Analysis of Google Co.

Yael Itskowitz

Extra Credit

Google (Alpha)Bets on Change

Google is a fast growing company, best known for their search engine. Google started as a research project in Stanford University and later became cooperation on in September 1998. It is a publicly traded company with a for-profit motivation. It is a flat organization that gives employees, in teams or groups, the ability to skip the middleman and communicate directly with the CEO when necessary.  Google has a cross-functional structure that splits up teams based on product or function that allows for an increase in communication and efficiency.

In 2015, Larry Page, co-founder and CEO of Google, decided there needed to be a change. Google was expanding too fast for its own good. Page has been taking very large bets and taking on ambitious projects such as “Google X,” self-driving cars, and “Fiber,” high speed Internet service. The current organizational structure was not enough to hold all of the different initiatives Google had taken on. Furthermore, Google was experiencing stagnant share price and investor unease. Using the Congruence Model, Larry Page analyzed the inputs and outputs of his organization and realized how difficult it was to measure Google’s overall performance.  It was hard to separate outcomes of Google’s main business of the search engine and advertising business from its other investments from its newer endeavors. He was trying to measure the input of a competitive and fast growing market to the outcome of low monetary returns however there were so many factors to consider that it was impossible to pinpoint the problem.

Therefore, Larry Page decided to create a parent company called “Alphabet.” Alphabet operates as a holding company that divided the domain of Google to allow it to have a slimmer focus. Alphabet split up Google from its ambitious projects including Google X and Fiber to focus Google’s resources on ninety percent of total revenues while Alphabet was now in charge of Google plus the other ten percent. Larry Page became the CE of Alphabet and Sundar Pichai became the CEO of Google.

Using Porter’s Five Forces to analyze Google, Page realized that there was a lot of competitive rivalry in their technology-based industry with a variety of competitors such as Apple, Microsoft, Yahoo, Comcast, Facebook, etc. Therefore, the creation of Alphabet allowed Google to focus its industry more and allow its parent company to extend its resources to the more ambitious projects that Google has created.

As an incumbent of the technology and search engine industry, Google has so much influence and power, yet it must constantly be reevaluating its performance in order to remain as one of the leading companies in the industry. With the creation of the parent company, Alphabet, Google has been able to become more transparent in its business initiative and monetary returns. I think that it is imperative for Google to keep a close eye on its new parent company to see what it truly becomes but it has the potential to being the key to Google’s success. It is allowing for further expansion and complexity into the company while allowing Google to stay focused on its main business and goals.