Alphabet Soup as Google reinvents itself

August 17, 2015

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.

The new businesses explained

The new businesses listed

tech crunch explanatory video

Google in a 45 Second video


How will Google deal with the threat of the smart phone?

October 21, 2012

Google’s biggest threat may be from changes to personal search habits triggered by mobile phone users

Weaknesses revealed in the Facebook financial model at its Initial Public Offering [IPO] recently, are now suggesting related problems at Google.

Google’s business model under scrutiny

For Facebook, the weakness in the valuation of its shares was considered by commentators as difficulties in converting its billion or so friends into means of selling advertising opportunities to commercial clients. Google’s business model has also come under scrutiny, after last week’s embarrassing leak of its financial figures [18th October, 2012].

A tipping point?

A minor operational error at Google last week involving a premature release of poor financial figures resulted in a stock-market blip. But the blip is now being taken more seriously. and has been tagged on to wider criticisms of the Company’s business model. If you believe in tipping points (and I’m not sure I do), it’s a tipping point.

The doom scenario

Such times call forth the doom scenario. On 20th October 2012, The popularist Daily Mail newspaper in the UK asked whether Google could disappear completely

As Google suffers a catastrophic nose-dive in its market value, analysts are already predicting its demise as the world’s lead Internet search engine.
Advertising revenues are falling — and will continue to fall — for Internet companies because consumers are increasingly migrating to mobile applications and advertisers aren’t willing to pay as much for [advertising through mobile phone platforms]

Realisation is dawning

Realisation is dawning that what is happening to Facebook is part of a wider economic shift.

“I keep saying Facebook isn’t the only one that has a mobile issue — Google does, too,” Colin Gillis, an analyst for Boston Consulting Group, told CNBC.com. “I keep saying Facebook isn’t the only one that has a mobile issue — Google does, too. If you are an investor in Facebook, ‘mobile’ is priced into earnings. I don’t think mobile in Google is priced in.”

The deepening story

The deepening story this week brought news that a dispute in Brazil has resulted in Brazil’s National Association of Newspapers [ANJ] saying that all its 154 members are following its advice to ban Google News from accessing content free.

Since 2010, the ANJ had experimented with giving Google News free access to its first few lines of stories. Google had sold them the idea that the arrangement would grow traffic for the Brazilian sites. But it turned out that it has, if anything, reduced traffic.

If the ban continues, Brazilian Internet users will still be able to find content if they use Google rather than Google News in searches. But Google says newspapers and news aggregators should be able to reach a negotiated solution to the problem.

Charging the taxi driver

Google’s Public Policy Director, Marcel Leonardi, suggested that the ANJ’s demands are like charging a taxi-driver for taking tourists to eat at a particular restaurant. But Google says newspapers and news aggregators should be able to reach a negotiated solution to the problem.

Page remains upbeat

Unsurprisingly, Google co-founder Larry Page was more upbeat, telling investors [19th October, 2012] that the company was uniquely well-placed to exploit mobile phone technologies, which he saw as in a transitional stage leading to multiple screen usage.

Page was making his first public speaking appearance since June 2012, a silence which had begun to produce health rumours.

Google executive arrested in Brazil

In another story, a senior Google executive in Brazil was arrested [Sept 26th 2012] for failing to comply with a judicial order to take down You Tube materials ruled to be in violation of the country’s electoral law.

Update

August 17 2018

The turbulent events covered in this post may (or may not) have contributed to the restructuring of Google into Alphabet


Does Carol Bartz disprove or confirm the glass ceiling theory?

February 19, 2009
Carol Bartz

Carol Bartz

The appointment of Carol Bartz replacing Larry Page as head of Yahoo has provided leadership headlines. Do the stories confirm the view that despite her success, prejudices against female executives still remain widely intact?

An article by the Economist on the appointment of Carol Bartz [January 17th 2009] prompted one irate reader to object of the double standards applied to male and female executives. The Economist painted a picture of someone driven by insecurities of early maternal bereavement who developed excessive discipline and who rejected notions of work life balance. For good measure the article added that at 60, she was “strikingly old” to lead an internet company.

A sympathetic and informative piece in Forbes by Carol Hymowitz

outlined evidence of her leadership capabilities at her previous role at Autodesk and makes the point that Bartz is one of

.. still just 23 woman at the helm of the nation’s 1,000 largest companies. Besides Bartz, only Paula Roseput Reynolds has been at the helm of two public companies–AGL and Safeco.

Hymowitz contrasts this with the frequency with which ousted male CEOs are hired into other big leadership roles. Her story continued:

[Bartz] was CEO at Autodesk for 14 years, much longer than most chief executives, whose median tenure is just five years, [where she] quickly imposed a more traditional management structure, with schedules for product launches and regular performance reviews. While doing this, she also coped with breast cancer, which she was diagnosed with just days after joining Autodesk Afraid to tell anyone that she had a “female disease,” she took off just a month from work after having a radical mastectomy, instead of the prescribed six to eight weeks.

During the dot-com boom of the late 1990s when Autodesk, many of her employees were suddenly being wooed to dot-com start-ups with the promise that they’d become millionaires. She convinced her best talent to stay put but also realized the Internet was radically altering business–and Autodesk had to adapt and learn to use the network to design, manufacture and market products differently.
As a business leader, Bartz also is known as someone who doesn’t hold grudges and is willing to change her mind. At one point, she fired Carl Bass, the company’s technical wizard at the time, over strategic disagreements. She quickly realized this was a mistake, hired him back a few months later and eventually named him her successor.
Bartz admitted she wasn’t ready to retire when she handed over the CEO spot to Bass in May 2006. “I cried my eyes out,” she said in an interview then. But she also knew Bass was getting offers elsewhere and she concluded that stepping aside was the right thing to do instead of spending years grooming another successor. “It’s very good to leave a job when you still love it,” she said at the time.

What do you think?

I know that female leaders in the business world have not been given the same sort of publicity as their male counterparts. I scan the papers regularly to add examples to my meagre collection. Carol Hymowitz argues that the glass ceiling is still pretty much intact. That is to say, the lack of case examples reflects a deficit of women in top executive roles. It’s an old argument. Is Hymowitz right that it is still salient? What do you think?