Yesterday, Google birthed Alphabet Inc. which became the umbrella organisation for a collection of companies. Google is now one of the subsidiaries under Alphabet's wing and has acquired a new CEO, Sundar Pichai. That's a lot of change for one of the most influential companies in the world. Here's more on what the overhaul means for Google.
So why did Google make this move? Looking at Google before the transition to Alphabet, it was a company with very diverse interests from life sciences and media to maps and search engines. Splitting them out into different companies means each of them can focus on their core competencies.
"Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related," Larry Page, now CEO of Alphabet, said in a media statement. His long-time partner at Google, Sergey Brin, has become Alphabet's president.
Together, Page and Brin want to ensure each of the spin-off businesses will have adequate funding and suitable CEOs. With the new structure, Google operates as a leaner organisation that can focus on the core internet products that it cut its teeth on.
What does this mean for workers of Google past? Probably less frustration for specialised staff who may have felt that previously it was hard to cut through the noise at Google since there were so many projects running simultaneously. Having different companies dealing with their own offerings means those employees can really focus on their chosen field of work. The is a smart move to keep workers happy, which is important for staff retention and also a great way of making the organisations more desirable for new talent.
"This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google," Page said. "... Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube."
Accountability is another thing Alphabet is hoping to instil in its subsidiaries. Both Page and Brin will be solely responsible for determining the compensation of the CEOs in each spin-off company and they've introduced segment reporting for Google's Q4 results, where the internet company's financials will be provided separately from the rest of Alphabet businesses as a whole.
Alphabet itself isn't planning to make a lot of noise for itself. The key for the parent company is to allow each of the companies to develop their own brands successfully and be truly independent.
We look forward to seeing what the new Google and the rest of its siblings will come up with under this new business structure.