How to cope with middle age Responding to a mid-life crisis The firm has outgrown its uninhibited corporate culture. It is time to learn from its eldersGrowing up, Google can no longer follow its unbridled corporate culture. It's time to learn from the predecessorsIT MAY BE just 21 years old, but Google is in the midst of a mid-life crisis. As so often in such cases, all seems well on the surface. Every day its search engine handles 6bn requests, YouTube receives 49 years’ worth of video uploads and Gmail processes about 100bn emails. Thanks to its dominance of online advertising, Google’s parent company, Alphabet, made a profit of $34bnlast year. Beyond its core operations, it is a world leader in artificial intelligence (AI), quantum computing and self-driving cars. Along with the bosses of Amazon, Apple and Facebook, its chief executive, Sundar Pichai, was grilled in late July by lawmakers in Washington, DC, who fret that America’stech giants need to be restrained because they are so profitable. Crisis? What crisis?Google may be the only one at the moment21years old, but has ushered in a mid-life crisis. As is common in such crises, everything looks good on the face of it. Every day, Google's search engine responds60100 million requests, uploaded toYouTubeVideo can be played in total49YearsGmailTo deal with approximately1000100 million e-mails. Google's parent company is the dominant company in the online advertising businessAlphabetIt was achieved last year340billions of dollars in profits. In addition to its core business, Google is also an artificial intelligence (AI, a global leader in quantum computing and driverless.7At the end of the month, GoogleCEOSandal·Pichay (Sundar Pichaiand Amazon, Apple andFacebookThe bosses were questioned by lawmakers in Washington who feared the US tech giant's profits were too lucrative and needed to be restricted. Middle-of-the-year crisis? What's the crisis?Being hauled before Congress is, on the face of it, a sign of success. But it also marks a difficult moment for Google’s leaders: the onset of corporate middle age. This is a problem as old as business itself. How do companies sustain the creativity and agility that made them great, even as they forge a culture and corporate machine that is built to last? For Google the transition is especially dramatic because its founders, Larry Page and Sergey Brin, tried from the start to build a firm in which this moment would never arrive. As Google prepared to go public in 2004 they declared that it was not a conventional company, and “we do not intend to become one”. They hoped playground-like offices, generous perks and a campus atmosphere would allow it to retain the agility and innovation of a startup as it grew. The appearance of wrinkles on the corporate forehead is an admission of failure.On the face of it, being questioned by Congress is a reflection of corporate success. But for Google's leadership, it also marks a difficult time: the company is entering middle age. The problem is as old as the business itself. How can companies maintain the creativity and agility that have allowed them to make their own businesses while building an enduring culture and corporate mechanism? The shift is particularly striking for Google, whose founder, Larry Page,Larry Pageand Sergey·Brin (Sergey BrinFrom the start, we tried to build a company that would never have had this moment.2004When Google was preparing to go public, they declared that Google was not a traditional company, and that it was not“We're not going to make it a company like this”。 They hope the playground-style office space, generous benefits and campus-like atmosphere will allow Google to grow up with the agility and innovation it was when it was a startup. But the wrinkles on its forehead suggest that this has not worked.The signs of ageing are apparent in Google’s maturing business, its changing culture and its ever-more-entwined relationship with government. Take the business first. The firm is running up against growth constraints in its near-monopolies of search and online-advertising tools. Its market share in search ads is around 90%. Unearthing other gold mines has proved difficult.None of the ambitious “moonshot” projects into which Alphabet has poured billions, such as delivery drones and robots, has been a breakout success. To keep growing, Google is having to try to muscle in on the turf occupied by big tech rivals, such as cloud computing and enterprise software and services.Google's aging is emerging in several ways: maturing businesses, evolving corporate culture, and increasingly entangled relationships with government. Let's start with business. Google's expansion has begun to take hold in search and online advertising tools, which are almost monopolized by it. Its share of the search advertising market has reached90%Around. The journey to the Nuggets elsewhere has not been smooth.Alphabethas been ambitious“Moon.”The project has invested billions of dollars, including delivery drones and robots, but none of them have made a breakthrough. To sustain growth, Google has had to squeeze into territories already occupied by other big technology rivals, such as cloud computing, enterprise software and services.The cultural challenge is fuzzier but no less urgent for a firm that is proud of its unusual corporate character. The freewheeling ethos that was so successful in Google’s early days has become a liability. It works much less well at scale. Google now has nearly 120,000 employees, and even more temporary contractors. Doing things from the bottom up has become harder as the workforce has grown larger and less like-minded, with squabbles breaking out over everything from gender politics and the serving of meat in cafeterias to Google’s sale of technology to police forces.For a company like Google, which is proud of its unique corporate character, the cultural challenges are less obvious but equally urgent. Google's free-flowing temperament, which was so successful in the early days, is now a burden. The benefits of this temperament are greatly diminished when the company grows in size. Google currently has nearly1210,000 employees, even more contractors. As the number of employees has increased, so has the perception of this group, and the bickering over issues such as gender politics, the availability of meat in restaurants, and the sale of technology by companies to the police has become more difficult to do from the bottom up.The third sign of lost youth, the attention of trustbusters, has long looked inevitable. As big tech has grown, so have its interactions with government—as an institution to lobby, as a customer and as a regulator.America’s Justice Department is poring over Google’s online-ads businesses and may soon file an antitrust suit. Scrutiny is unlikely to wane as the tech titans break out of their silos and compete more. Indeed, regulators may take it as a sign of broadening