Google Should Stay True to Their Management Practices

I believe in Google’s past, present and future. They have shown a great ability to ignore the short term focus that dominates (and kills success) of so many companies today. I am happy to invest in Google for the long term.

This current reaction to the economic crisis, is one of many times Google can be seen to be making significant changes to adapt based on market conditions and the results of their experiments and experiences. Google’s management in general and the 3 leaders continue to practice a management style based on an engineering perspective while so many others practice the style Scott Adams has pilloried in the pointy haired boss.

The thought and execution of Page, Brin and Schmidt (and others: Marissa Mayer) is at a different level than that of most other executives. Skepticism is wise. But I believe Google continues to have exceptional execution and focus on long term innovation.

The biggest risk I see, for them, is they become too focused on the short term and lose their ability to take advantage of the great opportunities available by focusing on long term success. Google is in a position where they are not forced to abandon long term plans due to cash flow problems. The only decision for Google should be whether something makes long term sense or not. If they are recalibrating and deciding they were being too lax in certain areas (without long term justification) then I am fine with changes. If though they are reacting to short term market conditions that is a big mistake.

Google Gears Down for Tougher Times

He says the company is “not going to give” an engineer 20 people to work with on certain experimental projects anymore. “When the cycle comes back,” he says, “we will be able to fund his brilliant vision.”

Bad idea, short term thinking. Don’t drive business practices based on short term earning releases. If the idea is not worth 20 people long term fine, don’t do it. If it is, do it. The lack of cash that would force many companies to abandon promising efforts is not an issue for Google. They have plenty of cash and are generating much more every day.

To better predict revenue, the company implemented quotas for ad-sales representatives and tied the pay of more employees to performance

Bad idea; quotas are a sign of management abdicating responsibility. Quotas are destructive to success. Pay for performance focuses employees on meeting targets instead of the best interests of the company. Quotas are destructive to constancy of purpose.

To better manage projects in development, top executives asked engineering vice presidents to rank the 20 most promising projects within their units; those that made the lists were granted the bulk of the resources

That seems reasonable (using arbitrary target like 20 is unwise but setting some form of priority is sensible.

Google recently hired a new chief financial officer, Patrick Pichette. Trained in “Six Sigma” management practices — a rigid quality-control system designed to eliminate waste — Mr. Pichette is looking to reduce inefficiencies and delay spending when possible.

It will be important for Google to practice six sigma as understood by the best experts and not the simple minded methods unfortunately far too commonly used (using words like “rigid quality-control system designed to eliminate waste” are a big danger sign that the six sigma effort is going to do more harm than good).

Google is still growing and developing their management culture. The ability to continue to experiment and adjust is good. I just firmly hope they do not bow to a short term quarterly earning focus. Adjustments like cutting back on building new data centers as projects for the need change – perfectly sensible. Adjust investments in new business ideas as the understanding of the potential shows it is not wise. Fine. But please don’t become more conventional.

I don’t think Google will retreat from their past commitment to take bold action. They need to remain willing to defy conventional wisdom. I think they will but I do worry they will retreat to making decisions not based upon what they think it right but what they will not be criticized for by the conventional masses.

Related: Google’s Moment of TruthEric Schmidt on Management at GoogleThe Google Way: Give Engineers RoomManagement: Geeks and DemingThe Defect Black MarketGoogle Exceeded Planned Spending on Personnel

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