How Google Works

(Based on How Google Works by Eric Schmidt)

I have summarized the entire book here. So, it’ll require more time to read but obviously much lesser time than reading the book :-)

Page and Brin didn’t hire Eric Schmidt for his business acumen as much as his track record as a technologist. They hired Jonathan Rosenberg in spite of his economics and MBA degrees, because he was a proven product advocate and innovator from his days at Apple and Excite@Home. That they were business guys wasn’t exactly a liability, wasn’t a benefit either, at least not in Sergey and Larry’s brain.

The best way to fend off Microsoft was continuous product excellence, but the best way to achieve that excellence was not via a prescribed business plan, but rather by hiring the very best engineers we could and then getting out of the way.

As Jeff Bezos, founder and CEO of Amazon says, “In the old world, you devoted 30 percent of your time to building a great service and 70 percent of your time to shouting about it. In the new world, that inverts.”

The second reason product excellence is so critical is that the cost of experimentation and failure has dropped significantly.

Data flows up to the executives from all over the organization, and decisions subsequently flow down.

The primary objective of any business today must be to increase the speed of the product development process and the quality of its output.

  • A smart creative has deep technical knowledge in how to use the tools of her trade, and plenty of hands-on experience.
  • In our industry, that means she is most likely a computer scientist, or at least understands the tenets and structure of the systems behind the magic you see on your screens every day.
  • But in other industries she may be a doctor, designer, scientist, filmmaker, engineer, chef, or mathematician.
  • She is an expert in doing. She doesn’t just design concepts, she builds prototypes.
  • She is analytically smart, business smart, competitive smart, user smart.
  • A smart creative is a firehose of new ideas that are genuinely new.
  • She is curious creative, risk creative, self-directed creative, open creative, thorough creative, communicative creative.

Not every smart creative has all of these characteristics, in fact very few of them do. But they all must possess business savvy, technical knowledge, creative energy, and a hands-on approach to getting things done. Those are the fundamentals.

The Egyptian who conceived and built the great pyramids thousands of years ago was really just a very successful product manager.

Smart creatives place culture at the top of the list.

To be effective, they need to care about the place they work.

Offices should be designed to maximize energy and interactions, not for status and isolation.

In the Internet Century, a product manager’s job is to work together with the people who design, engineer, and develop things to make great products. Smart-creative product managers need to find the technical insights that make products better.

Google is a computer science company, so the thing that our smart creatives need most is computing power.

We invest in their offices because we expect people to work there, not from home.

Don’t listen to HiPPOs — Highest Paid Person’s Opinons

When it comes to the quality of decision-making, pay level is intrinsically irrelevant and experience is valuable only if it is used to frame a winning argument.

Tenurocracies — where power comes from tenure, not merit.

Organizational design is hard. What works when you’re small and in one location does not work when you get bigger and have people all over the world.

Flat organizations facilitate things getting done and direct access to decision makers.

Since there is no perfect organizational design, don’t try to find one.

Organize the company around the people whose impact is the highest.

Decide who runs the company not based on function or experience, but by performance and passion.

Performance should be relatively easy to measure, but passion can be trickier to gauge.

If the company is run by a person who is performing well because she is committed to its success, and not just by making a bundle by selling to Berkshire Hathaway, then Warren will invest.

You should never be able to reverse engineer a company’s organizational chart from the design of its product.

As the old saying goes: If you want something done, give it to a busy person.

Knavish behavior is a product of low integrity; diva-ish behavior is one of high exceptionalism.

Remember that Steve Jobs was one of the greatest business divas the world has ever known!

Give your smart creatives control, and they will usually make their own best decisions about how to balance their lives.

A stagnant, overly “corporate” culture is anathema to the average smart creative.

Leadership requires passion. If you don’t have it, get out now.

The best cultures are aspirational.

MBA-styled business plans, no matter how well-conceived and thought out, are always flawed in some important way.

Faithfully following that flawed plan will result in “achieving failure”.

This is why venture capitalist will always follow a maxim of investing in the team, not the plan. Since the plan is wrong, the people have to be right. Successful teams spot the flaws in their plan and adjust.

