Organizational Design of Google: Approaches and Applications - Case Study Example

INTRODUCTION This paper is about the case study, “Googling out of control”. The case study poses the question as to whether the non-conventional organisational design and the chaotic work culture of Google can be sustained over the longer term and whether it is a recipe for disaster or continued success. The case study highlights the college like atmosphere at Google and goes on to describe the challenges to its way of working. This paper attempts to analyse the case study and answer the questions posed by the case study. In addition, the paper makes some recommendations about the viability of Google’s strategy over the longer term. The case study describes the Google way of working and as the case study puts it, “Google is a prime example of a company which not only embraces chaos, but profits from it. Traditional business management was based on product manufacturing, sales and distribution.” (Emerald Insight, 2007) Further, it goes on to describe how, “Google recognizes that its most valuable resource is the thought-power of its employees. Google employees are paid to think, to experiment and to dare to take risks. Even if those risks go wrong, Google prefers to create a work environment where mistakes are seen as tools for learning and employees dare to try outrageous ideas.” (Emerald Insight, 2007) This paper examines the case study from a mix of perspectives and analyses the points raised by it. The paper also recommends a future course of action for Google to follow and ensure that it stays ahead of the curve. The thrust of the conclusions are on how to maintain Google’s competitive edge in the midst of phenomenal growth. OVERVIEW OF GOOGLE Google is a phenomenon in itself. It has completely redefined the way in which users browse the internet. Given that the internet is a loose collection of millions (or more) websites, a centralized search engine was the answer to finding relevant information quickly and easily. When Larry Paige and Sergey Brian hit upon the idea in 1998, the concept of search engine was still vague. Thus, Google’s success lies in tapping the search engine space and as it grew exponentially; it had to evolve into some kind of structured organization if it had to maintain its astounding growth rate. The strength of Google is innovation and the workforce that prides itself on being “geeky” but resents formalized structures. Google derives its main strength from the way in which employees use their spare time to sound off on potential ideas that can be the “next big thing”. The weakness of Google lies in the way in which it is grappling with establishing formal governance structures. This is a classic dilemma faced by many technology companies: How to grow without making the workforce feel that are part of an “impersonal” and “mechanical” organization. (Bloisi et al, 2006) Google’s opportunity is the ever growing web applications market that has seen it grows at an annualized rate of around 30% over the last few years. The vitality and creativity of the workforce is another area of opportunity. Finally, the threat to Google is two-fold: potential start-ups like cuil.com that were started by ex-Google employees and can eat into its search engine market. Second, the rising headcount that now stands at over 6,000 can make it a victim of its own success. THRIVING ON CHAOS: THE GOOGLE WAY As the introduction quoted the case study describing the way Google works, it is pertinent to note that the company takes pride in the way it does things. The point here is that Google considers the chaotic work environment as something that encourages creativity and fosters innovation and free exchange of ideas and information. Google offers its employees the flexibility of working on projects of their choice for some time every week. This is to encourage the “next big thing” that might be the product of a lifetime, much the same way Google was the product for a generation. As I point out throughout this paper it is this culture of openness that has been Google’s forte and the reason for its outstanding success. However, in the changed business landscape brought about the economic slowdown and increased competition from other tech giants, Google has to find ways to maintain its ranking among the top tech companies. THEORETICAL PERSPECTIVES The main criticism of a chaotic work culture like Google comes from the conventional approaches to management theory and organisational design. Theory holds that companies need to have a well ordered organisational structure and a disciplined work culture. The conventional approaches to organisational behaviour posit the workplace as being bound by sets of rules that are formal and informal at the same time. The formal rules are those that are “imposed” from above as organisational policies and the informal rules are those which evolve over a period of time and which typify the specific organisational culture that the company does. (Buchanan et al, 2007) It has been noticed in many companies that the informal rules are described as “our way of working” or the organisational culture as the company grows and the evolutionary path is often marked by the combination of formal and informal structures that the company has. It is a common experience for people working in organisations to adhere to an informal code that is apart from the formal lines of management and reporting. This is evident from the use of “go to” guys at the workplace where these employees perform additional tasks as subject matter experts and dispense knowledge to the others. These “go to” employees may not necessarily be approached with the consent of the formal manager. (Mullins, 2007) In these and other cases such as the existence of a “grapevine” that is sometimes much better at information flows rather than the official channels are instances of how informal networks and culture permeate even the most rigid of organisations. However, in