Goggle springs a surprise with the announcement that it is restructuring itself under the holding company name of Alphabet
Google’s co-founder Larry Page explained what was going on in a blog post.
Being Google, it has created a quirky domain for itself.
One alternative explanation for the change offered by outsiders is that such restructuring efforts permit creative accounting. Google’s track record on tax minimization has become a matter for public protests in Europe.
Differentiation and Integration
The restructuring is explained by a much respected idea addressing the need to balance differentiation and integration of an organization. You can think of the restructuring as differentiating individual components including the core activities of the former Google Empire. The integration or coordination takes place through the new holding company Alphabet. You can read the classic paper in Administrative Science Quarterly here
To general approval, Silicon Valley whiz kid Sundar Pichai is to become CEO of the new slim line Google division, which remains the most profitable and largest revenue generator.
Hint to business commentators:
Practice saying ‘Alphabet’ while thinking ‘Google’s Holding Company’ Keep saying it until it loses all meaning except ‘Google’s Holding Company’. On the infrequent times you are using the word alphabet in its old sense, explain that you mean ‘Not Google’s Holding Company’.
To go more deeply
Business students needing to study the early days of Alphabet will find the following sources useful to back up more scholarly articles.