“How Google works” in 5 minutes

Vacation time is reading time and I took the chance to read and write an abstract of the book “How Google Works” written by Eric Schmid and Jonathan Rosenberg. The book delivers insights and core principles on how Google is managed.

The following abstract is written for our management team. DreamProduction is a young, fast growing service company competing in the online space focussing on client work and experimenting with own products. This abstract focusses on points that are important to us. Leaders of pre-internet companies would most likely highlight completely different aspects.

Introduction

Google is focussing on one special type of employee: smart creatives. Smart creatives are combining technical knowledge, business savvy and creative energy. Together with a hands-on and just do it attitude, self-motivation, hard work and team spirit these smart creatives are able to create value in the digital space. Examples of such smart creatives named in the book are: Paul Buchheit who developed the prototype of Gmail and then lead the team further, Jeff Dean with other engineers that developed the Google Adwords Quality score over the weekend after Larry Page posted a list of ads with bad results and the note “these ads suck” on a bulletin board. Vic Gundotta who started Google+ even though he was in the mobile team but saw that Google missed a huge opportunity. Also Steve Jobs is named as a smart creative (even though he was not an engineer). There are more examples in the book but I guess you see the pattern: smart people starting to do things in a new way based on their coding skills and understanding of users and business needs. Google gives a lot of freedom and power to those smart creatives. The book is mainly about these smart creatives — how to hire, how to manage and how to let them go if they absolutely want to leave.

There is no such thing as business plans. Get the best smart creatives you can and give them enough freedom to create the best possible products for the users. If it’s good for the user the money will follow. Always focus on the user. The basis for product excellence are speed and fast iterations.

ABOUT CULTURE

The core values that define Google’s culture are: focus on long term success, serving end users is the main priority, don’t be evil and making the world a better place. The IPO letter is a very good read highlighting these points (https://investor.google.com/corporate/2004/ipo-founders-letter.html). Other important parts of the culture are: crowded offices, a non hierarchical decision making process based on data. One of their favorite quote by the former Netscape CEO is: “If we have data let’s look at data. If all we have are opinions, let’s go with mine”.

ON ORGANISATIONAL SET UP — THE RULE OF SEVEN

Smart creatives want flat hierarchies so they can be close to decision makers and get things done fast. The rule for Google is that every manager must have at least 7 direct reports in order to avoid micro-management and create employee freedom. Building blocks of organizations should always be small teams. Jeff Bezos calls this the two pizza rule: Teams should be small enough so these can be fed by two pizzas. Organize the company around people that commit to success and are driven by passion and performance. Make sure knavish behavior is not accepted and don’t accept knaves. Knavish behavior could be: Taking credit for work not done by themselves? Knave. Selling customers stuff they don’t need? Knave. Knaves have low integrity and prioritize their individual over the team. Accept divas though: Divas think they are better than the team but want success for themselves as the team as well. As long as divas’ achievements outweigh the collateral damage caused by their diva ways you should fight for them. However get rid of knaves immediately.

ON STRATEGY

Bet on technical insights that help solve a big problem in a novel way. Examples mentioned are: PageRank algorithm improving search drastically, using the quality score for AdWords and thus improving quality of ads, Chrome offers improved speed for todays webapps.

Optimize for scale, not for revenue.

Platforms are the strategy of the day (AirBnB for lodging, Uber for personal transportation, Netflix for movies, Amazon for goods…). Sometimes the best way to grow a platform is to find a speciality that has the potential to expand.

To find a good strategy start by asking what will be true in 5 years and work backwards. Growth matters most and iteration is the most important part of the strategy.

On Talent — Hiring is the most important thing managers do

Google does not do hierarchical hires but uses hiring committees and hiring should be peer-based. People matter more than roles and managers.

The best workers are like a herd: They tend to follow each other. Get a few of them and you are guaranteed that a bunch will follow. Unfortunately it will work the other way as well — get some B players and you will have C’s and even D’s in your company.

The most important things Google is looking for in employees:
1.) Passionate about things and this also means failures (thats why Google values athletes — sport teaches how to rebound after losses)
2.) Intelligence
3.) Learning animals: High tech is extremely fast changing. People need to learn fast and have a growth mindset eg grow on tasks and adapt to new situations
4.) Googleyness: Integrity, are they interesting people with a unique standpoint (could you spend 4 hours on an airport together having an engaging discussion), creative and do they treat other persons well?

Schedule interviews for 30 minutes. This is usually enough. Google used to do lots of interviews (up to 30 in some cases…). Data shows, that decision accuracy levels off quickly after 4 interviews (at roughly 85%). Interviewers need to form an opinion on those 4 criteria: leadership (can mobilize a team), role-related knowledge, cognitive abilities (how do they solve problems), googleyness (cultural fit in a broader term).

If great employees want to leave try to motive to stay longer by offering them something that will help them in future career and thus working 2 more years. Do this very fast. If they still want to go let them go.

GOOGLE HIRING DO’S AND DON’TS:
- Hire people that are smarter and more knowledgable than you. Don’t hire people you can’t learn from or be challenged by.
- Hire people who will add value to the product and culture. Don’t hire people that contribute well to both.
- Hire people how will get things done. Don’t hire people who just think about problems.
- Hire people who are enthusiastic, self-motivated and passionate. Don’t hire people that just want a job.
- Hire people who inspire and work well with others. Don’t hire people who prefer to work alone.
- Hire people who will grow with your team and with the company. Don’t hire people with narrow skill sets or interests.
- Hire people who are well rounded, with unique interests and talents. Don’t hire people who only live to work.
- Hire people who are ethical and who communicate openly. Don’t hire people who are political or manipulative.
- Hire only when you’ve found a great candidate. Don’t settle for anything less.

ON DECISION MAKING

Google requires all people to have an opinion based on data and dissent if they don’t agree. All arguments based on data will be discussed in a solution-oriented way. Reaching the best idea needs conflict and people need to disagree and debate their points in an open environment, because you won’t get a buy in until all the choices are debated openly. Then the decision that is best for the company will be taken.

If the process of making a decision takes to much time have the most senior person setting a deadline for decision making. Also have a bias for action — if you can’t decide on what to do prefer the version where you do something. This is not valid for negotiations where it is about Eric Schmid’s “PIA” rules: Patience, Information and Alternatives.

GOOGLE ON COMMUNICATION

- Leaderships purpose is to to optimize the flow of information throughout the company, all the time, every day.
- Default mode should be to share everything
- Managers must get into details of things
- It must be OK to ask the hard questions (Google uses their TGIF meetings and a mechanism to post questions anonymousely online)

GOOGLE ON INNOVATION

Spend 70% of your time on the core business, 20% on emerging business and 10% on new business.

For Google(x) — the incubator within Google — the following framework is used for a decisision on a project:
- Is it a big challenge/opportunity affecting 100's of millions or billions of people?,
- Is the idea radically new and different from anything currently in the market?
- Is the breakthrough technology needed technically feasible and achievable in a not-too distant future?

Ideas are born everywhere. Any new idea must prove strong enough to be able to attract first followers within the company. Then it will attract more followers and gain momentum.

Fail well. If you fail, fail fast. Learn from mistakes, discuss those and morph ideas. Transfer assets (a lot of Google Wave assets have gone into Google +)

TAKEAWAYS AND STRATEGIC ADVISE FROM ERIC AND JONATHAN

Ask the hard questions: Where will we be in 5 years from now given the facts that information is truly ubiquitous, reach and connectivity are truly global, computing resources are infinite and technological progress is an upward trend — what will this do to your business in 5 years from now?
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