Can Google Save Itself From Google?

The New York Times, this past weekend, ran a story about Google building a new kind of manager. It outlined Google’s (s GOOG) attempts to create a process to find and create better managers. To me the story didn’t ask the more pertinent question — why does Google need “management mantras” in the first place? And are these needs a symptom of perhaps a malignant ailment?

My questions aside, I do like Google’s candor at admitting to the exercise, even though it gives credence to skeptics’ grumblings about Google’s lack of management structure. It was also a strong reminder that Google is willing to apply its quantitative, algorithmic and data-driven approach to building a management structure for the future.

In my opinion, this data-driven approach might work when it comes to deciding search algorithms, but not to people. After all didn’t mathematician Paul Erdos once say that a “mathematician is a machine for turning coffee into theorems.”

Jokes aside, I think Google’s issues might go beyond just finding good bosses. Though only 11 years old, Google has entered corporate middle age that is showing around its proverbial waistline. To give you sense of what I am talking about — in 2010, Google hired 4,500 people and in 2011 it plans to hire about 6,100.

At the end of 2010, Google had 24,400 employees — a stunning number by any measure, and even more jaw dropping considering that five years ago, the search engine giant had 5,680 employees. (In comparison, Microsoft had about 89,000 employees at the end of its most recent quarter.)

Baby to Big Daddy

In the lifecycle of a technology company that goes from being a start-up to a large enterprise, growth comes in three phases.

  1. Early days when the company is almost entirely focused on developing technology and figuring out a business model.
  2. Phase Two is when it revs up its engine and starts to bring in dollars, and goes on a hiring binge to support the growth of the business.
  3. Phase Three is when it starts to seek newer areas of growth in order to sustain its growth engine, and keeps hiring more and more people.

For Google, Phase One ended around 2002, while Phase Two ended sometime in 2007. Google had about 16,807 employees then. Since then it has added about 7,600 employees and by end of 2011 it will have 28,883 employees according to estimates from Ben Schachter, analyst with Macquarie Capital. It was in 2007, the company started to make a serious push into newer markets — productivity apps and Android OS, followed by Chrome OS, Google TV and the social web., over the course of the next few years.

The Challenges of Growing Up

The very fact the company has to go through an exercise to codify a process for building managers points to the fact that Google is now focusing all its energies inwards, rather than outwards. This is a crucial and perhaps Google’s biggest challenge (hence my choice of the headline.)

It so happens that somewhere between Phase Two and Phase Three, big technology companies start shifting their focus from products to managing their processes and people. The growth in the company size and scope bring in bureaucratic morass and politicking, which in turn breeds a culture of consensus.

Others, who don’t want to spend their creative energies on trying to survive (or just do they their jobs) end up leaving for greener and more importantly, intellectually more challenging enterprises — like the recent exodus of Googlers to Facebook.

These are challenges not unique to Google — pretty much every company goes through such a painful phase. The problem is that Google is facing these issues at a time when it is competing with a more nimble and definitely more formidable foe in Facebook. Furthermore, its recent success in the mobile market notwithstanding, Google cannot afford to exhale as Apple continues to breathe down its neck.

But let’s focus on the Mark Zuckerberg production for now — it is ruthless in its pursuit of its goals, and most importantly it is still in Phase One of its life. That gives the company a lot more flexibility to reshape its future. Facebook may not threaten Google’s revenue stream today, but it will eventually pose challenges to Google’s way of the web: search. It would be fun to watch how the incoming chief executive and co-founder Larry Page helps get Google’s focus back on products and overcome the curse of size.

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