"What does Google want?"
A favourite pastime among people who watch the tech industry is trying to figure out why Google does things. The Verge was downright plaintive about it the other day, and I get the question frequently from financial analysts and reporters. But the topic also comes up regularly in conversations with my Silicon Valley friends.
It's a puzzle because Google doesn't seem to respond to the rules and logic used by the rest of the business world. It passes up what look like obvious opportunities, invests heavily in things that look like black holes, and proudly announces product cancellations that the rest of us would view as an embarrassment. Google's behaviour drives customers and partners nuts, but is especially troubling to financial analysts who have to tell people whether or not to buy Google's stock. Every time Google has a less than stellar quarter, the issue surges up again.
As I wrote recently when discussing Dell, it's a mistake to assume there's a logical reason for everything a company does. Sometimes managers act out of fear or ignorance or just plain stupidity, and trying to retrofit logic onto their actions is as pointless as a primitive shaman using goat entrails to explain a volcano.
But in Google's case, I think its actions do make sense – even the deeply weird stuff like the purchase of Motorola. The issue, I believe, is that Google follows a different set of rules than most other companies. Apple uses "Think Different" as its slogan, but in many ways Google is the company that truly thinks differently. It's not just marching to a different drummer; sometimes I think it hears an entirely different orchestra.
Google's orchestra is unique because of three factors: corporate culture, governance, and personal politics. Let's start with the culture.
Google culture: you are what you do
The strategic thinking of most companies is shaped by the way they do business. For example, a farmer thinks in terms of annual seasons and crops; everything revolves around that yearly cycle. Manufacturing companies, the traditional foundation of a 20th century economy, plan in terms of big projects that take a long time to implement and require a lot of preparation. If you're building a car or a plane or even a smartphone, you have to plan its features well in advance, drive hardware and software to completion at the same time, and arrange manufacturing and distribution long before you actually build anything. The companies that build complex physical things naturally plan their products in terms of lifecycles lasting at least 12 to 24 months, and sometimes much longer.
That long planning cycle dominated big companies in the 20th century, and was driven into all our heads through generations of business books and business school classes. It's how most of our brains were formatted.
An internet company, like Google, works at a fundamentally different pace. Web software changes continuously. You don't plan it rigidly; you evolve it day by day in response to the behaviour of customers. The faster and more flexibly you evolve, the more successful your products will be.
This evolutionary approach, and the Agile design processes that support it, is built into the fibre and psyche of web companies. They don't think in terms of long-term detailed plans; they think in terms of stimulus and response.
This is a dramatic change in the history of business. In the past, the nimble companies were always the little ones. The larger your company, the more it valued planning and the long-term view. Google is one of the first very large tech companies ever to pride itself on rapid response rather than rigid planning.
On top of this quick-turn bias there's the cultural training of Google's senior management. Most big companies end up being run by professional managers who came up through business school or finance, where they get trained in the rhythms and personality of traditional big business. They learn a shared vocabulary and set of values that are very familiar and comfortable to investors. By contrast, Google is completely controlled by engineering PhDs. They speak the language of science rather than business, and they're contemptuous of the vague directional platitudes and reassuring noises made by modern finance and marketing.
I think most reporters and analysts don't understand how fundamentally different the engineering mindset is from traditional business thinking. It's a very distinct paradigm, unfamiliar to most people who haven't studied science.
One key element of the engineering mindset is the use of scientific method: you encourage a Darwinian marketplace of ideas, you test those ideas through controlled experiments, and you make decisions based on experimental data.
In its behaviour and vocabulary, Google oozes scientific method. A couple of times recently I've heard Google executives say in public, "if you can't measure it, you can't improve it". It's an old quote, dating back at least to Lord Kelvin in the 1800s. It's also a subtle twist on the traditional mantra used in web design: "that which you measure, you can improve." The web design version says you should measure everything you can; the Google executive version implies that nothing really matters unless you can measure it.
That's a very scientific, rational point of view, but I couldn't help thinking that if you had said something like that to Steve Jobs, he would have taken your head off with a dull knife. The whole idea of vision at a place like Apple is that you pursue things you can't fully quantify or measure; that great product design is an art, and the most important changes are the ones you intuit rather than prove in advance.
But engineers are trained not to act on intuition. You are allowed to have intuition, of course, but you use it to make hypotheses, which you then test. You act on the results of those tests.
There have been other big companies run by engineers, of course. HP in its glory days was a great example. But those companies were almost always wedded to traditional long-term planning cycles. What makes Google unusual is its combination of an engineer's love of scientific method with the web's rapid iterative development. Put those two characteristics together, and Google often behaves like a big bundle of short-term science experiments.
Why did you kill my favourite product?
Take Google's bizarre practice of publicly killing products. To most companies, killing a product is a shameful thing. It disappoints customers, and it hurts your own ego because it's an admission that you failed. Most companies hide their product cancellations: they try to disguise them as a "reallocation" or "new focus" or some other doublespeak.
Google does the exact opposite – a couple of times a year it trumpets to the world that it's terminating products and services that millions of people love and rely on. Google isn't merely up front about these cancellations; it's downright cheerful, as if turning off Google Reader or Google Desktop is an accomplishment to be proud of.
And to Google, maybe it is. If you look at the world through the eyes of the scientific method, every Google project is an experiment, and experiments must be periodically reviewed. When an experiment is completed, you either choose to follow up on it, or you terminate it and move on to something else. A scientist doesn't get emotional about this; it's the way the system works, and everyone knows that it's all for the best.
By announcing its terminated experiments, I think Google isn't admitting failure, it's proudly demonstrating that scientific principles are in use. I think Google's management views the cancellations as proof that it's being focused and logical.
Google management: who's in charge here?
The second unusual aspect of Google is its ownership structure. Never forget: Google is not really a public company. Sure, it has stock and all the other attributes of a normal public company, but 56.7% of Google's voting shares are held by cofounders Sergey Brin and Larry Page. As long as they remain friends, they can do whatever they want with the company, and they cannot be fired.
I don't have a problem with that. Google has always been up front about it, and besides I've seen many large public companies manage themselves into ruin in pursuit of quarterly returns. It's refreshing to see a big company that doesn't enslave itself to the quarterly report. As Page put it in 2004, "by investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me".
How long term is that bet? I'm not sure Google's senior management even thinks in terms of annual returns, let alone quarterly. Brin and Page are both about 40 years old as of 2013. They have a life expectancy of about 38 more years, to about 2050, and I have no reason to think that they plan to work anywhere else in their lives. So I think Google's planning horizon goes to at least the year 2050. Page himself likes to talk about his 50-year planning horizon, so he may well be thinking out to the 2060s.
To put that in context, some scientists predict that we'll achieve superhuman machine intelligence well before 2050. I'm not endorsing that timeline, by the way; I think it may be optimistic. But my point is, Google could be planning almost anything.
Combine the first two unique things about Google and you get an interesting picture. Most companies have a long, detailed planning cycle in pursuit of quarterly goals. That often makes them very predictable. It also makes it hard for them to get anything done – when your planning cycle is longer than your goal cycle, you'll often change goals faster than you can achieve any of them.
Google does just the opposite. It has a short, unpredictable planning cycle in pursuit of very long-term objectives. It's likely to pursue those objectives relentlessly, but its near term actions will look random, because they're just Darwinian experiments along the way.
In other words, there is probably a method to Google's madness, but they're not going to tell you what it is.
But there's one more factor about Google that we need to consider: it's run by human beings. Larry Page is not Spock. No matter how logical and dispassionate he tries to be, he and the rest of Google's managers have psychological needs and reactions that they cannot transcend. That means Google has corporate politics.