How Google Works by Eric Schmidt and Jonathan Rosenberg

Creating a culture that has a thirst for and thrives on innovation is the holy grail of business today. But it’s not as tangible, nor as easy, as creating processes, borrowing best practices, and funding innovation initiatives. Managers across the globe sit and weep in their offices, because this problem … is all about … people. The one darn thing their MBA didn’t teach them about.

Google is perhaps one of the best examples of an innovation-driven culture – or at least their culture appeals to me, so I was keen to read a new book on the subject by long-serving Google executives, Eric Schmidt and Jonathan Rosenberg. In How Google Works, we get a glimpse into what really makes their environment so different, and so innovative compared to most companies.

Hiring is everything

I was surprised to see that above everything else, the one thing that stands out in the book as a clear strategy for innovation, is the passion and dedication for hiring the right people.

“The most important skill any business person can develop is interviewing.”

Google is obsessed with what they call smart creatives. People who are highly intelligent, but are also creatively motivated – they enjoy figuring things out, they seek out problems to solve, and in their own strange way, they are highly interesting people.

At Google, they have something called the ‘airport test’ – which is to say, if you were stuck in an airport, delayed for hours on end, and you had to sit with this person for the duration, would they be boring, or interesting? Would the conversation keep you from being bored? You don’t have to get on with the person that well, but you do need to find them interesting – they need to have diverse interests, hobbies, backgrounds, and ways of thinking to yours.

“You must work with people you don’t like … homogeneity in an organization breeds failure. A multiplicity of viewpoints – aka diversity – is your best defence against myopia.”

But don’t talk about passion

Passion is not something you should ever have to mention or justify – passion should be demonstrated. Google look for people who have deep interests in subjects in and outside of work, because they are looking for people who tinker, who mess with stuff, who like to keep learning. And crucially, people who tend to be absorbed in something, with persistence and grit.

“Henry Ford said that ‘anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young.’ Our ideal candidates are the ones who prefer roller coasters, the ones who keep learning. These ‘learning animals’ have the smarts to handle massive change and the character to love it.”

To help weed the phonies, Sergey Brin poses a deceptively tough question for his interviewees:

“Could you teach me something complicated I don’t know?”

This is where they expect you to bring something new and interesting to the table. Maybe it’s about how to fix up an engine, rig up some DIY solar panels, or build an algorithm to improve Netflix’s recommendation engine. But it won’t be about defining go-to market strategies, or benchmarking KPIs. What would you say to somebody who is as bright and well-informed as Sergey? Tough question.

“Comfort with ambiguity, bias to action, and collaborative nature.”

People that can adapt to change

Because the world is changing so quickly, you need people who can adapt. People who are always learning (i.e. they have a growth mindset) are better able to make that rapid change. People who take action, try things out, discuss and share with others, are a strong preference. Don’t hire for a specific role, hire for the company as a whole. Job positions are expected to change frequently, so you need people who can move into other areas – therefore look for general abilities, not specific ones. Typically companies look for past experience when filling a role, but that’s not how you find a learning animal.

“Favoring specialization over intelligence is exactly wrong, especially in high tech. The world is changing so fast across every industry and endeavor that it’s a given the role for which you’re hiring is going to change.”

Put simply, hire outstanding individuals, the superstars. Act like a top sports coach, spend significant energy on drafting, recruiting, and trading the best talent you can find.

“We want to hire the best minds available, because we believe there is a big difference between people who are great and those who are good, and we will do everything we can to separate the two.”

And as for finding these great individuals? Well, firstly Google wonders why you need recruiters. There is a place for them – perhaps for other companies – but everybody in the company should be a recruiter. Because if you find one great person, the chances are they will know more – interesting folk tend to congregate with other interesting folk.

“A workforce of great people not only does great work, it attracts more great people. The best workers are like a herd: They tend to follow each other.”

The hiring process

Hiring should be peer-based, and not hierarchical. It’s one decision where a committee actually makes sense. This is because you need to hire all round good individuals, that can quickly jump to other areas of the company or different projects. Google puts people through a series of short interviews with the members of the committee.

“From the outset, Google’s founders understood that to consistently hire the best people possible, the model to follow wasn’t that of corporate America, but that of Academia. Universities usually don’t lay professors off, so they invest a lot of time in getting faculty hiring and promotion right, normally using committees.”

Most interviews will result in a no-decision, therefore schedule every interview for a maximum of 30 minutes. Why should it be an hour when you know the probability is a no-go? If the candidate is bad, you will know very soon into the discussion. If they are good, you’ll want more than 30 minutes with them, so schedule another talk. 30 minutes also forces you to avoid the waffle and get to the important questions. Also know that a highly qualified candidate is evaluating you, the interviewer, as much if not more than you are evaluating them. A top candidate always has multiple options, you are just one of them. And crucially, look for people who engage rather than sit there deflecting your questions:

“People who ask good questions are curious, smarter, more flexible and interesting, and understand they don’t have all the answers – exactly the type of smart creative characteristics you want.”

