Leadership and Business Philosophies of Google and Yahoo - Essay Example

Table of Contents 1. Introduction : p.3 2. Organizational structure and design : p.5 a. Google : p.5 b. Yahoo : p.6 3. Approach to management and leadership : p.9 4. Conclusions : p.12 5. References : p.14 6. Appendix : p.15 Introduction Google and Yahoo are two of the prominent companies in the search engine business (see appendix for more details). Even though Yahoo was established well before the establishment of Google, Google is far ahead of Yahoo in terms of growth, profits, market share, and market capitalization. Even though, the preliminary business portfolio of search engine, Google has plenty of other business segments such as social networking (Google+), mobile phone operating system (Android), online book store (Google books), personal health records (Google health), etc. On the other hand, Yahoo has search engine business, Yahoo finance, web hosting and E-commerce etc. Google Inc. started as a search engine on the World Wide Web in the month of September, 1997 by Larry Page and Sergey Brin. On the other hand Yahoo’s history started when “The two founders of Yahoo!, David Filo and Jerry Yang, Ph.D. candidates in Electrical Engineering at Stanford University, started their guide in a campus trailer in February 1994 as a way to keep track of their personal interests on the Internet” (The History of Yahoo! - How It All Started..., 2005). Yet Another Hierarchical Officious Oracle is the expanded from of YAHOO. The growth of Google was phenomenal compared to that of Yahoo. Until recent times, Google dominated the IT business. In 2005, Google joined the list of 100 most powerful companies in the world. Moreover, Google’s revenues increased steadily over the last few years. However, the entry of Facebook is causing huge challenges to Google at present. On the other hand, Yahoo is struggling to compete with Google and other IT companies. It should be noted that Yahoo is trying to establish business alliances with Microsoft and Amazon as a strategy to compete with Google. Yahoo and Microsoft both have behind-the-scenes technology used to generate those listings you get when you perform a search. Yahoo’s going to give up their technology and use Microsoft’s. Running that technology is costly. Rather than own the technology, Yahoo feels its more economical to lease it from Microsoft (Sullivan, 2009). Microsoft and Yahoo like companies are currently struggling to compete effectively with Google. Only Facebook and Apple Inc are causing problems to Google at present. However, with the help of innovative business strategies and business alliances, Google is bouncing back strongly. For example, many of the smartphone manufactures such as Samsung and LG are using Google’s operating system. Moreover, the acquisition of Motorola by Google is a big threat to the smartphone manufacturers. Many people believe that Google will definitely enter into the smartphone manufacturing market in near future itself. Google Books is the online book store established by Google recently to challenge Amazon whereas Google plus is the social network established by Google to challenge Facebook. In short, Google is offering stiff challenges to all major IT companies whereas Yahoo is struggling to survive in the market. Organizational structure, culture, management styles, leadership and business philosophies of Google and Yahoo are entirely different. While Google’s business strategies are meeting big success, same thing cannot be said about Yahoo. This business report analyses the organizational structure, design, management and leadership styles in Google and Yahoo. Organizational structure and design Google Unlike other companies, it is hard to explain Google’s organizational structure in few words. It is difficult to categorize Google’s organizational structure in functional or matrix organizational structures. Google’s organizational structure is made up of different shareholders. Even though Sergey Brin and Larry Page are the actual owners of this company, Larry Page seems to be taking more responsibilities as a leader of this company. The voting system in the director board of this company is peculiar. Two types of voting structure is there; one for the shareholders and the other for the owners. Such a voting system helps Brin and Page to take full control of the company, no matter the number of people invest in this company. The voting system is designed in such a way that Brin and Page will get ten votes when others get only one. Therefore, nobody can take over this company in future also. As Google’s chief executive officer, Larry is responsible for Google’s day-to-day- operations, as well as leading the company’s product development and technology strategy. Since joining Google in 2001, Eric Schmidt has helped grow the company from a Silicon Valley