Google’s case, what is normally considered informal in most organisations is the norm and hence the organisational structure of Google raises questions about the standard approaches that may not be valid in Google’s case. ORGANISATIONAL APPROACHES As we have seen in the preceding section, the traditional approaches towards organisational design and application call for a fixed structure without the chaotic way of doing things. However, the Google way is all about “thriving on chaos”. Many companies in the so-called “New Economy” space do their work in a similar fashion. The reasoning is that these companies need to have a mix of creative and formal approaches if they have to thrive in what is essentially a sector that is knowledge based and is based on free flow of ideas and information. (Liley et al, 2009) The traditional approaches towards organisational design are stood in the head with the emergence of these new economy companies. As the example of Google and other tech companies’ shows, the composition of the workforce is something that makes the difference in the way these companies operate. As the case study points out, “For most young graduates, the transition from university life to the corporate world of work comes as something of a cold shower shock. Just getting out of jeans and trainers into the suit and tie uniform can be intimidating. Then there are office hierarchies to assimilate, time clocks to punch and corporate politics to fathom. For the work force at Google Headquarters, most of whom are in their twenties and thirties, going to work must seem like a continuation of campus life.” (Emerald Insight, 2007) The challenge for Google is in maintaining its innovative culture with the rigid bureaucratic structure that large organizations typically embrace once they reach a certain critical mass. IS IT SUSTAINABLE? The point as to whether the “Google Way” of doing things is sustainable in the longer term is indeed worth asking. The results certainly seem to indicate that Google is in a comfortable position as far as financials go. However, as the case study points out, it is fast becoming a household term to describe anything connected to searching the internet to be called “Google it”. As we shall see in the next paragraph, this association of the brand with the product has implications that go beyond the success of brand recall and may well endanger the brand itself. To quote from the case study, “While many firms assume that achieving ‘‘household name’’ status is the ultimate accolade, some business experts warn that there is a down side to such recognition. When you jumped into the ‘‘Jacuzzi’’, ‘‘hoovered’’ up the crumbs off the carpet or fondly remembered listening to your first ‘‘walkman’’ you were not necessarily using the branded products to which those names were originally attached. In other words, there is no longer much (if any) association between the product and the brand. What was originally a brand name designating a particular manufacturer’s product is now used to indicate the generic product. If ‘‘Google’’ becomes just a generic term for a search engine it is possible that their share of the market could slump” (Emerald Insight, 2007) The other point about the sustainability of the “Google Way” of doing things is when the organization grows at a pace that makes the free flowing culture no longer possible. As the “economies of scale” kick in, the organization would feel a need to have a more hierarchical structure and one that is in tune with the changing needs of the organization. This is applicable in the case of Google as well as the company needs to have formalized structures that harness the creative energies while directing them towards increased productivity and channeling them appropriately. Growing organizations have always felt the need to balance creativity with organization. And this is where the leadership of people like Schmidt comes into play. They have to make sure that everyone is aligned to the vision and mission of the company. Google’s management team also has to manage the challenge of “scale” and ramping up the headcount. While size and scale are good for any company, they come at a price. And that is the feeling of bureaucracy. Thus, the adaptability of Google to these twin challenges remains the core of the recommended strategy. (Fleming, 2006) CONCLUSION The previous sections have described the Google way of doing things and have attempted to answer the question as to whether this approach is sustainable. Further, the discussion also included as to whether the theory supports such a way of working and how traditional concepts about organisations may not necessarily hold for these types of companies. However, the recommendation that is to be made is one of combining an organisational structure with that of the existing free flowing one. The blend of youth and experience is something that Google would well do to follow and ensure that it stays ahead of the curve. As the company matures, it becomes imperative to maintain a semblance of an organisational structure and do away with at least a portion of the chaos that characterises the company. The challenge before Google is to balance growth with its free flowing culture and introduce some amount of bureaucratic controls in order to manage the situation better. In the current business environment where the economic slowdown has hurt the bottom lines of many companies, Google has to adapt and innovate if it has to weather the recession. In conclusion, the point about companies disappearing of the Fortune 100 rankings every year is to be mentioned. One year you are there and a few years down the line, you are not. Google is a byword for the internet and is used synonymously with the World Wide Web. Thus, it is in the interest of internet users and users of web applications that Google maintains its competitive edge. It is hoped that it indeed does so. 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