Why Google Can’t Run Its Business Like Google

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Logo of Google’s new holding company Alphabet

Late last month I posted an article on this blog titled “Why You Can’t Run Your Company Like Google.” In it I discussed how most companies cannot afford to move beyond their core businesses and go after so many unconventional projects as Google does. Lo and behold, it seems that even Google cannot continue to act as Google. This week the company announced a new corporate structure where it is separating its core businesses from its “moonshot” projects, such as driverless cars and smart contact lenses.

The reason? According to Larry Page in his letter announcing the restructuring, “Our company is operating well today, but we think we can make it cleaner and more accountable.” They are separating the financials of Google from the collection of companies it is calling “Alphabet.” Said Page: “This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead.”

This move will make it much easier for employees to understand and align to the very different mission of the core business compared to the other moonshot projects. Defining success is critical for every CEO, and with the mishmash of businesses it was unclear what success was for the old Google. Now the existing advertising and search engine business can focus on what it does best, while the moonshots can be run as they should be: as high-risk, high-reward startups. As a CEO, it is important to review your mission annually and make sure success is clear for every employee.

 

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