startup to a global leader in technology. As executive chairman, he is responsible for the external matters of Google. Sergey Brin co-founded Google Inc. directs special projects. From 2001 to 2011, Sergey served as president of technology. Nikesh Arora, Senior Vice President and Chief Business Officer is responsible for all oversees revenue and customer operations, as well as marketing and partnerships. David Drummond joined Google in 2002, initially as vice president of corporate development. Today as senior vice president and chief legal officer, he leads Google’s global teams for legal, government relations, corporate development. Patrick Pichette is Google’s chief financial officer (Google: Management team, N.d.) Apart from the top management team illustrated in the above paragraph, plenty of executives, managers and employees are working under the top management team. “The number of Google employees has grown from 2,000 in 2004 to more than 9,000 employees in 2006” (Schwartz, 2006).In other words, the manpower strength of Google has increased heavily in just two year period. Getting an employment in Google is not an easy task because of the peculiarities in its organizational structure and the complexities in the recruitment process. Google gives more importance to the ability to innovate while they screen the applications of job seekers. The selection process includes; coding contests, mysterious billboards and aptitude tests apart from the interviews which lasts for even months. During the recruitment process, all the job seekers undergo vigorous scanning and only few people become successful at the end. Yahoo (Carol Bartz Gets New Yahoo Org Chart, n.d.) The illustration given above represents Yahoo’s organizational chart. However, Carol Barz was replaced by Scott Thompson in 2012. Scott Thompson unveiled a plan recently that will reorganize the company into three main divisions focused on users, advertisers and technology” (Yahoo CEO outlines new corporate structure, 2012). As per Thompson’s plan, users or consumer servicing division in Yahoo will have three units: Media, Connections and Commerce whereas the advertising division is accountable for all yahoo revenue. On the other hand technology division looks after the infrastructure development. The reporting structure also changed drastically in yahoo. Regional executives are currently responsible for creating contents and selling ads. Even though Scott Thompson worked hard to streamline the company’s progress in the right track, his attempts were not so successful. Moreover, lots of controversies started to revolve around Thompson regarding his educational credentials. As a result of that he was replaced by Marissa Mayer recently. In short, Yahoo had four CEO’s in the last five years. Mayer, 37, was one of the first employees of Google, the company that first rode to prominence on Yahoo’s coattails as its search provider—and then quickly surpassed it. She ran Google’s search group for years and most recently has led the location and local division; she’s also always been one of the company’s best spokespeople. But over the past year she never seemed to find a place on CEO Larry Page’s senior leadership team (Stone, 2012). In short, yahoo is currently trying for a comeback with the help of a former Google employee. Different CEO’s who worked in Yahoo in the recent past tried a lot to revitalize the company with the help of different organizational structures. However, none of them was successful. While Google is trying to increase the workforce, Yahoo is trying to reduce the workforce in attempt to survive in the market. Yahoo CEO recently announced that the company would begin laying off 2,000 employees, a 14% cut to its workforce (Yahoo CEO outlines new corporate structure, 2012). It should be noted that this laying off represents the biggest in the history of Yahoo. Some rumors spreading in the corporate world indicates that yahoo is trying to get rid of its search business altogether. It is almost impossible for yahoo to compete with Google. Yahoo’s real problem is believed to be its poor organizational structure. Former CEO, Terry Semel implemented a classic matrix structure to manage the company. Products like Front Page, Messenger, Mail and Flickr are on the verticals, while organizational functions like PR, legal, privacy, branding, etc. are on the horizontals. This structure is used by most large organizations in the world, and it’s great for managing growth as well as for checks and balances. But it is terrible for accountability or speed. Whenever you launch or change a product, you have to get clearance from legal, PR, branding, privacy etc, which inevitably takes time. The matrix structure also prevents any real risk taking (Ismail, 2011). Matrix structure is not working for yahoo. Centralized control is not providing by the present