How Google Works

by Eric Schmidt

3. Management/Leadership

4. Innovation (Best Practices)

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

if they were the equal of Steve Jobs, with instinct and insights matched by few people, then they should go ahead and try it his way.

If your customers are asking for it, you aren’t being innovative when you give them what they want; you are just being responsive.

Voilà: For something to be innovative, it needs to be new, surprising, and radically useful.

Darwin from The Origin of Species: As many more [ideas] are born than can possibly survive; and as, consequently, there is a frequently recurring struggle for existence, it follows that any [idea], if it vary however slightly in any manner profitable to itself, under the complex and sometimes varying conditions of life, will have a better chance of surviving, and thus be naturally selected.

Astro Teller, the head of Google[x], notes that if you want to create a car that gets 10 percent better mileage, you just have to tweak the current design, but if you want to get one that gets five hundred miles per gallon, you need to start over. Just the thought process—How would I start over?—can spur ideas that were previously not considered.

70/20/10 became our rule for resource allocation: 70 percent of resources dedicated to the core business, 20 percent on emerging, and 10 percent on new.

The most valuable result of 20 percent time isn’t the products and features that get created, it’s the things that people learn when they try something new.

Voltaire wrote, “The perfect is the enemy of the good.”

Steve Jobs told the Macintosh team that “real artists ship.”

To innovate, you must learn to fail well. Learn from your mistakes: Any failed project should yield valuable technical, user, and market insights that can help inform the next effort.

“It helps to see failure as a road and not a wall.”

“Good judgment comes from experience; experience comes from bad judgment.”

As Jeff Bezos points out, “Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.”

Sometimes the most effective way to help change and innovation outrun the antibodies of corporate entropy is a simple one: Ask the hardest question.

As Carl Shapiro and Hal Varian note in Information Rules, information is costly to produce but cheap to reproduce.

Colin McMillen, whose Memegen invention is only one of the many cool things he’s done.

Gopi Kallayil, who is not only the best presenter we’ve ever known but a constant critic with insightful improvements.

ah’cha’rye English rendering of the Hebrew for “Follow me,” the rallying cry in the Israeli army.

Coase’s law The principle, expressed by Nobel Prize–winning economist Ronald Coase, explaining that large firms emerged because, when you take transaction costs into account, it’s often more efficient to get things done within a firm rather than contracting out on the open market. Because the Internet has lowered transaction costs, Coase’s law implies that these days it’s often more efficient to outsource work rather than doing it internally.

HiPPO (or simply “hippo”) Highest-Paid Person’s Opinion.

obligation to dissent The expectation that if someone thinks there is something wrong with an idea, they must raise that concern.

smart creative A person who combines deep technical knowledge of his or her trade with intelligence, business savvy, and a host of creative qualities.

tenurocracies Companies in which power derives from tenure, not merit.

Peter Drucker’s idea of the purpose of business: “There is only one valid definition of a business purpose: to create a customer…. The customer is the foundation of a business and keeps it in existence.” From The Practice of Management,

Bob Lisbonne, a former SVP at Netscape, compiled a list of Jim Barksdale’s witticisms, which Lisbonne had jotted down at meetings with the boss, and posted them on his personal website. See lisbonne.com/jb.html.

“Bad Is Stronger Than Good” (Review of General Psychology,

Phil Rosenzweig, The Halo Effect

Steven Levy, “Google’s Larry Page on Why Moon Shots Matter” (Wired.com, January 17, 2013).

Miguel Helft, “Larry Page on Google” (Fortune, December 11, 2012).

to Aristotle, whose discussion of appeals to logos (argument), ethos (character), and pathos (emotion)

“You have to tell the story so that people feel something,” she’s said. “They only want to do something after they feel something.” See “Oprah Winfrey Talks to Dan Pink, Part 2” (YouTube.com/watch?v=kRfT8ujRfOA).

For more information about how variation and selection characterize creativity, see Dean Keith Simonton, Origins of Genius: Darwinian Perspectives on Creativity (Oxford University Press, 1999).

The quadrant represents the best combination on a 2 × 2 matrix of whether or not research advances basic understanding and whether or not it solves real-world problems. See Donald E. Stokes, Pasteur’s Quadrant: Basic Science and Technological Innovation (Brookings Institution, 1997).

Patricia D. Stokes, “Variability, Constraints, and Creativity: Shedding Light on Claude Monet” (American Psychologist, Volume 56, Number 4, April 2001).

As of August 5, 2010, anyway. See “You can count the number of books in the world on 25,972,976 hands” (Google’s official blog, August 5, 2010).