power.Being targeted by antitrust authorities is the third sign of youth, which seemed inevitable long ago. The relationship between big technology companies and the government has developed with the development of companies, which are its lobbyists, customers and regulators. The U.S. Department of Justice is reviewing Google's online advertising business and may soon file an antitrust lawsuit. As tech giants step out of their traditional territory and compete more, the scrutiny they receive is unlikely to diminish. In fact, regulators may see their expansion as a sign of expanding their sphere of influence.How should Google respond? To be both innovative and mature is a hard trick to pull off. History is littered with failed attempts. In giving it a go, the firm has to decide who it puts its faith in: managers, investors or geeks?How should Google respond? It is difficult to be both innovative and mature and stable. Examples of historical failures abound. To try to do both, Google must decide who it wants: management, investors, or geeks.The first route would involve taking a strong dose of managerial medicine to become a more tightly run conglomerate. The archetype for this approach is GE in its heyday under Jack Welch, who persuaded shareholders that sprawling businesses could work well, provided they were run by expert managers. But it turned out that GE was disguising weaknesses in its industrial units by leaning on its financial arm, GE Capital. GE’s subsequent woes offer a warning of the peril of relying on one hugely successful division to subsidise less profitable units elsewhere—as Google does with its advertising business.The first solution is to give it a powerful management dose and make it a more tightly managed business group. The prototype of this method is Jack Welch (Jack Welchunder the leadership of the heydayGE。 Mr Welch convinced shareholders that the juggly business would work well if it were run by professional managers. But it turned out thatGEis dependent on its financial sectorGECapital (GE CapitalTo mask the disadvantages of the industrial sector.GEThe plight that came later was a reminder of the dangers of expecting a highly successful sector to subsidize other less profitable sectors——The same is said of Google's reliance on advertising.If doubling down on the conglomerate model is not the answer, what about the opposite approach: spinning off, selling or closing some units and returning money to shareholders? That would please many investors. By some calculations, Alphabet is worth $100bn less than the sum of its parts. Spinning off YouTube would increase competition in internet advertising—a handy sop to regulators—as well as unlocking value. It might be worth more than Netflix, because it need not pay for content, most of which is user-generated. But the experiences of firms like AT&T and IBM highlight the danger that downsizing hollows out innovation. And while Google might hope to retain its distinctive culture in whittled-down form, the truth is that no matter how much it wants to be as youthful and free-spirited as Peter Pan, it is no longer a startup.What if a strong corporate group model doesn't solve the problem, so what if you take the opposite approach - splitting, selling or closing some of your business and returning the money to shareholders? This will please many investors. According to some estimates,Alphabetmarket value is less than the total value after the split1000billions of dollars. Put itYouTubeSplitting it up will increase competition in the Internet advertising industry——This will please regulators——it also frees up its value.YouTubeThe value may be higher than that of Nayfei (Netflix), because most of its content is user-generated and is not paid for. But.AT&TAnd.IBMThe experience of companies such as these clearly shows that downssing risks hollowing out innovation. While Google may want to preserve its unique culture in a slimmed-down way, the truth is that no matter how young and free it is to be like Peter Pan, it is no longer a start-up.That leaves trusting the geeks. Becoming a glorified venture-capital outfit has appeal, but the woes of SoftBank’s Vision Fund warn of hubris. Google would do better to examine how two older tech giants overcame their own mid-life crises (and near-death experiences): Microsoft, nearly broken up by antitrust regulators, and Apple, which spent years in the wilderness before Steve Jobs returned to reinvent it as a maker of portable devices. Both bounced back by rediscovering their core purpose and applying it in a new way. Under SatyaNadella, Microsoft has reinvented itself as a provider of cloud-based software tools and services, rather than its Windows operating system. And Apple, previously known for its elegant, easy-to-use computers, has minted money by applying its genius to smartphones.Then all that's left is to trust geeks. Being a good venture capital institution has its appeal, but softbank's Vision Fund is a warning of the dangers of hubris. Google would do well to see how the two tech giants' predecessors resolved their middle-life crises and even came back to life: Microsoft was nearly split up by antitrust authorities; And Apple remained silent for years until Steve Jobs returned and reinvented it as a portable device maker. They are all rediscoers their core goals and take new approaches to implementing them before they can be regrouped. In Satya Nadella (Satya NadellaUnder its leadership, Microsoft has transformed it into a cloud software tool and service provider, not just a providerWindowsOperating system. Apple, previously known for its simple, easy-to-use computers, will be able to use smartphones and start making big money.Could Google similarly identify what it does best and apply it in new areas? It could decide its mission is helping consumers trade their personal data for goods and services; or using AI to solve more of the world’s problems; or being the data processor of net-enabled gadgets. At the moment it is betting on almost everything. Indiscipline can lead to unexpected innovations, but more often saps vitality. Google’s best way forward is to follow the advice often given to victims of a mid-life crisis: slim down, decide what matters and follow the dream.Can Google also determine what it does best and apply it to new areas? It can decide whether its mission is to help consumers trade their personal data for goods and services, or whether to use itAISolve more of the world's problems, or process data for a variety of network-based devices. At the moment it is betting on almost every aspect. Unbridled innovation leads to unexpected innovations, but more often it weakens vitality. Google's ideal way forward is to follow the advice that those caught up in a mid-life crisis usually get: slim down, decide what's important, and follow your dreams.
Source:8Monthly Business Theory
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