14 Aug What Restructuring Meant for Google
Google just launched yesterday Alphabet, a holding company ran by Larry Page and Sergey Brin. However, their structures and purposes differ.
Before, traditional businesses would anticipate threats coming from competition. In Clayton Christensen’s theory of ‘disruptive innovation’, this is simply not the case. Now, small businesses can compete by launching low-end, cheap products and continuously improving them as they go along.
But even this model is totally outdated. Today, you no longer know when and where your competition is coming. It may come from various industries and attack the core of the model from leading industries. Uber has already paved way for innovative transportation and Netflix has cleared any chances of reviving standard video rental services. New approaches are being churned out and practically attack the core of these businesses then improve them.
Take a look at giant companies like Johnson and Johnson and Procter & Gamble and you’ll see that the world has ‘passed them by’. They are not innovating but becoming part of the era that’s lost. Operating on same old businesses and structures spell disaster for your business.
Larry Page and Sergei Brin understood this thus the birth of Alphabet. They understood that dramatic changes are needed for Google to be the leading thought leader in its industry. Many may say it’s a ‘moonshot’ and risky. With Alphabet, Google is being broken down to pieces for it to survive independently in the long run.
From what we’re seeing with Microsoft, it has failed to realize that the company needed to break it by market (computing, entertainment, enterprise, personal computing) or by product (Xbox, Surface, Windows, Office). Had Microsoft realized this earlier, the company wouldn’t be so stringent defending old businesses and internal politics.
With this bold move, Google can unleash its people’s talents and attack parts of the model that can be put out of business or improved on. Breaking Google into separate divisions paves way for improvement or exist independently. Furthermore, its founders will be able to maximize what they do best: innovating.
Speculations about this bold move has been coined ‘risky’ by many. But this also meant that that new structure will be able to work independently and produce results on a long-term perspective.
However, Google’s move to Alphabet can leave the public in confusion. Compared with Virgin that is a parent brand to Virgin Air and Virgin mobile, Alphabet is quite different. The risk will be how they address Google now that is has already became a household name? The future is uncertain but it looks promising.