matrix organizational culture in yahoo. Accountability of the senior managers is less in matrix organizational structure. Moreover, this structure is preventing Yahoo managers from implementing quick decisions. Yahoo managers do not have the freedom to take independent decisions and implement them quickly. They forced to take approval from the top level even for silly matters. Thus, yahoo is not functioning as rapidly as Google. Approach to management and leadership Yahoo’s and Google’s approach to management and leadership are entirely different even though both have similar lines of business. Yahoo does not have a visionary leadership to look after the business. On the other hand, Google has such a leadership in Larry Page. It should be noted that most of the successful organizations in the current era are investing in the capabilities of its leadership. For example, Steve Jobs was instrumental in Apple Inc’s success whereas Bill Gates is responsible for Microsoft’s success. Larry Page is providing the effective leadership to Google now. However, Yahoo is struggling in the absence of effective leadership. As mentioned earlier, yahoo appointed changed four CEO’s within five years period. Yahoo’s director board is struggling to identify a suitable leader. Carol and Scott, two of the recent CEO’s of yahoo generated huge controversies. Even though Google is performing well, some of its management policies are highly questionable. “Google’s high growth rate is creating new HR challenges for the company. Google has built a culture where a well-chosen elite accommodates flexibility, shifting roles and, above all else, urgency” (Verma, 2006). Human resource management in Google is not so good. Racial discriminations and stereotyping are often taking place in Google’s workplace. Google is often accused for the discrimination towards employees over the age of 40 years. Google is always interested in fresh talents and they are not much interested in the services of aged people. In other words, Google values freshness more than experience. It should be noted that careful blending of freshness with experience is necessary for the smooth functioning of a company. Moreover, Google seems to be more interested in politics rather than management at times. They have no hesitation in interfering in politics. “Google has recently started a blog to tagline Google's views on government, policy and politics in America” (Catone, 2007). Even though Google forced to withdraw from China recently, its readiness to operate in China generated huge criticisms. In fact yahoo also has no problem in operating in China which is famous for censoring of information. “Its “Do no evil” slogan has been ridiculed, and it was called before the U.S. Congress (along with Yahoo!, Cisco, and Microsoft) to defend its decision to work in concert with Chinese authorities” (Martin, 2008, p.9). “Google uses competitive intelligence in order to become a more efficient and responsible user of its resources” (Helft and Hempel, 2011, p.116). Competitive intelligence or CI of Google is much more than that of Yahoo. CI helps Google to forecast the market trends and pulses well and take necessary actions. Moreover, Google has the uncanny ability to silence the competitors with the help of innovative business strategies. For example, Google plus was introduced as an answer to Facebook whereas Google Books was introduced to counter the challenges of Amazon. “Google CEO Larry Page trotted out an impressive statistic during January 2012 quarterly earnings call: Google+ now has 90 million users, double what it had three months ago. Even better, 60 percent of those users are engaged daily, and 80 percent weekly” (Brodkin, 2012). Android OS is causing big concerns not only to Apple Inc but also to Microsoft. Google has the ability to introduce products and services necessary for the needs of the changing consumers. For example, “Since its launch in 2005, Google Earth has been used to circulate information about various conflicts around the world, including the wars in Iraq and Afghanistan. Its most high profile conflict layer has been the ‘‘Crisis in Darfur” (Parks, 2009, p.536). Google maps, Google ears, Google now, Google Goggles etc are some of the latest products introduced by Google to cater the needs of consumers. Personal health records or PHR is another area in which Google showed business interests recently. They started the effort to develop PHR or Google Health in 2006. Archer (2011) mentioned that “Electronic personal health record systems (PHRs) support patient cantered healthcare by making medical records and other relevant information accessible to patients, thus assisting patients in health self-management” (p.515). Green energy solution is another area in which Google recently entered. It has already started investing in a wide range of green energy