Bet on technical insights that help solve a big problem in a novel way, optimize for scale, not for revenue, and let great products grow the market for everyone.

A technical insight is a new way of applying technology or design that either drives down the cost or increases the functions and usability of the product by a significant factor.

The result is something that is better than the competition in a fundamental way.

So regardless of your business, there is a robust corpus of technical knowledge upon which the industry is based.

Prioritize growth over revenue.

Twitter is not a technology company, it is a publishing company. Airbnb is a platform for the lodging industry, while Uber is one for personal transportation services. 23andMe is a platform play as well as a consumer service company.

Open-sourcing something says, in effect, that we are committed to growing a platform, an industry, and an ecosystem as a whole.

If you focus on your competition, you will never deliver anything truly innovative.

Iteration is the most important part of the strategy. It needs to be very, very fast and always based on learning.

Smart coaches know that no amount of strategy can substitute for talent, and that is as true in business as it is on the field.

Scouting is like shaving: If you don’t do it every day, it shows.

Passionate people don’t wear their passion on their sleeves; they have it in their hearts.

If someone is truly passionate about something, they’ll do it for a long time even if they aren’t at first successful. Failure is often part of the deal.

The passionate person will often talk at length, aka ramble, about his pursuits.

Intelligence is the best indicator of a person’s ability to handle change.

Our ideal candidates are the ones who prefer roller coasters, the ones who keep learning.

Psychologist Carol Dweck has another term for it. She calls it a “growth mindset.”

Most people, when they are hiring for a role, look for people who have excelled in that role before. This is not how you find a learning animal.

Favoring specialization over intelligence is exactly wrong, especially in high tech.

Great people treat others well, regardless of standing or sobriety.

You must work with people you don’t like, because a workforce comprised of people who are all “best office buddies” can be homogeneous, and homogeneity in an organization breeds failure.

The best people are often the ones whose careers are climbing, because when you project their path forward there is potential for great growth and achievement.

The most important skill any business person can develop is interviewing.

We are hiring for passion, remember, and passionate people will often have an exuberant online presence.

Leadership: We’ll want to know how someone has flexed different muscles in various situations in order to mobilize a team.

Role-Related Knowledge: We look for people who have a variety of strengths and passions, not just isolated skill sets.

General cognitive ability: We’re less concerned about grades and transcripts and more interested in how a candidate thinks.

Googleyness: We want to get a feel for what makes a candidate unique.

You can’t say, “We should hire Jane because she’s smart.” You have to say, “We should hire Jane because she’s smart and has the MacArthur Fellowship to prove it.”

Just because a job ends, your relationship with your employee doesn’t have to.

Product management in Silicon Valley was like “flying an F-16 at Mach 2 over a boulder-strewn landscape, two meters off the ground. Plus, if you crash it’s just like a video game at the arcade, and we have lots of quarters.”

There are many people who may not be as well known but brim with insights.

You know who reads a lot about their business? CEOs. So think like a CEO and read.

Many leaders strive for “consensus-driven” decisions, but they fundamentally misunderstand the meaning of consensus.

For those of you who skipped Latin, it stems from the Latin cum, meaning “together with,” and sentire, meaning “to think or feel,” so it literally means “to think or feel together.”

It’s about coming to the best idea for the company and rallying around it.

Eric’s “PIA” rule can help get the best outcome: Have patience, information, and alternatives. P is especially important.

When ending a debate and making a decision that doesn’t have 100 percent support, remember these three words: “You’re both right.”

To emotionally commit to a decision with which they don’t agree, people have to know that their opinion was not only heard, but valued. “You’re both right” accomplishes this.

It tells the person whose argument lost that there are elements of truth amidst the rubble of their failed position.

It provides an emotional boost — people like hearing that they are right.

And fortunately, it is often true, since in a group of smart creatives there are usually elements of truth in everyone’s position.

It’s rare for a good person to be completely, 100 percent wrong.

Then, after reassuring the argument’s losers and articulating what needs to be done, the decision-maker must ensure that everyone who was involved does one of two things: disagree but commit, or escalate publicly.

You have to focus on your core business. You have to love it.

