el modelo google por bernard girard n.
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El modelo Google Por: Bernard Girard

El modelo Google Por: Bernard Girard

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El modelo Google Por: Bernard Girard

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  1. El modelo GooglePor: Bernard Girard

  2. Google’s management model Bernard Girard

  3. Google is a very special company • Because of its economic and financial performances • Because of its market share • Because of its very fast growth • no employees in 1998 • 5000 in 2005 • 20 000 today • Because of its prospects and chances to keep on growing • Markets left to penetrate • Search on mobile phones… • Because of its resilience • But also because of its very original methods

  4. A lot of growth to come

  5. A company as a model • The management theory uses innovative companies as models, examples to copy, imitate • Ford, 1910 : the mass production • General Motors, 1930 : The M organization • Toyota, 1970 : quality and mass production • Citibank, 1970, the « one bank holding company » • The theory is just the conceptualisation of methods and solutions discovered by innovative managers • Google is the last of these models • Not because of its successes that come from • The context • The situation • But because of the methods it uses in the management of its people, its products, its markets

  6. The context, the situation • The situation : the Silicon Valley • Its universities • Its financial tools • Its financial competences (they know how to select the best projects) • Its legal rules • It’s very difficult to impose non-compete clauses • Engineers and ideas flow freely from one company to the other • The context of the late nineties • The internet bubble • Engineers are cheap • The rapid growth of internet

  7. What makes Google so different? • Its technologies • The algorithm • The « factory » • Its economic model • Advertising • Selling • Its governance • Its management methods • In HR • In product development • In marketing • In managing innovation

  8. An algorithm for the search • Search on computers used two methods • Indexation : people read the documents, abstract and index them • Efficient but expensive : a lot of handwork, delays… • Automatic search : the computer selects the documents with the words selected by the searcher • Fast, inexpensive but inefficient when too many documents • If the machine brings back 1 million documents, what do I do? • Page & Brin find a way to rank pages that makes automatic search efficient • Imitated from the scientific method of ranking papers • The most cited ones should be the best • The documents with most links should be the more relevant • If you want your site to be on the first page, one solution : make it the best, so that others create links to it

  9. And it works

  10. Innovations in the « factory » • A powerful « factory » : 1 million computers in 60 « farms » • When they started, Brin & Page were not rich • They had to build their computer farm with PCs and cheap used computers • They chooed Open Source softwares that are free and give a better control on home-made applications • Everyone knows PCs don’t last very long, are not very reliable • They has to build an ad hoc system • Very redundant • That duplicates data several times • With a software that copies automatically the data from one PC to the other • They have built a reliable system that grows incrementally

  11. An economic model • When Page & Brin started Google, the search engines where financed by advertising • Free search for everyone, money comes from advertisers • But too much advertising is a « pain in the neck », that slows search and harms the reputation of the engines • They tried to find other ways of financing before finding their own way with • Advertisements that are useful and almost invisible • The way these ads are priced • A price per click • A price defined by a double envelope auction • An automatic customer relationship • No need to sell the ads • No need to negociate the prices • The long tail : a lot of small advertisers that make a lot of revenues for the company

  12. Useful and invisible ads

  13. Price : a price per click The advertiser pays only when users click on their ad • He pays only useful impressions of his ads whereas in the press (and on the other search engines) he pays all impressions • Which could help Google grow in a recession : advertisers just want ads that bring sales • If ads don’t bring sales, it’s not Google’s fault, it’s because the advertiser does not transform clicks into sales • In a way, Googe brings customers in the shop

  14. An automatic sales system • When they started Brin & Page had not ressources to hire a salesforce, they invented a system where sales are made without salesmen • The buyer does everything • Chooses the keywords of his ads • Writes the text of the ad • Decides the price per click on a keyword • Chooses his daily budget • Google gives advertisers tools to improve their ads • Statistic tools (Analytics) to convert ads in clicks • The best ads bring the more sale to the advertiser and the more revenues to Google • This automatic sales system brings Google new customers : small shops… that didn’t do advertising

  15. The long tail

  16. Price : the double envelope system • But how Google chooses the ads it prints ont its pages? • What happens when several advertisers want the same keyword? • Their solution : an auction system • The sealed-bid second price auction • All bidders give their best price in sealed envelopes • The winner is the highest bidder • He pays the second highest price (and not his own price) • The bidder is encouraged to give his best price vs the english ou dutch auctions) • The price is fair (it’s the market’s price) • The buyer can trust the transaction • Pricing is automatic thanks to the auction system • Everything can be automatized • No need for negociations, transactions costs are reduced to almost nothing

