How Google Works by Eric Schmidt and Jonathan Rosenberg

Animated Book Summary

Eric Schmidt was the CEO at Google for ten years.

Eric Schmidt was the CEO of Google for ten years. He became the CEO in 2001. At that point it was a successful three year old internet start-up, but was already preparing to compete with the giant Microsoft.

Google was different to other places Schmidt had worked. Even as CEO he had to share his office. The company was growing in size and in 2002 Jonathan Rosenberg joined as Head of Products.

The company’s early principles consisted of focusing on the user, hiring as many great software engineers as they could and give those engineers freedom. Google was managed with informal meetings of small engineering teams.

In 2003 Schmidt and Rosenberg were charged with creating a business plan to take on Microsoft. To carry it out involved learning a new way of managing these smart creatives who are not shackled by organisation structures and defined rules. They’ve been learning and documenting these new management methods ever since and this book gives us an insight into how Google works, providing a series of steps in the development of the company.

Culture

When starting a company, culture is an important consideration. Smart creatives need to care about where they work to produce their best work. The culture should be defined by the founders and the founding team. In Google’s case, the culture of the company is the same now as it was back then.

The office layout at Google is not typical. It is deliberately crowded to encourage interaction and reduce envy of other colleagues’ facilities. Employees are not segregated in the office by what they do; product managers sit with engineers to increase integration. The office is often messy (a by-product of innovation) but the engineers are given access to as much computing power as possible and Google’s offices are packed with amenities, again promoting more employee interaction and therefore more chance of colleagues putting their heads together and coming up with the next billion dollar idea.

The organisational structure is relatively flat. Each manager must have at least seven direct reports. This helps the smart creatives get stuff done and provides them with better access to the people that make decisions.

Small teams working on breakthroughs are encouraged. Jeff Bezos of Amazon had a “two pizza team” rule, where the team should be small enough to be fed by two pizzas. Larger teams should take over as a product grows.

Establishing a culture of saying yes is also important as saying yes starts things, which leads to experiences, which in turn leads to increased knowledge. Sir Richard Branson has developed a nickname at Virgin due to the number of times he uses the word — “Dr. Yes”.

Strategy

There are three principles to Google’s strategy.

  1. Bet on technical insights, not market research.
    A technical insight either reduces cost or increases functionality of a product significantly. Nearly every successful Google product has them. Google Search was better than any previous search engines because the founders worked out how relevant a web page is to a search query based on which other pages link to it.
  2. Optimise for growth, not for revenue.
    In order to achieve something big, you need to be able to grow quickly and globally, in other words, scale. The strategy must be to grow big and quickly. Google resisted the urge to make more money by putting adverts on its homepage and instead focused on improving and investing in the search engine.
  3. Let great products grow the market for everyone.
    Keeping your product “open” by adhering to standards and sharing computer code for example, means losing some control but gaining scale and innovation. It allows you to utilise the talents of many thousands of people around the world who may be willing to contribute.

Talent

No amount of business strategy can substitute for talent. Google’s recruitment process is carried out by a committee of the interviewee’s potentially future peers. The committee make the final decision. Sometimes people are hired even if they don’t suit an available role. The important thing is bringing in the best possible people into the company.

A company full of great people attracts yet more great people. One sought-after trait is passion. Passionate people will often talk at length about their passion, whether its work related or not.

Intelligence is high on the list of priorities too but as well as that they should have a growth mindset or in other words, be willing to learn. This is an especially important trait in an industry such as information technology as it allows the person to handle and enjoy major change.

Other aspects of a person that are observed are their character and how interesting they are. Does the person treat others well? Would you enjoy their company if you were stuck with them for an hour?

If interviewing, preparation is required. Interviews need not be longer than thirty minutes as most interviewers can make a call in that amount of time. The candidate should be pushed with questions that are challenging but not overly stressful. Using the same questions on different candidates is helpful to compare responses.

When a person joins the company, they should be paid appropriately. Great people should be paid greatly, but the pay should start low and performance should be rewarded.

Decisions

There’s more to decision making than just making sure you’ve made the right one. The timing of when the decision was reached, the process of getting to a decision and the way the decision is carried out are just as important.

At Google decisions are made based on data — and lots of it. Decisions are consensus driven. That means that everyone rallies around the best idea for the company. It doesn’t mean that there is unanimous agreement necessarily. Conflict, debate and dissent are all encouraged and help to ensure the right decision has been made.

All these principles were utilised for Google to come to a decision to enter the Chinese market and create a localised site, google.cn in January 2006. They were again used when Google withdrew from China, taking the site down in March 2010 after investigating hacking attacks on its products.

Communications

Effective leaders today share information rather than keeping it to themselves. As a leader, knowing the details is key too. This requires asking the right questions. An environment must be created where tough questions can be asked and the truth can always be told — even when the truth is not good news.

When it comes to email, aim to respond quickly. As a result you’ll be more likely to be included in decisions and discussions that are important. Emails should be clear and to the point. There shouldn’t be any content in there that people can skip.

Innovation

iOS, the operating system that runs on Apple’s iPhones and Android, Google’s OS that runs on many other smart phones are two innovative products created by two of the most innovative companies around today. However, whilst similar in some ways, they highlight two differing approaches to innovation.

Android is open-source. Anyone can use the software’s code for free and anyone can sell apps that run on Android devices without approval. Apple’s approach is different with iOS code being closed and apps requiring approval.

Google defines an innovative product as being new, surprising and radically useful — Google’s driverless cars being a textbook example, but how does a company become innovative? The environment needs to be right. It should encourage people smart enough to come up with new ideas and also encourage those who want to join that individual.

The company focus should be on the user. In 2004, Google bought a start-up called Keyhole. Using Keyhole’s technology they launched Google Earth. It did not offer any direct impact to the company financially, but it was a tremendous hit with the user.

Thinking big is essential and provides the advantage of giving smart creatives more freedom. Big challenges also tend to attract big talent.

Google also runs a program where its engineers can spend 20% of their time working on whatever they want. It has spawned some valuable features from Google’s search engine suggesting search queries as you type, to adding bus and train information on Google maps.

Conclusion

The current age is one where many industries are feeling the effect of the disruption caused by technology. Gone are the days where people only watch video on a television for example. There are economic impacts to these industries due to this, so what can we do to survive this period?

Businesses should utilise new platforms to their advantage which will enable them to produce great products. The social web, where users can share things and talk about them has emerged. Companies should ensure that their products and services compliment the social web.

Think not only about your company, but the future as well. What could be true five years from now and how will it affect the landscape? Schmidt and Rosenberg believe that with enough data and ability, any challenge can be solved. Computers will continue to make lives easier and better but for yet more people. Speed will continue to increase, as will the amount of collaboration thanks to the free flow of information. The future is bright as technology will transform practically every industry or field.