Posted on Feb 1, 2020

How Google Works Summary

PDF, Chapters & Review of Erik Schmidt & Jonathan Rosenberg’s Book

How Google Works

Authors: Eric Schmidt & Jonathan Rosenberg, with Alan Eagle

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You should hire the best engineer you can find, regardless of her coding preference, because if she’s the best she can down enough Java to C how to make the Python Go

High-Level Concepts:

  • The Internet Century: Our current era
  • Smart Creatives: People who combine deep technical knowledge with a restless entrepreneurial spirit
  • Users First: Google releases features that hurt revenue, but improve the user experience

Ideas & Quotes:

The Internet Century is built on radically increasing information, connectivity, and computing power

  • As a result, the key to success is Product Excellence
    • The way to achieve Product Excellence is using Iterations
    • The key to increasing Iterations is Speed

*Reader’s Thought: A corollary to Product Excellence is Personal Excellence; are you iterating your own skills and habits to be a “great” person?

The key management goal for managing Smart Creatives is to manage the environment to attract the right people

  • “Attract and motivate”
  • The key tools for managing the environment are:
    • Culture
    • Strategy
    • Hiring
    • Consensus
    • Communications
    • Innovation

The authors assert that their approach is applicable beyond startups and high tech, but do not provide any data or evidence to support this statement.

The purpose of corporate culture is to attract the right people.

Google follows the “Rule of 7”: Every manager must have at least 7 direct reports so that they don’t have time to micro-manage and are forced to delegate.

Try to keep a Functional organization as long as possible: Divisional organization tends to build silos.

Use small teams to pursue breakthroughs.

“Your title makes you a manager. Your people make you a leader.” Debbie Biondolillo.

At least 50% of your senior managers should be product people (responsible for designing and/or building your products).
Knaves vs. Divas: Knaves behave badly because of low integrity, and should be rooted out.  Divas behave badly because of high exceptionalism…but sometimes they are worth it.

“Don’t Be Evil”: This is Google’s equivalent of Toyota’s andon cord, which is pulled whenever something seems to be going wrong.  Everyone has to stop and figure out the problem before proceeding.

Strategy: Bet on Technical Insights that help solve a Big Problem in a Novel Way, optimize for Scale, not for revenue, and let Great Products grow the market for everyone.

The classic strategy of leveraging strengths to attack adjacent markets can never deliver breakthroughs

Competitive advantages don’t last long so scale quickly.

Don Tapscott: Falling transaction prices have reversed the Coase Theory of the Firm:

Shrink your company to the point where external transaction costs exceed the internal coordination costs.

Hire like a university

  • Peer-based
  • Use committees (4-5 people) to review candidate packets
    • Google found that 4 interviews achieved 85% accuracy; further interviews only increased accuracy about 1% per interview
    • Google set an upper limit of 5 interviews per candidate since 5 is a prime number
  • Focus on potential and talent.

“You must work with people you don’t like (to avoid homogeneity).”

Identify the candidates who ask thoughtful questions, not just those who provide thoughtful answers

Managers are asked, “Who on your team is a good candidate for the rotation?”–talent mobility is rewarded

  • Google’s decision to leave China
    • Even though it was clear that the founders wanted to leave, which meant the decision was made, it was still important to follow a process that allowed everyone to voice their concerns, and which implemented the decision gradually

Reader’s Note: The authors describe Marine Corps decision making as one person giving the order, which must be followed.  They clearly don’t understand anything about how the military, and especially the Marine Corps, actually works!

Meetings: Google meeting rooms have two projectors; one for video conferencing or meeting notes, the other for projecting data. Decisions should be data-driven.

The duty of the decision-maker is to set a deadline, run the process, and then enforce the deadline

Identify high potential people by asking, “Could this person be running the company in 10 years?”

A coach isn’t better than the player at the sport; coaches have a different skill: They can observe players in action and tell them how to be better.

“Leadership’s purpose is to optimize the flow of information throughout the company.”

“The first follower is what turns a person from a lone nut into a leader.”

Googlers post all their OKRs on the company intranet.

Reader’s Note: Every company should strive for this kind of clarity of expectations and purpose.

Exercise: Write a self-review.  would you work for you?

At Google, the product managers worked onboard presentations, which provided hands-on leadership training

“If everything seems under control, you’re just not going fast enough.” (Mario Andretti)

Innovation = New, Surprising, Useful

Build a prototype as quickly as possible: Google Books came about when Larry Page bought some equipment from Fry’s and used a metronome to coordinate his taking photos of books while Marissa Mayer turned the pages.  Google Street View came about after Sergey Brin drove around town taking a photo out his window every couple of seconds.

20% time: Paul Bucheit created Gmail and hacked the ad server to target ads against email text, which eventually led to AdSense, all against direct orders.

“In a ship-and-iterate model, leadership’s job must be to feed the winners and starve the losers, regardless of prior investment.” Contrast this with Jonathan’s experience at Excite, where lagging sections got better placement so they could hit their management targets.

Appeal to smart creatives by creating an environment where they can succeed at scale.

People often don’t like to ask hard questions because there aren’t any good answers.  That’s why they need to be asked.

“We see most big problems as information problems, which means that with enough data and the ability to crunch it, virtually any challenge facing humanity today can be solved.”

“Information is costly to produce, but cheap to reproduce.” – Hal Varian and Carl Shapiro


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