  17. Innovations in management • Google innovated in • Governance • Human Resources • The hiring process • The 20% rule • Reputation as a motivation driver • A very special working environment • Customer relationship • Product management • Innovation

  18. Page, Brin, Schmidt

  19. Governance • Usually, there is one head, the boss who knows better and decides for everyone (or tries to) • At Google, they have a tripod : Schmidt, Page, Brin… three leaders who work together • Which opens up the cognitive capacities of the leaders • Instead of one brain, three brains… • Which improves the quality of the information they use to take decisions • Which gives them the opportunity to look at the business from different points of view and not only from the financial one • Which gives them more freedom • Vis-à-vis the shareholders • Vis-à-vis the high management • This governance mode helps create a company with less layers of management and bureaucracy • It’s not totally new (many start-ups have the same structure) but they choosed to keep it active

  20. Human Resources • The hiring process • Reputation as a motivation driver • The 20% rule • A very special working environment

  21. Hiring the best • All companies say they want to to hire the best • Most don’t really do that, Google really tries • It affects a lot of resources to the recruitment process • It’s hiring methods are non conventional • They don’t wait for the best people to come to them, they look for them • They reverse the usual way of hiring • Diplomas are not a proof of your technical abilities but a proof or your personal abilities • You prefer future to present (you invested in education and stayed long years in school) • You are able to solve difficult problems • Tests and meetings are used to discover your technical capabilities

  22. Reputation as a motivational driver • How to motivate workers is a question all managers have to deal with • Two classical answers • The external drivers : salary (commercial companies), prestige (army…) • The internal drivers : pleasure to do, to achieve an objective… • In the US, the usual answer is money, index salaries to performance • Google taught there is another driver : reputation • What motivates people is the desire to acquire and keep a good reputation among co-workers • It’s a bit like in the academic world : scientists don’t run for the money but for the reputation their work can bring them • This motivation friver is embedded in Google in two ways • The selection of the brightest • Working with the brightest gives the impetus to work a lot : one wants to be considered bright and capable by those one considers so well • The peer reviews : rather than being judged by hierarchy, projects are judged by colleagues

  23. The 20% rule • Each engineer can spend 20% of his working time on personal projects • An unconventional but efficient way of managing people • When one has an idea, he has time to work on it, even if it’s not in the company’s priorities • In traditional companies, these ideas are abandoned or their inventors go elsewhere to develop them • To find these 20% time you mus rush on your official job : it’s good for productivity • Procrastination is no longer a loss of time which is also good for productivity • Several Google products come from this 20% rule • Googlenews, cloud computing…

  24. Free food…

  25. A very special working environment • The popular press emphasized the massages, the free food, the swimming pool… • It’s important • To build the good image of Google : it’s a place where it’s nice to work • But, it is also a place where you can find the best conditions to work • The techshops : any problem with your network? Your computer? Specialists solve them quickly • Engineers don’t have, like in other companies, to work on these trivia! • They can concentrate on satisfying users

  26. A new personage, the user • In all companies, the  « customer is the king »… but is he really? • On the web, the user is the main personage of the play • He is the one who creates the contents search engine supply • Without users and their contents, no… interesting results • And Google understood that better than others • « Take care of the users all else will follow » (L. Page) • « First make sure our users are satisfied, we’ll always find ways to monetize our invention » (LP) • The user helps the company in a kind of renewed potlatch

  27. A modern gift economy • The user benefits from Google’s free products, but, in exchange… • He brings contents on his websites, on his blogs… • He gives Google informations • On his behaviors, his preferences that statistical analysis can analyze • Metrology is a marketing tool • He tests the products delivered in early phases of development (beta phase) • He promotes them through blogs and forums… • He develops them when he participates in a mashup…

  28. An application born in a mashup

  29. From product management to innovation

  30. Product management : how to solve the complexity problem • High-tech companies meet the complexity problem • At Microsoft : several years between two major releases of a product • Which slows innovation • Google solved that problem with the swiss knife approach

  31. The Swiss Knife • With the swiss knife every innovation, every tool is independent vs the « bloatware » à la Microsoft • Google can easily add new products, new tools : it’s not limited by the obligation to respect the past applications • Any of these products can change quickly without any impact on the other tools • It’s of course possible to mix these tools to build new ones • In these cases innovation comes from integration of different applications

  32. Release early, release often… • This approach allows to launch innovations as they come • Once a product is « usable », it is released • Very high rate if innovation : almost not a week without something new • The method gives a very quick feed-back from the users, it forces to listen to the users • But the products are « work in progress », they are not perfect, they are… perfectible • Users are often disappointed but they keep quiet : these products if mediocre are… free and they know they will improve • This solution is possible only because the applications are free and there are no distribution costs

