How Google Works – The Fun-Sized Version

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How Google Works – The Fun-Sized Version

Words by Messrs Eric Schmidt and Jonathan Rosenberg with Mr Alan Eagle

8 October 2014

In an exclusive excerpt from their bestseller, two top execs reveal the secrets to building a great 21st-century business.

My sense that Google was different started on my first day as CEO in 2001. When I arrived at the office that had been assigned to me, I found that it was occupied by several software engineers. Rather than kicking them out, I decamped to the next office over. Then, a few weeks later, the situation got worse. I found out that I had a new officemate, Mr Amit Patel, who explained that his office had five inhabitants with another on the way. In comparison, my spot seemed quite roomy, so Amit moved in. Amit and I ended up sharing the office for several months.

Jonathan too experienced a stark example of Google’s aversion to traditional business practices a few months after he started in 2002. He presented a product plan to Google co-founder Mr Larry Page. The two-year plan was a manifestation of the “gate-based” process to building products, which in most companies entails a series of well-defined phases and milestones, governed by various executive reviews. All that remained was for Jonathan, a veteran of Apple and Excite@Home, to receive a round of applause.

“Have you ever seen a plan that a team beat?” Larry asked.

Um, no.

“Then what’s the point of the plan? It is holding us back. There must be a better way. Just go talk to the engineers.”

The engineers Larry was talking about weren’t engineers in the traditional sense. Yes, they were brilliant coders and system designers, but along with their deep technical expertise, many of these Googlers were also quite business-savvy and possessed a healthy streak of creativity. Managing them by traditional structures wouldn’t work. It might guide them, but it would also hem them in. “Why would you want to do that?“ Larry asked Jonathan. “That would be stupid.”

Introducing The Smart Creative

By the summer of 2003, Jonathan and I had been at the company long enough to realise that the way to achieve product excellence was not with a traditional plan but by hiring the very best people the company could attract and then getting out of the way. If we were going to succeed, we would have to relearn everything we thought we knew about management and business. The same economic forces — the internet, mobile-global connectivity, big data — that are roiling industries are churning up workplaces too. You suddenly have an environment where employees can have an inordinately big impact. And when we look at the people we work with at Google, we see our peers represent a different type of worker.

Unlike the typical white-collar worker of the late 20th century, our colleagues are not confined to specific tasks. They are not limited in their access to the company’s information or its computing power. They are not averse to taking risks, nor are they punished or held back when their initiatives fail. They are not hemmed in by role definitions or organisational structures. In fact, they are encouraged to exercise their own ideas. They don’t keep quiet when they disagree with something. They get bored easily and shift jobs a lot. They are multi-dimensional, usually combining technical depth with business savvy and creative flair. They are a new kind of animal, a type we call a “smart creative”.

Since the Industrial Revolution, operating processes have been biased towards lowering risks and avoiding mistakes. These processes, and the management approach from which they derive, stifle smart creatives. Now, though, the defining characteristic of today’s successful companies is the ability to continually deliver great products. And the only way to do that is to attract smart creatives and create an environment where they can succeed at scale. Here are some of the key elements to building that sort of environment…

Culture – Believe Your Own Slogans

At most companies cultures just happen: no one plans it. That can work, but it means leaving a critical component to chance. Once established, company culture is very difficult to change, because early on in a company’s life a self-selection takes place. People who believe in the same things the company does will be drawn to work there. The smart approach is to ponder and decide what sort of culture you want at the outset of your company’s life. And the best way to do it is to ask the core members of your team.

Here’s a little thought experiment for you. Think about some place you worked. Now, try to recite its mission statement. Can you do it? If you can, do you believe in it? Does it strike you as authentic, as something that honestly reflects the actions of the company and its employees? Take “Respect, Integrity, Communication and Excellence”. Sounds good, doesn’t it. Well, that was Enron’s motto.

On the other hand, one of Google’s stated values is “focus on the user”. If we changed that, perhaps by putting the needs of advertisers or publishers first, our inboxes would be flooded and some of our best people would leave.

Think about your culture. Imagine months or years from now an employee working late unable to make up his mind about a tough decision. What values would you want the bleary-eyed employee to consider? Write them down in a simple concise way then share them, not in posters and guides, but through constant authentic communication.

Talent – Hiring Is The Most Important Thing You Do

If you asked managers at large companies, “What’s the most important thing you do at work?” most would reflexively answer, “Go to meetings”. For a manager, the right answer to that question is hiring. Once hired, however, most managers do everything in their power to avoid being involved in hiring anyone else. Recruiting is for recruiters. Interviewing is a chore. The higher you go up in most organisations, the more detached the executives get from the hiring process. The opposite should be true. Everyone knows someone great.

The simple way to keep recruiting in everyone’s job description is to measure it. Count referrals and interviews. Then make this metric count when it comes to performance reviews and promotions. Recruiting is everyone’s job, so grade it that way.

At Google, we break down candidate evaluations into four different categories.

Leadership. We’ll want to know how someone has flexed different muscles in various situations to mobilise a team.

Role-related knowledge. We look for people who have a variety of strengths and passions, not just skill sets.

General cognitive ability. We’re less concerned about grades and transcripts and more about how a candidate thinks.

“Googleyness.” We want to get a feel for what makes a candidate unique. We look for someone who is comfortable with ambiguity and has a bias to action and a collaborative nature.

We’ve also learnt that when people talk about their passions during interviews, their guard usually drops. Listen to how they talk about their sport. For example, athletes can be quite passionate, but do you want the ultra-marathoner who pursues his craft all alone, or someone who trains with a group? Is the athlete solo or inclusive, collaborative? When people talk about their professional experience, they know the right answers to these questions (no one likes a loner in the work environment).

