Yesterday Google surprised the industry watchers with the announcement of a new structure - Alphabet. Not surprisingly G is for... Google. Which becomes a subsidiary of Alphabet. At the helm of Google will be Sundar Pichai, who has been taking in more and more prominent roles inside the product development organization recently. Larry Page will be CEO of Alphabet, Sergei Brin will become its President. 
 
 
This is an interesting move by the two Google founders that deserves a blog post - especially since Google competitor Microsoft has not chosen the route of splitting the company (against my suggestion - more here). 

It will give Google a very different operating structure - but will also deliver some interesting benefits:
  • Synergies where Synergies are needed - autonomy where not - The Google founders have consolidated where synergies help (Google) and created autonomy where there are (at least not immediately) synergies - on the different moonshot projects that Google is running.
     
  • Setup for more valuation transparency - Google now has an easier structure that can lead to better transparency of financial performance. How much do the Moonshot businesses drag Google down? Should risks of the operating a Moonshot business drag down Google isolation All these issues can now be addressed in the new structure.
     
  • Different businesses need different talent - As mentioned also in my post on Microsoft - the businesses that Google finds itself in are very different, and require different talent, connections and experience. Cars are not Advertising, Home Automation not Search, etc. Google can now (and seems to) hire the talent to run these moonshots businesses. 
 

MyPOV

A bold move by the Google founders to keep Google aggressive on all fronts. Specialization always increases focus, and the Alphabet setup is basically agreeing that the previous organization did not work in the best way for Google and Google shareholders. We noticed e.g. the absence of the moonshots at Google I/O this year. Then we thought it was more a needed focus on Android that lead to the content selection, now we know it may have been an early indicator of changes ahead. 
 
So congrats to a bold step - normally High Tech companies cherish and hold on to synergies for very long, often too long. So now we will have to see if alpha (return for investors) will happen, or if it will be alphabet soup, a dish my kids love, but that won't create the returns Google needs. 
 

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alphabet, google, microsoft