  33. Products with an original life cycle • They improve incrementally and stay for long periods in beta phase • Which gives the users the opportunity to give the company feedback on their uses • They have a long life. There is no obsolescence strategy as at Microsoft (Vista vs XP) or Apple • They slowly diverge from the competition : • At first Googledocs was a terrible « me too » Office • It is, today, a suite of office automation applications for the web and collaborative work • With special functions that you can only find on the web • And appear to be, in the end, competitive • Today Microsoft imitates Googledocs :)

  34. Search in a spreadsheet

  35. Innovator, but not like the others • Microsoft, Apple, Sun, HP… are also innovators, but the flavor at Google is different • At Microsoft, innovating is the best way to build monopolies • Which is the classical strategy : patents give their owners a monopoly on their invention • Apple applies Hollywood’s theory of creating blockbusters to industrial innovation : • A star (Steve Jobs), • Excellent products (although usually not disruptive) • Formidable advertising campaigns • Google is an explorer that applies the scientific experimental method to industrial innovation (hence the word « trying » in Schmidt’s sentence)

  36. The experimental method • In the experimental method, researchers propose hypotheses and design ways and means to validate them • Eric Schmidt : « We try this, we try that, we see what works » • This logic of « trying and trying » is embedded in the company • In its management, • In an organisation that was designed to make plain use of this method • In the management of its products • Two examples • The peer review and the management of innovations • The swiss knife and innovation

  37. The peer review, innovation, productivity and quality • Thanks to the peer reviews… • Ideas flow between teams • The colleagues that judge your projects work on other topics • OCR : the fight against spam and Google Book search • If you want your colleagues to judge your work you’d better make it short and readable • Everyone speaks the same programming language • Source code documentation is a must • Projects are short • Small projects = small teams = less layers of management

  38. Innovation by integration

  39. Mobilize all creative ressources • But the experimental is not the only novel way of doing things at Google, the company is also a master at mobilizing creative ressources wherever they are • Its engineers and their ideas (the 20% rule), its users • Universities • The Open Source Community and its developers • Google code and project hosting • The archives of IT • The Tesseract story and how it became OCRopus • Competitors : rather than reinventing their applications, Google buys young companies • Users as creators of contents and as developers • Google gives them tools (API, Sketchup…) • Which help fight the « Not Ivented Here Syndrom » : Google does not reinvent the wheel every morning as others do

  40. Thanks to this method… • Google regularly discovers new domains that could become very lucrative new businesses • Maps • Collaborative office automation • Cloud computing • But also new frontiers that could limit its markets and slow its growth • Technical : translation • Good translations could open the web, but where are the engines that produce them? • Legal : Copyright laws • Everyone would like freely available rich contents, but copyright laws are an obstacle in video, music and books • Economic : innovations must be monetized • And it’s not always easy to find a way to do it (Youtube)

  41. « No preview available… »

  42. How users helped overcome the copyright obstacle • Because of copyright laws, big search engines cannot offer movies or music • The solution : give the users the means to create and publish their own content • Create our own contents? we can all do that with our cameras • Publish? We can do that with Youtube and we do it!

  43. 368 000 movies on Obama!

  44. Innovation as a strategic tool • I am often asked : what is Google’s strategy? • The answer : innovation • Fast innovation stifles, asphyxiates the competition and make sure all roads lead to… Google • Search, gmail, picasa, blogger, chrome, google books, docs, notes… Google gives almost all the tools you need on the web • Thanks to the beta model and the continuous improvement of products, the competitors are uncertain as what will be their next move, • They run after Google • This same model make allies of users and customers • They help develop new products, they are the best « salesmen », they give the best informations on what the products should look like… • And they are, most importantly, loyal!

  45. Questions on this model • Is it sustainable? • Is it for everyone?

  46. Is it sustainable? • Is what is good for a small and young company appropriate for a mature and bigger company? • How long can Google deliver solutions it cannot monetize? • Can this model be applied to products that are sold rather than given? • Is the ad market big enough to finance all th web? • Is reputation so good a motivaton driver when stock-options dive • …

  47. A model for every one? • This powerful model helped Google become what it is today • Following all Google’s rules is not a recipe to become a new Google • But most of these new ways of managing will in the years to come enter the catalogue of business’s best practices • Somes companies already started emulating them • In the hight tech sector • Most start-up imitate Google’s ways • But also in the old industry • Chrysler and the tripod as a mode of governance • Even in very different businesses • The Restaurant and the 20% rule • The consulting company in Bucaramanga, Colombia

  48. A model for you? You tell me…