Google announced a huge re-organization yesterday with the founding of Alphabet, it's new parent company. This gives a lot of latitude to explore a variety of new businesses that will be led independently.
With this, they join the ranks of other big "family" companies. Their new peers do okay, but IMHO no one's figured out how to do the conglomerate thing very well, especially when it comes to things like:
COMMONALITIES: What makes them all part of the parent company other than ownership? What should remain consistent with every subsidiary no matter what? Will they be bound by a common mission? (As of yet, Alphabet has not announced a new mission statement)
EFFICIENCIES: There tends to be an inverse relationship between size and efficiency. Work, resources, and money are wasted on multiplying the same thing over and over again. Other parent corporations have attempted to manage this by establishing Centers of Excellence (COEs) and sharing overhead functions like finance, IT, and HR--all with mixed results. These efforts at efficiency tend to decrease effectiveness and add bureaucracy.
CULTURE: Whether the subsidiaries will cultivate their own distinct cultures or share one large one is still TBD. Right or wrong, the reputation of the entire family of companies rides on its worst subsidiary culture. Culture impacts everything from employee morale to company performance. One large mistake in one place ( a poor decision, safety/compliance issues, etc.) could harm the business and reputation of the others. The ability to recruit top talent for future business needs can be impacted as well.
Even writing about these feels daunting. Alphabet's got some big challenges ahead, but...they can also be great opportunities. There's no shortage of opinions out there, but hopefully this unsolicited advice proves helpful:
It is my hope that Alphabet won't be just another conglomerate created simply because Google got too big. Rather, this is an opportunity for them to change the status quo once again and lead the way. Goodness knows the conglomerate model needs disruption. If anyone can do it, they can.
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