Google as a ‘grown up’

Media and tech reporters, as well as analysts all over the web, are discussing the reasons behind Google’s restructuring. After reading 20 articles; some with more and some with fewer insights, most of the ideas boil down into two reasons for the reorganization:

1. The Investor Sphere

The first reason is based on the interests of investors. The reorganization will enable Google to increase transparency within its diverse businesses. While the core business is profitable and rather mature, the remaining part of the business includes activities, which have a venture character, like the example of self-driving cars illustrates. The reorganization makes it easier for Google’s investors to assess each of them independently.

2. The Business Operations

The second reason is that the reorganization will make each of the businesses easier to lead. The various types of business require different kinds of management, different organization forms, and different corporate cultures. Incentives and accountability add to this logic. The independence of subsidiaries helps recruit and motivate talented managers. Finally, independent reporting makes it easier to measure performance.

Google’s reorganization into Alphabet might not come as too much of a surprise. Many companies go through this kind of reorganization; this is part of the growing up of a company. This doesn’t mean that Google’s offices will go from Silicon Valley campus-style to the gray cubicle-style of Wall Street. However, it means that Google’s organizational structure will change to reflect the different levels of maturity of its businesses.

When I was a kid, I loved being at the children’s table. Us kids weren’t really interested in the topics that the adults talked about. They were not relevant for the phase that we were in. Today I don’t sit at the kids table anymore. The same goes for companies that have different ages. They face different challenges that they need to talk about.

image credit: Joshua Earle / Unsplash

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