Google’s Holding Company – Alphabet
Prior to the death of Apple’s Steve Jobs, he had informed Google co-founder and CEO, Larry Page that his company had been trying to do too many things and as Page later told the Financial Times in his reply that `if they did just the same things they had done before and did not do something new, it would seem like a crime to him’. Yet Page acknowledges that Jobs could have been right to a certain extent – he would manage only so many things before too many of it would get lost in the shuffle.
These two desires , one to do new things irrespective of how weird and unrelated it could seem to Google’s core search and advertising business and still find a way in managing them to completion, explains the surprise announcement of Page’s that he intend creating a holding company by the name Alphabet.
This would separate Google’s profitable ad-related businesses, which include mobile software as well as the video site YouTube from the company’s range of efforts on human longevity, internet access balloon, self-driving cars; the Nest connected home devices etc. where each of them will probably be a separate holdings
First Step in Fulfilling the Company’s Long-Standing Goal
However, the move, though applauded by investors, is just the first step in fulfilling the company’s long-standing goal in making Google a long term success as well as the world a better place’.According to several management experts, Alphabet would be successful if the individual project and companies would be successful enough on their own to become freestanding companies, ultimately and the new corporate organization qualifies that to occur though it does not guarantee it.
At first, it is essential to dismiss the notion which Page together with co-founder Sergey Brin had developed such as the Berkshire Hathaway of the Internet, an updated version of Warren Buffett’s company. A professor at MIT’s Sloan School of Management, Michael A. Cusumano commented that `the comparison seemed to be silly and Buffett invests in existing, undervalued companies something like mutual fund is the opposite of Alphabet’s VC-style focus on risky new ventures like Calico.
New Businesses Tend to Get Short Shrift in Resources
According to David B. Yoffie, professor of international business administration at Harvard Business School, states that if Page and Brin attempt to run alphabet similar to an updated Berkshire Hathaway or General Electric, which is a more tech focused company, they would run into trouble.
They have been running differently from successful tech companies and that he is doubtful since it is difficult to have a company structure in the tech world’. Regardless of closely related businesses, companies like Microsoft, Samsung, and IBM together with Hewlett-Packard have found it difficult to succeed.
Moreover, they have also found it difficult to capitalize on updated products and services. According to Yoffie, new businesses have a tendency of getting short shrift in resources as well as management consideration.
This is specifically what Page as well as Brin intends to avoid with Alphabet. Page had written in a blog post which means `alpha-bet’ or an attempt to get returns above `alpha’ – a normal target. In any circumstance, the reorganization sets Google/Alphabet on the track which may not be easy to change in the future if it does not tend to work since it will be more than a just a promise of reporting Google’s financial result and the alpha-bets separately.
