Alphabet and Google: Here’s What Happens Next

Jun 23, 2016

By Les McKeown, CEO of Predictable Success
Alphabet and Google: Here's What Happens Next

There’s a defining moment faced by every once-a-firebrand-now-merely-big organization, and Alphabet, the parent company of Google, just flunked it.

It works like this: A once stratospherically successful business (say, Microsoft, Yahoo, Blackberry or Gap, Inc.) becomes at the same time balance-sheet rich and insularly narcissistic. Besotted with their own brilliance, and fueled with liquid assets, senior management (especially if they’re also the founders) start making dumb bets. A few billion dollars disappear on this and that, without any real return – but, hey what does that matter when you’re iconic, a market darling, and, well, filthy rich (yes, businesses can be filthy rich. It’s just a little infra dig for us commentators to say it).

None of this is in itself the defining moment. Like most episodes of Game of Thrones, the first eighty percent of the action is just the precursor for the final denouement, and for our best-company-in-the-world-to-work-for, paradigm-changing mega-brands, the denouement comes when someone at a senior level starts to ask embarrassing questions.

Questions like: “Is this the best way to do this?”, or “Shouldn’t we be focused more on improving our core business?”, or “Are we only getting into self-driving cars as a knee-jerk response?”

Sometimes (sadly, rarely), a company’s founders will listen to an internal challenge and respond to it positively (like Netflix did, crucially, some years ago); but, more often than not, the pesky question-asker will be isolated, marginalized, maybe even fired – and slowly at first, then rapidly, the internal challenge function gets crushed. It becomes impolitic to question the big kahuna’s whims, culturally offensive to enquire, let alone probe, and career suicide to say ‘no’.

One by one, the company’s second- and third-tier Visionaries leave, isolating the C-Suite further. The company begins to eat its own dog food, believing in its own invulnerability, until eventually, even customers are just plain wrong. At this point the business has hit The Big Rut, and there’s no way back. It may take a long time (remember how filthy rich the company is), but eventually, years or decades later, it’s all over.

The recent departure of former Nest CEO Tony Fadell from the Google-acquired company shows every sign of being a precursor to just such a decline. Although Mr. Fadell had detractors both inside and outside the company, and by all accounts could be prickly to work with, there is no doubt that he brought a robust challenge function to Google.

My prediction: Watch for more departures of Visionary department and division leaders from Google (voluntary and involuntary) and increasingly unfocused Hail-Mary investments, until the day the board has finally had enough.