How Google Works

by Eric Schmidt

While it’s hard to imagine now, when we started Google Maps, people thought that our goal of mapping the entire world, including photographing every street, would prove impossible. So if the past is any indicator of our future, today’s big bets won’t seem so wild in a few years’ time. These are some of the principles that I think are important, and there are more in the pages that follow. Hopefully you can take these ideas and do some impossible things of your own!

Process is a great thing. It is the art and science of taking something that needs to be done and reducing it to a documented set of steps, often supported by information tools and systems. With process comes scale; you absolutely need process to grow a company profitably. At some point, though, process starts to take over. It becomes so entrenched that it can trump common sense and cause executives to, as our head of business operations, Kristen Gil, says, “lose muscle memory.” People stop thinking and instead just depend on the process to make decisions for them. As process gets better, judgment can weaken. It’s like there is a big pendulum in companies, swinging from centralized control and consistency on one side to decentralized chaos on the other. In a big company, that pendulum always pulls toward the control side. But a start-up, or any new venture that is trying to do something big and new, favors the chaos. Start-ups don’t run on process, they run on ideas, passion, and a common set of goals. They don’t wait for the meeting to make decisions. Dependence on process, no matter how well intentioned, squelches start-ups and the start-up spirit.

As a company gets big and complex, you can’t just organize around people who create innovation; you need to organize around people who can create and lead entire new ventures and businesses. This is a special class of smart creative: the CEO. The decision to create Alphabet was driven in part by the realization that leaders with the audacity and talent to start new businesses are a special breed and are often averse to working within the structure of a big company. They need the freedom to build things their way, without being forced to adhere to cumbersome processes or politic across various teams.

We have long felt that the start-up model, with small, autonomous teams located in one office led by passionate founders, is the most effective way to achieve remarkable new things (or fail quickly in the effort). So we wondered, What if you could figure out a way to think big (solving big problems by taking advantage of big-company assets such as talent, resources, and technology) while simultaneously acting small (growing “start-ups” built through bottoms-up insights and with the autonomy to move fast)? This think-big-act-small concept was the inspiration for a new program called Area 120. We have always had “20 percent projects,” where Googlers are allowed and encouraged to work on projects of their own choosing. Area 120 gives a select group of Googlers the opportunity to spend 100 percent of their time on 20 percent projects (100 + 20 = 120!). Teams are given the money, space, and autonomy to pursue their ideas, and founders are given the chance, in the words of Don Harrison, who runs the lab alongside Bradley Horowitz, “to throw themselves against it as hard as they can.” We attempt to re-create the Darwinian world of start-ups by establishing aggressive milestones and timelines. For example, of the inaugural class of fourteen teams that started at Area 120 in September 2016 (selected from more than three hundred applicants), we expect half to fail within six months. Area 120 becomes a new arrow in our innovation quiver, giving Googlers another way to try new big thi...

Hire as many talented software engineers as possible, and give them freedom. This approach suited a company born in a university lab, since in academia the most valuable asset is intellect (also, for some American universities, the ability to throw a football fifty yards). But while most companies say that their employees are everything, Larry and Sergey actually ran the company that way. This behavior wasn’t corporate messaging, and it wasn’t altruism. They felt that attracting and leading the very best engineers was the only way for Google to thrive and achieve its lofty ambitions. And they really meant engineers: The founders stopped Eric’s first attempt to hire the estimable Sheryl Sandberg, now Facebook’s COO, because she wasn’t an engineer.

The management tactics the founders used to run the company were equally simplistic. Like the professors in their Stanford computer science lab, who did not dictate what their thesis projects should be but rather provided direction and suggestions, Larry and Sergey offered their employees plenty of freedom and used communication as a tool to keep everyone moving in the same general direction. They had a very strong belief in the profound importance of the Internet and the power of search, and they communicated these points via informal meetings with the small engineering teams that populated the Google offices, and through company-wide “TGIF” meetings held every Friday afternoon, where any topic was fair game for discussion.

One of the biggest reasons for our success, though, is that the plan we delivered to the board that day in 2003 wasn’t much of a plan at all. There were no financial projections or discussions of revenue streams. There was no market research on what users, advertisers, or partners wanted or how they fit into nicely defined market segments. There was no concept of market research or discussion of which advertisers we would target first. There was no channel strategy or discussion of how we would sell our ad products. There was no concept of an org chart, with sales doing this, product doing that, and engineering doing some other that. There was no product roadmap detailing what we would build and when. There was no budget. There were no targets or milestones that the board and company leaders could use to monitor our progress.

When it came to management tactics, the only thing we could say for sure back then was that much of what the two of us had learned in the twentieth century was wrong, and that it was time to start over.