Book review "How Google Works" by Eric Schmidt and Jonathan Rosenberg

Foreword

• Moonshot thinking is important
• When companies settle down they become irrelecant

How alphabet works

• Restructuring Google into Alphabet was crazy and unusual
• Budgeting growth is difficult
• Budget according to opportunities
• Create startups inside a company (eg Niantic)
• Organize around people that create stuff
• Exceptional leaders need a lot of freedom
• Not invented here is a problem. M and A is always a problem. Eg Google video was radically shut down and replaced by Youtube which was bought.
• Eric's maxim from Bill Gates: Spend 80 percent of your time on 80 percent of your revenue.
• Area 120 projects => There Googler spend 100 percent of their time on their 20 percent project.
• Alphabet put energetic CEOs in place. They can focus on their buinsess and do not need to focus on office rentals and such.
• Google even gives bonuses to teams that fail well.
• Mantra: Make things 10x better, not only 10 percent better
• Roofshot and Moonshot projects. You neet both

Introduction - Lessions learned from the front row

• Finland was the codename for Microsoft
• Plans are ok. But Larry was absolutely ok with letting the Engineers do their thing. Just creating MBA style business plans won't work well.
• Hire the best and get out of the way
• 30/70 rule - in the old world build 30 percent of the time and 70 percent shouting about it - in the new world it is the reverse.
• Excellent products stand on the shoulder of many iterations => speedy continuous delivery is king => Primary object of business

Culture - believe your own slogans

• Culture is super important to attract smart crearives
• TGIF meetings are very important for Google. Employees can voice disagreement with decisions.
• Work environment is important
• messiness is a virtue (!)
• Jonathan absolutely does NOT like his people working remotely
• Create a meritocracy
• Keep your organization flat. Google's manager have many many reports. But too many direct reports also did not work for Google. Aka the no-manager experiment failed.
• Rule of seven: You have to have at least 7 direct reports.
• Consider splicing up your company into discting business units
• Stay functional (aka don't use business units) as long as possible.
• Bezos two pizza rule. A team should be feedbale by two pizzas.
• Measure people based on performance and passion. Group your people around that.
• Warren Buffet's rule: Only invest in companies where the leader does not run the company because of the money, but because she is committed to it
• In CEO staff meetings 50% of the people should be product people
• Give responsibility to your best people
• You can work with Divas - but you have to really make sure that their output is ok.
• Establish a culture of Yes (Is this really desireable?). "No" kills creativity.
• Make jokes from time to time
• Idea for offsites: Forget team building and have fun
• Another idea: Run book clubs!
• When you are leader everyone is watching - it does not matter if you dance poorly - it is important that you dance (says Eric)
• Find the smartest people in the org by identifying one and asking for the others. Especially helpful in a turnaround.
• Every organization is an extended shadow of the organization
• Be a human being. No matter how much on the top you are - always pick up litter from the ground.
• "Don't be evil" slogan is to empower people
• Create an organization where any employee can report problems.
• Create aspirational cultures

Strategy - your plan is wrong

• Plans are always flawed
• VCs invest in the team, not the plan
• The plan is fluid. The foundation is stable
• Delegate and don't plan perfectly
• Giving the customer what he wants is less important than giving him what he doesn't yet know he wants
• Henry Ford: If I'd have listened to customers I've gone out looking for faster horses.
• If you are trying to solve something big it's not enough to grow - you have to scale
• Platforms. Create platforms!
• Google prioritized growth over revenue by not maxing out on displaying ads
• Create open platforms. Like eg Android (But - that's a bad argument as Android is not really open)
• Do not think too much about competition - don't think about things that exist - think about things that you did not think of yet - but you need.
• Don't follow your competitors
• Very good notes for strategy meetings (Page 92)

