News Analysis: Inside Alphabet – G Is For Google

Published on August 10, 2015 by R "Ray" Wang

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Alphabet Enables Google To Remain Innovative

On August 10th, 2015, Google co-founders Larry Page and Sergey Brin announced the formation of Alphabet, the holding company which will include Google and a portfolio of companies to spur innovation (see Figure 1).  A new website www.abc.xyz emerges and Google will still trade as (GOOG). Check out the parody of the HBO Silicon Valley comedy here (www.hooli.xyz)

Figure 1. The New Google Alphabet

@rwang0 @google #alphabet

 

For those in the know, Google has struggle with remaining focused on the existing operations which fund innovation and the new areas which have massive market potential.  Sundar Pichai will lead as the CEO of Google which includes Ads, Android, Apps, Maps, Search, and YouTube.  Eric Schmidt will serve as the Executive Chairman of Alphabet while Sergey Brin will head up Google X.  The remaining Alphabet companies will retain their current leadership.  Arthur Levinson will run Calico. Tony Fadell will still lead Nest.

Figure 2: The Run Down News Analysis: Inside Alphabet – G Is For Google

The Bottom Line: Move Spurs Focus On Innovation, Avoids Failures Of Past Innovators

History is rife with the failure of large has-been corporate giants such as AT&T, Bell Labs, General Motors, Kodak, Sony, and Xerox who failed to recognize the failure to revinvent the company.  With innovation stifled in bureaucracy, these organizations failed to retain their ability to compete and disrupt themselves.  The new holding company Alphabet gives Google an opportunity not to repeat the mistakes of past innovation and technology giants and should enable the Alphabet leadership to focus on their specific innovation mission.  Customers and shareholders should find that this new governance model will unlock the hidden potential within Google and improve the sagging morale and low productivity among the teams.

One last note, from Robert Theis (@rmtehis), “It’s a good end run around European regulators who have been wanting to break Google up”

Your POV.

Do you think Google made the right move? Will Google split the company up for divestiture? Will the one-trick pony still pay all the bills?  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

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  • Ray,

    Incumbent firms talk about innovation as if it was a tap to turn on or off. (i.e. the ERP company that will ‘reduce innovations, in product A after acquiring another company.) The truth is that there is a lot of innovative ideas in companies like Google, but corporate cultures thrive on killing that innovation or underfunding to strangle innovation. There’s glee when an initiative is killed to release funds for incrementalism. So, firms kill off inexpensive nascent ideas in favour of expensive acquisitions like Nest. A clever move.

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