I have been reading “How Google works” by Eric Schmidt (CEO) and Jonathan Rosenberg (SVP Products). Working in a tech company, I find many of the insights valuable. It is (as the title may suggest) written for managers more than in-the-trench developers, etc. Notwithstanding that, it is a valuable book for most anyone in the field. This is not a review. It is a gleaning of thoughts from the book. These are some of the things that seemed important enough to me that I should take notes on it. So, what follows are some highlights.
As a quick note, you can find this book on Audible. And here is a link to get two free books on Audible. I am not getting a commission for either of those. But when I found the two book deal, I almost kicked myself, because I had just started using Audible in the previous month. Anyway, …
They have steep competition with some notable (or maybe notorious) rivals (like Microsoft, Apple, and Yahoo!). There are a couple of places that they focus their efforts in order to provide value and distinguish themselves:
- Provide great products.
- Have higher-quality services.
- Focus on accessibility.
- Make the user the primary focus.
That last point may sound trivial, but they have a board and stockholders to answer to. Even so, if they are to continue to grow, they have to have a market (to whom they ‘sell’ their products). Many have fallen into obscurity because they made more of the bottom line, or providing value to stockholders. Think of the place that Microsoft used to hold, then think of AOL, Excite, and other large web properties that are now shadows of their glory, or altogether extinct.
It is important that you know who your competitors are, and how you are distinct from them. What value do you provide? Why should others be interested in your service or product?
This is more of an entrepreneurial insight, and a talent or skill, but have a (very strong) sense of the direction of technology. Applying Moore’s Law, Bill Gates & co. knew that hardware was getting cheaper, so they focused on software. Steve Jobs saw that computer hardware was becoming a consumer good (not a small insight in the late-70s and early-80s when only corporations invested in big technology. The folks that built YouTube (before they were purchased by Google) recognized that bandwidth would become a trivial consideration, and democratized the publishing of online video. There are doubtless many other examples in and out of the technology field. But knowing which way the wind is blowing is part of the foundation of a thriving, sustainable business.
Marketing v. research
Historically, organizations have spent a great deal of resources on aiding discovery (namely advertising) at a rate of around $70 spent on marketing for every $30 for development. Because of the advent and increase of online search, the cost and difficulty of discovery has decreased precipitously. For that reason, it is arguable that we should spend more on development, and less on marketing. So, the old ratio of 70:30 could be flipped to $30 for marketing to every $70 spent for development. Doesn’t it make sense to spend more time making and less time marketing?
Cost of failure
When working in technology (particularly in the realm of software and application development), the cost of failure is decreasing. An oversimplification in terms of web dev would be the refresh→ perceive mistake→ undo→ write→ save→ refresh cycle. There is far less spent on that kind of development than building and testing an internal combustion engine. Though there are spaces in between where the burgeoning small-scale manufacturing movement mitigates even some of those costs (both in terms of money and time).
In light of the decreased cost of failure, Google makes a point of avoiding the term “knowledge workers” in favor of “smart creatives”. They link that to another idea: employees should be encouraged to do things that may fail. (They are not encouraged to do things that will fail, heedlessly.) They have to be bold, not brash.
Keep it crowded
Keeping people close together encourages people’s working and thinking together. Forget the cubicle farm. Put folks closer together, not further apart. Get rid of ‘facilities envy’ by putting everyone in an area together, to stimulate growth, work and creativity. As much as I hate to admit it, we work better in close groups. Google is VERY opposed to the idea of telecommuting.
They have an interesting and compelling insight: the interactions that are created by a crowded environment are very different, and have greatly impacted their organization’s productivity for the better. They particularly cite the creation of Google AdSense as an example of this. It was a serendipitous encounter between two of their employees in a hallway that catalyzed the beginning of their biggest revenue generator. (That is not to say that the monetization of their services by ad revenue was ever in question, but the particular implementation had been unknown until then.)
It is at least noteworthy that the biggest revenue-generating operations in the tech world are gathered in some of the most expensive property on the planet. It would be cheaper to let them work from home. But the payoff for bringing these folks together in one place outweighs that exceedingly high cost.
In the past I thought that working in close proximity was conducive to talking, and wasting time. Well, I stand by that, but that is a different problem that needs to be dealt with separately. The fact is that the synergistic interactions that are encouraged by working together has real value (if I can use “synergy” in a sincere way divorced from the baggage of its present overuse).
I have liked this idea of work-life balance. And while there is doubtless much right about it, there may be a few flaws in it. I will try to constrain my comments to approximations of their ideas:
- Work doesn’t happen alongside life: it’s a large, important, enjoyable part of life.
