Google and Alphabet

A new model and one of the most bold moves for a large corporation

Innovative companies like Google have often made bold moves that seem crazy but end up working out regardless. This is especially true when Google does it - They start so many new products but if they don’t work out properly, they are swift to kill them or replace them. This new change sounds crazy but it is not a new model, Alibaba follows the same model. A couple of HBR articles explain this very well and thoroughly:

  1. Why Google Became Alphabet
  2. Alibaba Looks More Like GE than Google

So what exactly happened here? Google announced that it is forming a new company, called Alphabet. Alphabet won’t be part of Google. Rather, Google will become part of Alphabet. So what exactly is Alphabet? Google explains this in a post:

What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t much related.

Essentially, the idea is that Google is streamlining the management, creating several smaller companies out of itself which will all work like almost like startups developing products and services that one corporate giant could not manage very effectively. It’s not a management challenge as much as it is a fuel for more innovation. Google is trying to grow arms that will spread and reach out into 10 different markets now and be successful in almost each one of those. Of course there will be failures down the line, but the core ideas remain the same. Most of its other ventures will now be run separately under the Alphabet umbrella. Those include:

  • Calico, a project devoted to extending the human lifespan
  • Nest, the company’s smart-home division
  • Fiber, its ultra-high-speed Internet infrastructure project
  • Google X, the lab that incubates “moonshots” like solar-powered Internet balloons and self-driving cars
  • Google Ventures, Google Capital, and related investment arms

Even though this move seems like completely out of the blue, it seems like many companies are getting ready for this. Just look at Facebook, it already has separate apps: The flagship Facebook app for the timeline, the Messenger app for messaging friends, Whatsapp for people outside the country, Instragram for photos sharing. What’s stopping any of these venues from becoming separate companies under Facebook just like Alphabet? This should be interesting, Alphabet is one of the most important moves for our generation and we will see how others respond as a result..