companies, including wind, solar, and geothermal plants. “Google CEO Larry Page announced a new R&D team charged with capitalizing on those investments and Google's own cleantech intellectual property” (New Google R&D Team Charged With Making Renewable Energy Work For The Market, 2012). In short, Google leadership is successful in implementing effective business strategies to exploit the favorable market situations. They are encouraging sustainable business practices and their corporate social responsibility is well demonstrated through its activities. It should be noted that Google had no hesitation in stopping its business activities in China, when China tried to censor the information passing through Google search engines. Google argued that Chinese laws are human right violations and hence they withdrew their operations in China. However, Yahoo is ready to obey Chinese laws and they are making significant headways in the country. Yahoo believes that Chinese market is essential for their future growth prospects. In fact yahoo is developing its future business strategies based on the needs of Chinese market. Successful leadership is a big asset for Google. On the other hand, yahoo is struggling even to find a suitable leadership and management team. Team works is encouraged more in Google whereas yahoo seems to believe in individual work. Instead of working as a team, yahoo managers are trying to safeguard their interests. Yahoo tired a business alliance with Microsoft and Amazon as a strategy to counter the challenges of Google. “However despite the best efforts of its competitors, Google holds the majority of the global search engine market, and this does not look set to change”(Marketline, 2012, p.4). Conclusions Even though Yahoo entered search engine business much earlier than Google, present statistics show that Google is yards ahead of Yahoo. In fact Yahoo is currently struggling for survival whereas Google is trying to swallow smaller companies. The recent acquisition of Motorola definitely shows Google’s intentions to enter into the smartphone manufacturing market. Failure of organizational structure, poor leadership and management are the major reasons for the failure of Yahoo. Yahoo forced to change many CEO’s in the recent past. However, they never bothered much to change its matrix organizational structure. Decision making is taking place much slowly in yahoo because of the matrix organizational structure. Moreover, the accountability of the middle managers and executives are very less and risk taking attitudes are invisible in yahoo. On the other hand, Google has no hesitation in entering the enemy territories to challenge them. Google plus, Google books etc are examples of Google’s courage to counter the challenges of enemies. Yahoo tried a strategic business alliance with Microsoft and Amazon to challenge Google’s dominance in the IT industry. However, Google was successful in countering such challenges with ease. Larry Page is instrumental in Google’s success. He was providing the necessary leadership needed for a modern IT company to counter the challenges. On the other hand, yahoo is struggling a lot in identifying a suitable leadership. Management styles in Google and yahoo are entirely different. Even though there are plenty of criticisms against Google’s management styles, the outcome of this management style is very good. On the other hand, Yahoo seems to believe in participatory management and the employees are exploiting the freedom. Yahoo should make drastic changes in its management styles. Yahoo is still trying to make a comeback with the help of same old products and services. Diversification is not at all taking place in yahoo’s business portfolios. It is necessary for a company to change tactics when competition intensifies. For example, Apple shifted their attention from computer manufacturing to consumer electronics, when they faced strong challenges from Microsoft. On the other hand, Yahoo is still trying their luck with the help of old products and services. Yahoo should diversify its business instead of sticking with the same products and services. Yahoo has a strong customer base, but it is mainly located in United States only. Yahoo is not doing anything to spread its customer base across the world. It should be noted that global wealth is currently shifting from US and Europe to Asian region. Yahoo needs to give more attention to Asian region. In short, Google is successful because of its innovative business ideas and strategies. On the other hand, yahoo is struggling because of its reluctance in diversification of business and over confidence in the existing business. Market trends are changing day by day because of the huge changes in science and technology. Yahoo should fine tune its business strategies based on these changes. References Archer, N., Fevrier-Thomas, U., Lokker, C., McKibbon, K.A. and Straus, S. E. 2011.Personal Health Records: a scoping review. J. Am Med Inform Assoc. 