Editor’s Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business -- and at Entrepreneur.com, entrepreneurs are responding with their own ideas and experiences on our hub. This week, we’re discussing Hoffman’s theory: the smartest companies don't tell their employees how to innovate, they manage the chaos
Starting and managing a business is no easy feat, even for Google
While it’s currently one of the most powerful and respected businesses in the world, nearly 20 years ago it was just a small group of people working at a very typical startup, all-nighters and all.
“The founders [Larry Page and Sergey Brin] built the company in the image of what they saw at Stanford graduate school,” Eric Schmidt, the former CEO of Google and current chairman, told Reid Hoffman on Masters of Scale, a podcast series examining counterintuitive theories to growing a company. He added, “that graduate student culture, that sense that somehow we're about to discover something new, permeated the decision-making, and traditional experience wasn't present."
While this culture works at the very start of a company, more experience can shape fresh talent into a company that will scale. When Schmidt took over as CEO at Google in 2001, Brin and Page said it was because they needed “parental supervision” – something many entrepreneurs face. Founders can be great at launching a vision, but have difficulty managing people, implementing policies and being involved in the day-to-day operations takes a different skillset. Chaos tends to occur – and not in a good way
In 2011, Schmidt stepped down as CEO, so Page could take over – something he knew the founder was ready to do
“I realized they weren't kids anymore. They were very seasoned professionals who had been through five or six or seven years—very challenging situations, where nobody was perfect, and people made mistakes, but they learned from every one of them,” says Schmidt. “There's a point when you realize the organization is continuing to learn—whether that's product execution, product quality, business strategy, truth to power, realistic scenario planning, those sorts of things.
Now with more than 50,000 employees, the culture remains chaotic, but is just better managed
“If you want your company to innovate, your job is to manage the chaos,” says Hoffman on the sixth episode of Masters of Scale
Here are three surprising discoveries Google learned while scaling its culture
1. Their famous hiring algorithm created a bias towards men.
Google invented a number of well-known hiring algorithms to help the company select the “right learners” for the company, including having potential hires get interviewed by peers, completing a task and answering those crazy, trick questions. Google managers would score interviewers during the process. But what they found is the approach worked for men, but not women
“It turns out that we uncovered unconscious hiring bias—because we certainly don't want to be discriminating—that was literally rejecting the top female candidates,” says Schmidt. “So after a lot of discussion, we decided that the way we interviewed women was not appropriate to the way we wanted to be perceived. It was causing this bias.
The company went onto to fix this by tweaking the hiring system to improve it. “It was our first real data proof that we, as a very, very socially liberal company, had our own biases,” he says. “Today, we have whole classes on unconscious bias, and we're convinced that we still have it, although we're working hard to eliminate it.
2. One simple move could make meetings more meaningful.
Not every meeting is worth holding -- and managers need to be mindful of who actually can benefit and how
“There's a great deal of evidence -- typical staff meeting of 10 people, five people will do all the talking, two people we're not so sure about, three people never say a word,” he says. To get everyone to participate, he will call on people and say, ‘"Do you agree?’ You'll come up with an incredibly cogent answer.
And when Google was smaller, managers would ensure everyone knew the meetings were important by assigning a note-taker to them
“Not only were notes taken, but we actually arranged it so we had projectors in the room, so you could watch what the note-taker was writing down during the meeting,” Schmidt says. “It was a fun prospect, but it also gave everyone a sense that something important was happening. We were in a meeting, it was being documented, it was consequential.
3. Hope isn’t a plan -- and doesn’t save failing products.
Google has built hundreds of successful products -- Adwords, Maps, Search and Gmail, to name a few. But there are many more that fail, including Wave. The product was supposed to be a new email system -- with all the bells and whistles -- and provide a solution to the antiquated online-mail world we had all known. Initially, there was an uptick in users, but soon traction began to slow and people started to lose interest. The team “kept making changes, and so forth and so on, they kept losing users,” Schmidt recalls. “For 18 months the CEO—me—failed to act on what was clearly a losing strategy.
Google eventually put a stop to the program, but it took great effort, Schmidt says. He learned an important lesson. “There are no cases where a platform emerged that was highly successful, before it had a use case that solved a new problem that was important.
“Wave is a good example, where hope is not a plan,” he says. When you see something that is in trouble, you need to act more quickly—because the only thing that matters is time.”