There is a limit of five interviews, because they found that statistically more than five does not impact the quality of the decision. They use a scoring system between 1 and 4, and they encourage interviewers to take a strong stand. Offering up a 3 means you are fine with the hire. That’s not good enough. You want to be more than fine, and by issuing a 4, it means this person will get hired, or you can expect the interviewer to “hunt you down and … passionately debate the decision.” Smart creatives care a lot about the people they work with, it’s like an addition to the family, so you can expect emotion.

A hiring ‘package’ is created for each candidate. This is a standardized document, containing all known information on the candidate, and feedback from each interviewer throughout the process. This means everybody on the committee has the same information. It must be filled with data, not just opinion – and it’s the only source of information for the committee, everything must go in. A successful candidate will end up with a stuffed document, full of interesting pieces of data and examples. This process is the same across the entire company, for every level.

“Once you get your smart creatives on board, you need to pay them; exceptional people deserve exceptional pay.”

Just like successful athletes, great employees have a disproportionate impact on the company. They help teams win, and winning brings huge business benefits. Should you pay them disproportionately right away? No. The pay curve should start low, but accelerate fast and high when the impact is made on the business.

Google’s innovation methods

So now that you have your well paid, high impact, smart creatives all buzzing with new ideas, how do you manage their innovation potential? The first step is to ensure you have speed built in – you must move fast. The only way to really handle this is through agility and iteration. You must try stuff, often in a low-fidelity way, learn, and try again.

“Product development has become a faster, more flexible process, where radically better products don’t stand on the shoulders of giants, but on the shoulders of lots of iterations. The basis for success then, and for continual product excellence, is speed.”

Iteration is the hardest part. Once developers finish the initial work, they tend to look for something new – getting them to stick around for the improvements is not easy. So start small, and ship it quickly to get results – focusing on the improvements for the user. Google also recommend saving a ‘wow’ feature for after initial launch. If people like the product, then hit them with a giant wow feature very quickly.

Employees at Google have famously had 20% time, but Schmidt and Rosenberg explain that it’s not really 20% out of the working week, it’s more like they work 120%. The idea of 20% time is to give permission to employees to work on anything they want. It’s a reinforcement of the culture and ethos:

“Twenty percent time is a check and balance on imperial managers, a way to give people permission to work on stuff they aren’t supposed to work on.”

10X everything

Google’s attitude towards innovation is to improve something by 10 times or more. Try to find the areas, even in existing products, where you can make a 10X improvement. 10X is big – it changes the game, like Gmail did with its enormous free storage on launch. This idea has permeated into every area of the company, with people often discussing how to 10X their job. It’s a great mindset to have – how would we 10X what we’re doing here?

“Many companies get comfortable doing what they have always done, with a few incremental changes. This kind of incrementalism leads to irrelevance over time, especially in technology.”

For Google, innovation is not incremental. Rather it must fulfill three criteria: it must be new, it must be surprising, and it must be radically useful. They safeguard time for this kind of work, by following a 70/20/10 plan. 70 percent of projects are related to the core business, that of search and search related advertising. 20 percent is related to emerging projects which have already achieved some sort of early success or promise. And 10 percent is allotted to completely new things, which are high risk, but with a big potential pay-off.

Radical innovation

Google’s Project X team could be considered part of this 10 percent allocation. They work on exclusively radical ideas, like the driverless car, Google Glass, or Project Loon. To determine whether an idea is funded in Team X, they use a Venn diagram with the following criteria:

  1. It has to be something that addresses a big challenge or opportunity, something that affects hundreds of millions or billions of people.
  2. It must be a solution that is radically different from anything currently in the market. Not try to improve on an existing way of doing something, rather start from scratch.
  3. The breakthrough technologies that could bring that radical solution to life have to be at least feasible.

Despite these grand ambitions, in general Google has a philosophy of not over-funding ideas:

“When you want to spur innovation, the worse thing you can do is overfund it. As Frank Lloyd Wright once observed, ‘The human race built most nobly when limitations were greatest.’”

Say no to the CINO

Another area where Google seems to divert so radically from other mainstream companies, is their belief that the CINO role is a mistake.

“A few years ago, a major consulting firm published a report advising all companies to appoint such a ‘Chief Innovation Officer.’ Why? Allegedly, to establish a “uniformity of command” over all the innovation programs. We’re not sure what that means, but we’re pretty sure that ‘uniformity of command’ and ‘innovation’ don’t belong in the same sentence”

Innovation they claim, cannot be owned, unlike other things in business. It resists typical MBA-style tactics. Rather, ideas must fight their way to survival in a Darwinian kind of evolution. You must create a ‘primordial ooze’ that cultivates innovation – i.e., a culture. People should never be told to innovate, but they should be allowed to do so at every opportunity, which is why hiring is the bedrock of the strategy. When smart creatives work on ideas they believe in, the ideas travel a path which is perilous, but if successful will have become a stronger idea, picking up supporters and momentum along the way. Weaker ideas won’t make it. And perhaps most concerning for other companies scrambling for an innovation best practice, Schmidt and Rosenberg have this to say:

“There is no process by which to implement this evolution; its defining characteristic is its lack of process.”

Bingo! It’s all about the people.

(This post was originally published on LinkedIn)

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