When interviewing people for senior staff, scenario questions are also useful because they can reveal how a person will use or trust their own staff.

Here are some of our other dos and don’ts when it comes to hiring:

·  Hire people who are smarter and more knowledgeable than you are·  Hire people who will get things done·  Hire people who are enthusiastic, self-motivated and passionate·  Hire people who inspire and work well with others·  Don’t hire people who like to work alone·  Hire only when you’ve found a great candidate·  Don’t settle for anything less

Other things to keep in mind: hire “learning animals”. We know plenty of bright people who, when faced with the roller coaster of change, will choose the familiar spinning teacups ride instead. Our ideal candidates are the ones who prefer roller coasters, the ones who have the smarts to handle massive changes and the character to love it.

The loftier your hiring aspirations, the more challenging the interview process becomes, and conducting a good interview requires preparation. You need to understand the role, read the resumé – and most important – consider your questions. Look at their resumé, do a search, find out what they worked on and do a search on that too. You need to ask challenging questions that push the candidate. What was the low point in the project? You need to find out if the candidate was the hammer or the egg, someone who caused the change or someone who went along with it.


The forum for decision-making is almost always a meeting, which may be the most hated of all business practices, except for secret Santa. People complain about meetings and how they are a waste of time, but in fact a well-run meeting is a great thing. Note the italics.

Computer scientists hate inefficiency, so over the years Eric’s team developed a series of rules for meetings that we found to be quite efficient.

·  Meetings should have a single decision-maker/owner

There must be a clear decision-maker/owner at every point in the process, someone whose butt is on the line. A meeting between two groups of equals doesn’t result in a good outcome, because you end up compromising rather than making the best tough decisions. Include someone more senior as the decision-maker.

·  The decision-maker should be hands on

He or she should call the meeting, ensure that the content is good, set the objectives, determine the participants and share the agenda (if possible) at least 24 hours in advance. After the meeting, the decision-maker/owner (and no one else) should summarise decisions taken and action items by email to at least every participant – as well as any others that need to know – within 48 hours.

·  Even if a meeting is not a decision-making meeting, it should have a clear owner

·  Meetings are not like government agencies. They should be easy to killThe decision-maker needs to ask the hard questions: is this meeting still useful?

·  If you attend the meeting, attend the meeting

If you are in a meeting and using your laptop, tablet or phone for something not related to the meeting, it’s obvious your time is better spent elsewhere. Everyone attending the meeting should focus on the meeting. And if people have so many meetings they can’t get work done, then there is a simple solution: prioritise and go to fewer meetings.

Communication – Default To Open

Your default mode should be to share everything. At Google, we try to share virtually everything. The company’s intranet called Moma includes information on every upcoming project but also everybody’s goals. We call these goals OKRs. The acronym stands for “Objectives” (the strategic goals to accomplish) and “Key Results” (the way in which progress toward that goal is measured).

Every employee updates and posts his OKRs company-wide, every quarter, making it easy for anyone to quickly find out anyone’s priorities. When you meet someone at Google and want to find out more about what they do, you go to Moma and look up their OKRs. This isn’t just a job title and description of the role. It is their first-person account of the stuff they are working on and care about. It’s the fastest way to figure out what motivates them.

Of course this starts at the top. Every quarter at Google, the co-founder and CEO Larry Page posts his OKRs and hosts a company-wide meeting to discuss them. All the various product leads join him on stage to talk through each OKR and what it means for their teams and to grade themselves on how they performed against the previous quarter’s OKRs. This isn’t for show.

The OKRs are real objectives, hammered out between the various product leaders at the outset of each quarter, and the grades of the previous quarter’s OKRs are usually full of red and yellow marks. The top leaders of the company candidly discuss where they failed and why. (At your company, does the top brass stand up each quarter and talk about the ambitious goals that they didn’t achieve?) After this meeting, when people go off to create their own OKRs, they have no doubt about what the company’s priorities are for the quarter. This helps maintain alignment across teams even as the organisation scales tremendously.

And finally, which companies survive and which ones don’t?

In order to understand why change threatens traditional corporations, we need to think about other moments in history when one form of economic hub passed the baton to another. As we enter the 21st century, we’re at a hand-off zone not unlike the one where the Western world went from a feudal economy to an industrial one in the 19th century.

In the 21st century, the corporation as a hub of economic activity is being challenged by the platform. A platform is a very different sort of hub than a corporation. A corporation’s relationship with consumers is one-way. GM decides how to design, manufacture and market a new product to its consumers, and sells it through a network of dealerships. In contrast, a platform has a back-and-forth relationship with customers and suppliers. There’s a lot more give and take. Amazon is a corporation, but it is also a marketplace where buyers and sellers come together. Amazon does not just dictate what it sells to consumers. Consumers tell Amazon what they are looking for, and Amazon sources it for them.

Thanks to the 2011 bankruptcy of the US bookseller Borders, we know that platforms such as Amazon can hurt incumbent corporations. So it seems that incumbent corporations have a choice to make. They can adopt a dig-a-moat-and-bury-your-head-in-the-sand approach, but that is bound to end tragically. Or they can develop a strategy that takes advantage of platforms to consistently deliver great products. Simple, right? Except that of course it isn’t, not even close. The very nature of mature companies is to be risk-averse and to attack big change like a body attacks infection.

We know because we’ve been there. After all, we were among the last Googlers to ditch our BlackBerries. We don’t always see change coming, but if you surround yourself with great “smart creative” hires, your colleagues will.

How Google Works by Messrs Eric Schmidt and Jonathan Rosenberg with Mr Alan Eagle is published by John Murray (£25) and Grand Central Publishing ($30), available via

Silicon Valley Cool

Illustrations by Mr Antony Hare