- An employee is accountable for his work (and output). If you trust your employees, trust them to stay and get it done when it is appropriate.
- Many people enjoy working more than 40 hours per week. Most—in fact—do, once you take into account outside studies, church, community involvement, sports, etc. So, artificially breaking off all employment-related work at 40 hours might be unnecessary. For exempt workers, it’s about getting the job done, not getting the hours in.
Diversity … of thought
When picking folks to round out a team, diversity—not necessarily of gender, or nationality, etc., but—of thinking is very valuable. Doubtless, you will find diversity of thought in diversity of gender, or nationality, but avoiding homogeneity of thought is important.
They argue for creating a culture that is fun. Having random, infrequent bouts of mandatory fun is not really fun. It’s a chore. Strive for continual fun.
Mission statement, vision
What is your mission statement? Do people know it? Is it worth knowing? If it was changed tomorrow would it matter?
Love of learning
Wage equality or relative wage parity is bad. Citing the earnings of professional athletes, they say it is appropriate for highly-productive workers to be appropriately compensated.
When asked if he thought that it was fair that he made more than the president, Babe Ruth said, “… I had a better year than Hoover.”
Their argument was not with Marxist egalitarians. If the Library of Congress contained nothing but Mises, Rothbard, and Hayek, there wouldn’t be sufficient argument. … And even Ben and Jerry’s attempt at relative wage parity (the highest paid employee could not make more than 5× the lowest wage) ultimately failed. Unilever has apparently reset that requirement sense acquiring the company. Ben and Jerry’s found that retention is harder when your highest wage earner makes near nothing when compared with his peers. (That is its own disparity.)
Within an organization you will find disparity between the work that people do (or their comparative output). It is reasonable that people who work harder (or rather produce more) would receive more. Between the most and least productive folks in an organization, it is reasonable that you would find a fivefold to tenfold difference in productivity without even touching on issues like laziness, inefficiency, or gross incompetence.
The ‘super’ importance of hiring (well)
For as much as managers say that it is important to have good people, not enough time is spent talking about how to do that. They give many tips on how to do that, including:
- Limit total interviews per person (not position) to five.
- Be willing to make small allowances (like “Can I bring my ferret to the office?”)
- Don’t let the hiring manager make final sole affirmative decisions (he needs a veto, but not the ability to hire unilaterally).
- Use small heterogeneous hiring committees (four or five, from different strata and maybe even departments)
- While hiring, use the same questions as much as is reasonable between candidates, so that you can get a true apples to apples comparison.
- Use measurable data points when you are making comparison, so that others outside of your group could easily make a discernment without your explanation. Don’t say, “he’s smart”. say, he’s a Rhodes scholar (and then you can say he’s smart if you still think it’s necessary). 🙂
Monetize your byproducts
While this is not new, it is no less true. Watch what you throw away and brainstorm how you could (repurpose it and) charge people for it. One of my favorite examples of this is the company Kingsford. Initially, when Ford was making its early models out of wood, they had a lot of scraps left over. In order to keep from wasting them, they resold them under the name “Kingsford” as charcoal. 3M is another fair example of that. Graco, Post-it, and other brands are great examples of their great use of byproducts.
Avoid the “NO” culture
Be careful not to have senseless bureaucracy. Don’t tell folks no when there is no reason to. If your organization has lots of rules but no reasons, there is a problem. Why tell folks no, when you don’t have to?
Create the only, not the best
This is an argument that even Peter Thiel (PayPal founder) made in a recent book called “Zero to One”. The basic argument is that if you want to build a business or thing, there is a greater promise of success in building the first than in building a better one: better a PayPal than a Stripe or a Dwolla.
Use of statistics heavily
There are so many metrics out there. So many ways to know who is using your site, where they are from, when they use it, when they bail, etc., etc. Being able to make good use of that (and other) data is an indispensable skill. The right use of that data, seeing trends and preparing to make the best use of emerging behaviors and situations has the potential to make one very successful.
Ask tough questions
There are undoubtedly some problems in your organization. If you see them, ask the tough questions, and work to fix them. It is better that a friend asks that question internally, so that you can solve it before an enemy capitalizes on it. (He probably won’t ask you about it.)
I finally finished the book. It was excellent. The last chapter had lots of ‘meat’ in it. But I was not in a good position to take notes as I was going through it. That book is definitely worth reading again, and I look forward to expanding these notes when I do.
Many of the examples were not in the book: they just made the point pretty well.