Google announced that it is forming Alphabet to be a holding company of sorts for all of Google’s many and varied businesses. The explanation for this new venture is that Google wanted to separate its money-making businesses from those still in development. That way, the thinking goes, it will be more transparent to Wall Street.
Okay fine, but I don’t really see how creating a parent company is any different than what Google has now and Alphabet is certainly not a better name. YouTube, for example, is not known as Google or even YouTube by Google. It is simply YouTube and the same can be said for Android.
For the sake of simplicity and focus, why add an additional name to confuse matters? The Google division of Alphabet will most likely always dictate what the other business units can and can’t do. The money Google makes has a direct relationship to what, where and how far the other moonshot ideas can go.
That is the way it always has been with Google. Or do I now call it Alphabet?
Adding to the complexity.
I understand the financial desire to break apart disparate businesses. But the reality is that companies already do that with adding complexity. Sony reports the sales figures of each of its divisions, as do all conglomerates. But even with the mistakes that Sony has made over the years, it has kept its name intact.
Here’s the kicker – Sony’s mistakes are well documented, including by me. (Particularly as they related to missing out on combining its music catalogue with its music player only to be kicked in the teeth by Apple’s iPod and iTunes.) But it remained one company with one name.
This Google Alphabet structure is running a terrible risk of losing the innovative culture that has propelled the Google brand to be one of the most successful companies on the planet. Adding another layer of bureaucracy, management and complication will not make Google Alphabet more innovative as some have predicted. Instead, it has the real possibility of squashing innovation.
The success of Google has always been the result of it applying its wealth of knowledge from computing to consumer data to infrastructure to other seemingly non-related endeavors, taking brain power from one area and applying to others. Creating a parent creates unnecessary compartments that Google has never had before. In essence, creating a parent company is a direct conflict with its company culture.
Google is relinquishing a portion of its brand equity, throwing away the power of its brand and creating an inefficient brand architecture that it really did not need. Brand is about being clear and simple and easy to understand. Alphabet or Google (I don’t even know what to call it) has done the exact opposite on all counts. Alphabet is not clear, simple and easy to understand.
I have been involved with many companies who claim they are highly innovative and the one thing I know for sure is that red tape kills innovation. Google has created red tape. It’s no longer one Google, it is a collection of companies.
Alphabet will have a honeymoon phase where everyone will play nice and get along. But I have a feeling that, over time, cross pollination of ideas will begin to slow down and some of Google’s world-class talent will view the new structure as a hindrance to being innovative and find that their once beloved Google is now just a corporate cog in ABC company.