Talent - hiring is the most important thing you do

• Sergey's question: Could you teach me something complicated I don't know?
• Most important task for a manager: Hiring
• Hiring should be peer based
• Google hired smart people before it needed them.
• Great people attract great people
• Set the bar high from the beginning => Especially important for product people as they have such a big impact.
• Look for passion
• Look for growth mindset.
• Favoring specialization over intelligence is exactly wrong
• Find learning animals
• Observe civil manners
• Listen to how the assistant likes the person
• Take out candidates for dinner
• Learn if a candidate was the hammer of the egg. Someone who caused change or went along with it?
• Most good interviewes can make a negative call in 30 mins
• Use a scale 1-4 to rate candidates. Then you cannot simply tick the middle value. You have to decide.
• 4 areas to grade people -> Leadership, Role related knowledge, General cognitive ability, "Googleyness"
• Always hire by a committee
• Larry reviewed every offer for a several years
• Decide on promotions as well inisde committees
• Exceptional pay for exceptional people
• Try to calibrate scoring of interviews
• Look for applicants with a growth mindset. Belief in people that want to grow and like to receive feedback.
• Favoring specialization over intelligence is wrong
• Observe civil manners by applicants, take the applicant out for dinner
• Ask challenging questions: "What was the low point of the project?", "Why was it successful?".
• Google does the first interview 30 mins. Often this already results in a "no".
• Google grades applicants in 4 areas: Leadership, Role, General cognitive ability, Googlyness
• Always hire by a committee / Decide on promotions with committees
• Pay exceptional people exceptional money
• Good applicants help teams win
• Employees want to leave - and that it is ok. You can try to advices them to stick around for some time. But leaving is also ok.
• If employee got competing offer make counteroffer quick.
• Don't hire people that like firing
• The chapter also features some nice career advice
• Combine passion and contribution. That's a clear path to happiness

Decisions - the true meaning of consensus

• Have a bias towards data
• Have a bias for action
• Google had Eric (management of VPS + sales), Larry (engineering product) and Sergey (engineering + buinsess deals). They met every day.
• Eric always let the founders decide
• Arguments are not enough. You have to tough their hearts.
• Don't use a laptop when attending a meeting
• Lawyers are risk averse and focus on the questionable.
• The horseback law tells corproate laywers to decide quickly without overdoing it.
• Spend 80 of your time on 80 percent of your revenue (advice from Bill Gates).
• Make sure to have a succession plan for yourself
• Make sure to have a coach

Communications - be a damn good router

• Sharing is super-important. Routing information is super-important
• OKRs are important
• Do post-mortems
• Use Tgif to let people ask questions
• Sometimes activites don't have to product something tangible, but are important for bonding (Jonathan invited people to a movie).
• Google themes: Putting users first, thinking big, not being afraid to fail
• Make staff meetings more interesting ("What did you do on your simmer vacation type question. Start staff meeting with trip reports)
• Golden rule of management: Make sure you'd work for yourself
• Do a self review of your own performance once a year
• Nice list of 1:1 topics by Bill Campbell
• Nice advice how Eric ran board meetings (Lowlights and highlights of the last quarter
• Make sure you get critizised
• If everything is under control you are not going fast enough (Mario Andretti F1 race driver
• Don't forget to make people smile

Innovation - create the primodial ooze

• Default to open (aka open source). Android is considered open
• Innovative is not just giving your cusomers what they want. You need to find something new. Something radically useful.
• A lot of small improvements are also innovative! (eg Google Search team is innovative!!!)
• First follower principle
• Focus on the user and the money will follow
• Doing big things inspires
• Use stretch goals for OKRs
• Business as usual stuff does not need OKRs
• 70/20/10 rule - 70 was search, 20 percent to emerging products, 10 percent to completely new things
• Don't overspend innovation. Street View and Google Books was done quite cheaply by Sergey.
• Use 20 percent time projects to start something cool.
• Use minimal internal reviews - opt for faster ccycles
• Don't forget sunk costs - and forget them...
• Don't launch crammy products. They should be OK, but with limited features.
• Example: Google Wave did not get traction and was killed off
• Google does not reward successful 20% time projects (!)
• Bezos has a 7 year time horizon.

Conclusion

• Put tech at the hear of your company
• As what is true in five years from now and act accordingly

Verdict

Must read. So many important topics. So many recommendations.