2011;18: 515-522. Brodkin, J. 2012. Google doubles Plus membership with brute-force signup process. [Online] Available at: http://arstechnica.com/gadgets/2012/01/google-doubles-plus-membership-with-brute-force-signup-process/[Accessed 22 November 2012] Catone, J. 2007. Google the Vote: How Google is Changing the American Political Landscape. [Online] Available at:http://www.readwriteweb.com/archives/googles_political_influence.php [Accessed 06 March 2013] Carol Bartz Gets New Yahoo Org Chart, N.d. [Online] Available at: http://www.google.co.in/imgres?imgurl=http://cache.gawkerassets.com/assets/images/7/2011/11/b6bc217627736750881e8c11ab9c64d2.gif&imgrefurl=http://gawker.com/5161062/carol-bartz-gets-new-yahoo-org-chart-half-right&h=499&w=900&sz=28&tbnid=ATTyo9ZxIpsGfM:&tbnh=63&tbnw=113&zoom=1&usg=__iJhAqpFY3rPPL3KnsGkdfF44rHk=&docid=rX_VmIKzFhbtQM&sa=X&ei=0tg2Uf_JK4r8rAfT0YHYDw&ved=0CD0Q9QEwAQ&dur=4933 [Accessed 06 March 2013] Google: Management team, N.d. [Online] Available at: http://www.google.co.in/about/company/facts/management/ [Accessed 06 March 2013] Hand, R. 2011. Google Still King of the UK Search Engine Market Share [Online] Available at: http://theeword.co.uk/seo-manchester/google_retains_top_spot.html [Accessed: November 22, 2012] Helft, M. and Hempel, J. 2011. Facebook V Google: The Battle for the Future of the Web. Fortune Vol 164 (8) pp114 – 124 Ismail, S. 2011. Stuck in the Matrix: Where is Yahoo’s Neo? [Online] Available at: http://gigaom.com/2011/09/12/stuck-in-the-matrix-where-is-yahoos-neo/ [Accessed: November 22, 2012] Martin, K.E.2008. Innovation, ethics and Business. Business roundtable corporate ethics. [Online] Available at: http://www.corporate-ethics.org/pdf/innovation_ethics.pdf[Accessed 06 March 2013] Marketline. 2012. Google Inc: Compay Profile. New York: Marketline Publications. www.marketline.com New Google R&D Team Charged With Making Renewable Energy Work For The Market, 2012. [Online] Available at: http://www.fastcoexist.com/1678104/new-google-rd-team-charged-with-making-renewable-energy-work-for-the-market[Accessed 06 March 2013] Parks, L. 2009. Digging into Google Earth: An analysis of ‘‘Crisis in Darfur”. Geoforum 40 (2009) 535–545. doi:10.1016/j.geoforum.2009.04.004 Schwartz, B. 2006. Charting Google's Growth By Employees. [Online] Available at: http://searchenginewatch.com/article/2057472/Charting-Googles-Growth-By-Employees[Accessed 06 March 2013] Sullivan, D. 2009. The Microsoft-Yahoo Search Deal, In Simple Terms [Online] Available at: http://searchengineland.com/microsoft-yahoo-search-deal-simplified-23299 [Accessed 06 March 2013] Stone, B. 2012. Marissa Mayer Is Yahoo's New CEO. Business week. July 16, 2012. The History of Yahoo! - How It All Started..., 2005. [Online] Available at: http://docs.yahoo.com/info/misc/history.html [Accessed 06 March 2013] Verma, M. 2006. Google’s HR Dilemma. [Online] Available at: http://www.ibscdc.org/Case_Studies/HRM/HRM0020P.htm[Accessed 06 March 2013] Yahoo CEO outlines new corporate structure. 2012. USA Today. 4/10/2012 Appendix Changes in Market Share in February and March, 2011 (Hand, 2011) Outline 1. Introduction (524 words) Background information of Google and yahoo is given in the introduction paragraphs. Different business segments and the history of these two companies are explained briefly in the introduction. Moreover, the reasons for growth of Google and the reasons for the struggle of yahoo are briefly introduced in the introduction part. 2. Organizational structure and design (1024 words) Organizational structure and design of Google and Yahoo are discussed under two different headings with the help of schematic diagrams and theories. This part also explains the frequent CEO changes in Yahoo. Moreover, it also discusses why yahoo is reducing workforce whereas Google is increasing workforce. 3. Approach to management and leadership (964 words) This part explains the leadership and management failure in yahoo and the success of the same in Google. Moreover, the importance of competitive intelligence in Google’s growth is discussed thoroughly in this part. Some of the unethical behaviors and the management failures of Google are also discussed in this part. Leadership failure, lack of diversification and poor business forecasts and strategies are identified as the reasons for the failure of Yahoo 4. Conclusions (487 words) The findings of this research are concluded in the conclusion part. Moreover, some recommendations for the improvement of leadership and management in yahoo are also given in this part. 5. References All the references used in this paper are cited in Harvard format in this section. 6. Appendix Appendix used for writing this report is given at the end of the reference part. Read More