As the leadership scholars James O’Toole and Warren Bennis note, many businesspeople who rise to positions of power often get there “not for their demonstrated teamwork but for their ability to compete successfully against their colleagues in the executive suite, which only encourages the hoarding of information.”

We are reminded of the Communist apparatchiks of the Soviet Union, who kept all office copiers behind double-locked, steel-plated doors lest someone use the wonders of xerography to create an unauthorized copy of the five-year plan for grain production.

Most managers still think like those Soviet-era bureaucrats: Their job is to parse information and distribute it sparingly, because obviously you can’t trust those young rabble-rousers on the lower floors with the information keys to the company’s kingdom.

But the Soviet Union collapsed, and while such a parsimonious approach to spreading information may have been successful when people were hired to work, in the Internet Century you hire people to think.

When Jonathan was in business school, one of his finance professors used to say that “money is the lifeblood of any company.” This is only partially true.
In the Internet Century money is obviously critical, but information is the true lifeblood of the business.
The most effective leaders today don’t hoard information, they share it.
Bill Gates in 1999: “Power comes not from knowledge kept but from knowledge shared. A company’s values and reward system should reflect that idea.”
Bill Gates in 1999: “Power comes not from knowledge kept but from knowledge shared. A company’s values and reward system should reflect that idea.”

Fortunately, the people running this process understand that “share everything” doesn’t mean “share everything that wouldn’t look bad if it leaked and that doesn’t hurt anyone’s feelings,” it means “share everything except for the very few things that are prohibited by law or regulation.” Big difference!

Eric calls our approach to transparency a “climb, confess, comply” model.

One of Eric’s most basic rules is sort of a golden rule for management: Make sure you would work for yourself.

To be a thought leader, you have to have a thought.

Eric believes in the three-week rule: When you start a new position, for the first three weeks don’t do anything.

Listen to people, understand their issues and priorities, get to know and care about them, and earn their trust.

So in fact, you are doing something: You are establishing a healthy relationship.

Praise is underused and underappreciated as a management tool. When it is deserved, don’t hold back.

Eric knew that Steve was wrong on some of his technical points, but Steve’s arguments were so persuasive that Eric and his Sun colleagues couldn’t figure out exactly how he was wrong.

Google[x] has a simple Venn diagram that it uses to determine if it will pursue an idea.

First, the idea has to be something that addresses a big challenge or opportunity, something that affects hundreds of millions or billions of people.

Second, they have to have an idea for a solution that is radically different from anything currently in the market. We aren’t trying to improve on an existing way of doing something, rather we want to start over.

And third, the breakthrough technologies that could bring that radical solution to life have to be at least feasible, and achievable in the not-too-distant future.

Before there can be innovation, there needs to be the proper context for innovation.

As business managers, we like to manage things. Want something done? Then put someone in charge of it.

But innovation stubbornly resists traditional, MBA-style management tactics. Unlike most other things in business, it cannot be owned, mandated, or scheduled.

Innovative people do not need to be told to do it, they need to be allowed to do it.

Creating a culture of ooze isn’t a new idea.

Thomas Edison became famous for the unique, throw-it-against-the-wall-and-see-if-it-sticks environment at his Menlo Park lab in the nineteenth century.

In the twentieth century, AT&T’s Bell Labs and Xerox’s Palo Alto Research Center (PARC) were renowned incubators of innovation.

When creating a movement, attracting the first follower is the most crucial step. “The first follower is what transforms a lone nut into a leader.”

Focus on the user… and the money will follow.
Users are more empowered than ever, and won’t tolerate crummy products.
When you want to spur innovation, the worst thing you can do is overfund it.
As Frank Lloyd Wright once observed, “The human race built most nobly when limitations were greatest.”
To innovate, you must learn to fail well.
A good failure is a fast one.

Larry Page often says that the job of a CEO is not only to think about the core business, but also the future; most companies fail because they get too comfortable doing what they have always done, making only incremental changes.

Information is costly to produce but cheap to reproduce.

We are certain that for every one of these rock stars we meet in our daily work, there are dozens or even hundreds more who are doing their best to unseat us from our perch.

Thanks for reading! :) If you enjoyed it, hit that heart button below. Would mean a lot to me and it helps other people see the story.