How Google Works by Eric Schmidt and Jonathan Rosenberg
How Google Works offers a guide to fostering innovation, building exceptional products, and managing talent effectively in the rapidly evolving Internet Age.
Attracting Smart Creatives:
Success in the modern business landscape hinges on creating great products. This requires hiring "smart creatives"—individuals with technical expertise, analytical skills, and user-focused perspectives—and fostering an environment where they can thrive at scale. Google’s approach emphasizes technical insights over traditional business strategies and incremental progress toward ambitious goals ("10X thinking").
Culture and Leadership:
Culture is the foundation of innovation. Google prioritizes meritocracy, collaboration, and transparency, empowering employees to voice dissent and focus on the quality of ideas over hierarchy. Flat organizational structures, small teams (e.g., the "two-pizza rule"), and dynamic leadership ensure agility and foster a user-first mindset. Leaders must embody passion and prioritize product excellence above all else.
Product Excellence and Innovation:
Product excellence drives business success in a world of abundant information, connectivity, and computing power. Google encourages rapid iteration, open platforms, and bold thinking to solve big problems. The 70/20/10 model allocates resources to core, emerging, and experimental projects, while "20 percent time" promotes employee-led innovation. Failure is seen as a valuable learning tool, enabling ideas to evolve.
Hiring and Talent Management:
Hiring is Google’s most critical task, with peer-based committees ensuring quality and eliminating bias. Exceptional talent is rewarded disproportionately, and career growth is encouraged through meaningful challenges and mobility. Retention focuses on creating engaging work environments, valuing individual contributions, and allowing employees to pursue passions.
Decision-Making and Communication:
Data-driven decision-making is essential, with open debate fostering consensus around the best ideas. Leaders prioritize clarity, transparency, and swift execution. Effective communication—reinforced through repetition, responsiveness, and inclusivity—ensures alignment and empowers employees to innovate, solve problems, and adapt to change.
Strategy:
Base strategy on technical insights rather than market trends. Use platforms and technology to lower barriers and drive product excellence. Prepare for disruption by questioning assumptions and imagining future scenarios.
Communication:
Overcommunicate core themes to ensure alignment. Use concise and effective methods like "trip reports" and self-reviews. Foster an environment where truth-telling is safe and encouraged.
Product Excellence:
Focus on the user above all else—trust that revenue will follow. Speed, iteration, and technical insights drive great products. Create a culture of ownership where small teams take responsibility for big outcomes.
Future Outlook:
Innovators must embrace platforms, data, and speed to address global challenges. Ask "what could be true?" to inspire forward-thinking and bold initiatives. Collaboration and the free flow of information enable solving large-scale problems effectively.
From the Book
Who succeeds and who fails in a world of platforms?
Dig-a-moat-and-bury-your-head-in-the-sand approach is bound to end tragically. The forces of technology and disruption are too powerful. So the incumbent that follows this strategy will eventually fail, or at the very least become irrelevant.
A couple of simple reasons for this. First, at the corporate level, most innovative new things look like small opportunities to a large company. They are hardly worth the time and effort, especially since their success is far from certain. And at an individual level, people within big companies aren’t rewarded for taking risks, but are penalized for failure.
There is an alternative for incumbents: Develop a strategy that takes advantage of platforms to consistently deliver great products. Use that strategy as a foundation to attract a team of smart creatives, then create an environment where they can succeed at scale.
Ask the hardest questions
Start by asking what could be true in five years. 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. And that is especially fatal today, when technology-driven change is rampant. So the question to ask isn’t what will be true, but what could be true. Asking what will be true entails making a prediction, which is folly in a fast-moving world. Asking what could be true entails imagination.
Once you have an idea of what the future could hold, here are some more hard questions to consider.
How would a very smart, well-capitalized competitor attack the company’s core business?
How could it take advantage of digital platforms to exploit weaknesses or skim off the most profitable customer segments?
What is the company doing to disrupt its own business?
Is cannibalization or revenue loss a frequent reason to kill off potential innovation?
Is there an opportunity to build a platform that can offer increasing returns and value as usage grows?
Do company leaders use your products regularly?
Do they love them?
Would they give them to a spouse as a gift?
Do your customers love your products? Or are they locked in by other factors that might evaporate in the future?
If they weren’t locked in at all, what would happen?
When you go through your pipeline of upcoming new major products and features, what percentage of them are built on unique technical insights? How many product people are on the senior leadership team?
Does the company aggressively reward and promote the people who have the biggest impact on creating excellent products?
Is hiring a top priority at the C-suite level?
Among your stronger employees, how many see themselves at the company in three years? How many would leave for a 10 percent raise at another company?
There certainly won’t be solutions if the questions never get asked.