Google, GM and Managing Success
Posted by Ed Frauenheim
on December 26 2014
A recent essay in The New Yorker takes aim at the notion that today’s “It” company Google has found the key to management success.
Nicholas Lemann’s piece “When GM was Google” notes that General Motors, though widely considered a dinosaur now, was thought in its heyday to have nailed the formula for organizational excellence. It would be unwise, Lemann argues, to put too much faith in any model based on the best-performing firm of the moment—whether that be GM’s rational bureaucracy of autonomous divisions or Google’s anti-bureaucratic emphasis on constant collaboration.
“One should be wary of the argument that any new company, no matter how brilliantly successful, has figured it out in a way that no previous company ever could have,” Lemann writes.
One might be tempted to think there is no timeless recipe for business success. And perhaps the pendulum will always be swinging along axes such as centralized vs. decentralized control, levels of retirement and health benefits and how much influence to allow charismatic leaders to have in companies. But even if we allow that management mantras must change with the times, it seems to me a great workplace culture is a critical foundation that endures.
This makes sense intuitively. In a climate of trust, pride and camaraderie—our definition of a great workplace—people will work hard and give their best. And that’s true whether they work on the factory floor, at a retail cash register or on software development. What’s more, such a culture attracts excellent talent in the first place.
A high-trust culture certainly is central to Google—the company has been topping our Best Workplaces lists for years now. And in a new book about Google that Lemann discusses, former Google executives Eric Schmidt and Jonathan Rosenberg credit Google’s culture for luring the kind of employees that do great things. For example, they mention a case when a small group of engineers—acting on their own volition—made a crucial fix to Google’s AdWords technology:
"It wasn't Google's culture that turned those five engineers into problem-solving ninjas who changed the course of the company over the weekend," Schmidt and Rosenberg wrote. "Rather it was the culture that attracted the ninjas to the company in the first place."
More and more evidence is emerging that high-trust cultures are a timeless cornerstone for success. Publicly traded companies on FORTUNE’s 100 Best Companies to Work For list have helped to nearly double the performance of the stock market from 1997 to 2013. Italy’s Best Workplaces have posted better revenues than their competitors in the same industry for six straight years. Over the past five years, a portfolio of India’s Best Workplaces outperformed overall India stock market indices by a factor of four.
As those findings suggest, the importance of a great workplace culture isn’t just ageless, it applies across nations as well. Google, in fact, has proven particularly capable of establishing a great culture around the world. It recently earned the title of World’s Best Multinational Workplace—an honor based primarily on the survey results of Google employees. Lemann makes an interesting point that the Internet giant will not be able to function in the same free-form way with 50,000-some employees today as it did in its early years. But Google shows no signs of lessening its commitment to a great workplace culture. And if it continues to foster that abiding foundation of success, I wouldn’t bet against Google remaining strong for years to come.