid expansion and into so many different
areas, running at a thousand directions, at the same time, which
had as a result, the diversion of management time and focus from
operating the business, to acquisition integrations. In addition the
acquisition of Motorola has two implications, the financial impact of
this huge, risky and distracting move, and the risk to derange the
relationships with Samsung, HTC and other Android partners.

On the other hand Google has an opportunity to create a platform

that could be used to better display ads for mobile device users and
increase firms income.
In conclusion the company has access to the widest group of
internet users worldwide, offers open source quality products and
services, possess strong patents portfolio, inimitable innovation
culture, the potential to grow into electronics industry, and is one of
the most profitable companies in the world with strong financial
results.
The challenges the company is facing are the unprofitable products,
patent litigations, relying in one source income, US government
privacy frameworks, EU antitrust laws, the increasing strong
competition, and the threats less from the market and more from
the government and judicial arenas.
As Google is growing at exponential pace, and the environment is
continuously changing, the Triumvirate has to carefully reconsider
the overall strategy of the company.
If you find this article useful please share it, thanks,
Nicolas Frangos.