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As a company scales, added complexity makes it harder to focus on the original source of the company’s success: innovation. At Google, for instance, corporate gatekeepers, PR concerns, and legal issues were all stifling “moonshots” like Calico and Google X. The decision to reorganize into “Alphabet” will keep Google competitive, and as Founder Larry Page noted in his open letter to employees:
“I should add that we are not intending for this to be a big consumer brand with related products–the whole point is that Alphabet companies should have independence and develop their own brands.”
This independence will be most evident in two key areas:
- Greater risk tolerance. Separating smaller “fringe” ideas from Google’s core products Search, Youtube, Android, Apps, Maps, and Ads, removes the liability associated with more inventive (read: riskier) products. Alphabet can take bigger bets, with smaller overall loss if something goes awry. Alphabet will also require all branches to pay their own “backoffice” expenses to ensure they will be more self sufficient.
- Improved talent retention. Founder Larry Page hopes to attract more innovators who otherwise wouldn’t want to come to work for such a large company. It also allows the leaders of smaller companies acquired by Alphabet to remain the CEO of their business, which is an attractive draw that could both retain more talent, and further boost innovation.
While your organization may not need to completely reorganize like Google, look for other ways you can increase independence to maintain a focus on innovation.
If your organization is struggling to support innovation, read about the roles of “edges” and “cores”, or find out how Taco Bell is teaching its teams new ways of working.
