Analyze and diagram Google’s business model (Johnson et al), detailing the relationships among the end users, web portals utilizing the Google search engine(s), advertisers, online publishers, AdWords/AdSense, and the communication and collaboration applications offered by Google. Identify and detail the customer value proposition, profit formula, key resources and processes. Based on your analysis, define the critical success factors for Google’s continued growth and profitability. How would these translate into objectives for the organizational design?
Analyze and diagram Google’s business model (Johnson et al), detailing the relationships among the end users, web portals utilizing the Google search engine(s), advertisers, online publishers, AdWords/AdSense, and the communication and collaboration applications offered by Google.
Identify and detail customer value proposition, profit formula, key resources and processes
- Customer value proposition: Google’s customer value proposition is based on the company’s mission of organizing all the information in the world in order to make it not only universally accessible but also useful. Its main customers are internet users who use its search engine while looking for particular information. In this regard, its customer value proposition means that end users will get the precise results that they were looking for. As for advertisers, this translates to delivering targeted advertisements as well as the capability to track information and feedback.
- Profit formula: Over 90 percent of the company’s revenues are generated from online advertisement. Its main advertising platforms are AdWords and Adsense. Therefore, the company’s profit formula is to increase the visibility of these two platforms. AdWords was designed to assist advertisers create and deliver advertisements that are targeted search requests and relevant web content. These advertisements are displayed on Google’s own websites and third party websites (referred to as Google Content Network). Adsense was designed to assist online publishers monetize their content by displaying AdWords advertisements relevant to search queries or content on a page.
- Key resources: Google’s key resources are its employees. They are responsible for coming with new ideas that would lead to product improvement or development of a new altogether. This is evidenced in the fact that it was conceived after its founders had successfully developed an algorithm that offered an innovative way of ranking web pages. Its search engine remains its trump card in the information technology industry. When it loses its leadership position in the internet search business, there are great chances that it would also lose significant amount of revenues due to low advert clicks and impressions. Therefore, its employees, who have the biggest responsibility of developing the search engine and monitor online advertisement hold the key to its long-term performance.
- Key Processes: These include its search algorithm that makes it the largest search engine in the world, its informal and consensual decision-making and recruitment of top talents. If the company improves or upholds (at the very least) these processes, its current performance would be sustained.
Based on your analysis, define the critical success factors for Google’s continued growth and profitability.
For Google, continued innovation in search optimization and online advertisement targeting are critical factors for success. The company’s heavy dependence on online advertisement (which contributes to more than 90 percent of total revenues) means that it cannot compromise its online presence. However, what has made it extremely popular is its search engine. Presently, many internet users have to visit Google first before they are led to websites that contain information they are searching. The emergence of other search engines such as Yahoo and AOL has created some competition, which Google must win always. This implies that it has to continually improve its search engine and add other features that will make it a must-use for internet users. In this way, it will continue to dominate the internet search business.
The more people search through its engine, the more the number of ads that are displayed. This translates to more revenues from the cost-per-impression system. In the same vein, the more people search, the higher the chances that they will click on ads. This will translate to more revenues from the cost-per-click system. This will act as an attraction to online advertisers, which would translate to more revenues. For Google to succeed in the long term, it is critical that its search engine and online ad platforms are enhanced on a regular basis.
How would these translate into objectives for the organizational design?
Google has developed many products ever since it was founded. However, its most important product is its search engine. This explains why its founders have remained leading figures in this product line. Therefore, even though the company has set aside huge amounts of resources on new product development, it is essential that most of the efforts are focused on attracting additional internet users. The objective of Google’s managers should be to improve the search engine since it has a great impact on revenues.
- Evaluate Google’s management and organizational structure with respect to their ability to continue to innovate and lead the market for online advertising services. What are the strengths and limitations of the current structure and processes (Do You Have a Well-Designed Organization?) Are they effectively positioned for continued growth and innovation?
Google’s management and organizational structure
Since its inception, Google has had a flat and loose organizational structure. Its founders, Sergey Brin and Larry Page have always wanted to make the workplace look more of a campus. As a result, employees are given the freedom to engage in playful activities even at work. Even as the company has grown, it has persisted with nimble organizational culture. This has meant that hierarchies, job titles and levels are not as pronounced as in many other companies. Consequently, employees can share ideas with each other and the managers without feeling inferior. More importantly, this structure has ensured that there are shared goals and common mission across the board. Employees also play an important role in new product development and idea creation. The freedom given them to has also meant that they are personally responsible for the company’s success. This has translated to self-management and motivation.
Due to the loose organizational structure, Google has managed to become one of the global leaders in innovation and online advertisement. Since the bureaucracies have been reduced significantly, employees can easily share their ideas amongst each other and their managers. This has promoted innovation as employees compete with each, in a positive way, about who will come up with the best and most successful innovation. The quest to seek new business opportunities has enabled it to monopolize the online advertisement market. With this structure in place, the company’s ability to continue to innovate will be strengthened.
Strengths and Limitations
- It has promoted innovation and creativity: The organizational management and structure has allowed the ideals of creativity and innovation to become part of Google’s culture. Even though the company is technology-based, all employees are not willing to accept the fact that only the engineers and product managers can have fun and be innovative. Consequently, they are willing to compete with one another in terms of coming up with an idea that will be successfully turned into a product. Therefore, new product conception is not a preserve of engineers. On the other hand, it is the responsibility of each employee, regardless of his or her core duties. In addition, innovation is not witnessed in product development only. Other department such as human resources, finance, and marketing are also actively innovating in order to make their functions efficient. All these have contributed massively to the company’s impressive growth.
- It has enabled Google to attract top talents: Google has been able to attract the top talents worldwide since the organizational structure enables them to grow and gain satisfaction from their jobs even if they are paid less than the industry standard. Whilst other companies have linear and bureaucratic controls, Google allows its employees to set and uphold their own standards. Such a culture acts an attraction to highly qualified and competent potential employees. This make them feel extremely empowered. In attracting top talents, Google will retain its position as a leading innovator in the information technology industry.
- It empowers employees: Google’s leadership structure allows employees to set and change their job parameters when necessary. At the workplace, managers act as mentors, not as directors. In essence, employees act as their own leaders. This gives them a sense of personal responsibility and empowerment when it comes to improving performance. This has proved to be an effective strategy since the employees have helped the company to grow.
- It has ensured managerial efficiency: The company encourages employees and their managers function directly with each other on a non-formal basis. This implies that the work of managers is not simply to order the employees around. Instead, they work hand in hand by sharing ideas on how they want tasks to be completed. As a result, the level of conflict between managers and employees is low. This has increased managerial efficiency.
- It can employ from a small pool of talent: For this structure to function successfully, it needs employees who are self-motivated and can manage themselves. This means that it can only employ persons who have showed these capabilities. As a result, the company sometimes overlooks recruits who may lack ‘Googley’ qualities even if they have impressive qualifications. Thus, Google misses out on some top talents that would otherwise enhance performance if they are given proper training and guidance.
Are they effectively positioned for continued growth and innovation?
Google has a formidable organizational structure that has proved successful since its inception. The structure has become the envy of other companies. As a consequence, it will continue to attract the top talents. In the same breath, the company will continue to retain its best employees due to its favorable employment conditions. The structure also ensures that idea creation will remain part of the company’s DNA. Therefore, it can be concluded that Google is effectively positioned for continued growth and innovation.