Gary Hamel Analyzes GoogleGoogle's stock closed at 475.00 yesterday (11/8), up 21.8% from 389.90 a year ago, and very near the 52-week high of 491.26 reached two weeks ago (10/26). (The 52-week low of 331.55 occurred on 3/10.)
Most people would agree that we're looking at a success story. This past April, Gary Hamel, famously co-author with C.K. Prahalad of Competing for the Future, wrote an article for the Wall Street Journal offering his analysis of what Google is doing right. His conclusions provide food for thought for other organizations aiming to achieve sustained growth.
Hamel's basic message is that companies need
... a capacity for rapid strategic adaptation. ... what matters most is not a company's competitive advantage at a point in time, but its evolutionary advantage over time. Google gets this.Hamel cites four risk factors that Google is managing more effectively than most companies:
- Taking too narrow or too orthodox a view of the company's business scope. Hamel argues that Google "is driven by an open-ended mission to organize the world's knowledge," which means continually scanning for opportunities and being willing to adjust its business model in order to take advantage of such opportunities.
- Setting up a hierarchical organization "that over-weights the views of those who have a stake in perpetuating the status quo."
Google is notoriously non-hierarchical, and they have "invested heavily in building a highly transparent organization that makes it easy to share ideas, poll peers, recruit volunteers, and build natural constituencies for change."
- Overinvesting in current projects and, therefore, underinvesting in exploratory experiments. Google fights this tendency by allowing its developers to devote a fifth of their time to whatever projects interest them.
- Creeping mediocrity. Google is also notorious for picky hiring. Then, to retain its top-notch talent, the company makes a point of rewarding "teams who've made outsize contributions to Google's growth."