Google restructuring must not be at cost to productivity

Explaining the unboxing of Alphabet, the new parent company of Google, Larry Page, its chief executive, said appointing someone else to run the search company "frees up time for me to continue to scale our aspirations".

He will need all the Google Calendar space he can liberate.

If history teaches anything, it is that growth, reorganisation and their consequences can suck up enormous amounts of time and energy. Robert Sutton and Huggy Rao wrote in Scaling Up Excellence that expansion "can tax human minds and organisations beyond what they can bear".

Eric Schmidt, Google's chairman, also recognises the risks of reorganisation. In How Google Works, he and co-author Jonathan Rosenberg offer this cynical summary: "An executive decides that the way the company is structured is the source of its problems, and if the company was organised differently everything would be puppies and sunshine."

The stock market has assumed that Alphabet’s formation will improve clarity and simplify Google’s growth challenges. But it would be unusual, possibly even unique, if the creation of Page’s conglomerate presaged the birth of puppies, rather than the sorts of bureaucratic monsters that roam more conventional large companies.

Getting the structure right is one way of avoiding this commonplace fate. Clever time management is another. Andy Grove, former Intel chief executive, pointed out in the 1980s that "just as you would not permit a fellow employee to steal a piece of office equipment, you shouldn't let anyone walk away with the time of his fellow managers".

Yet keeping to time has become even harder since then. A Bain & Company analysis of the “time budgets” of 17 big companies showed that executives now receive about 30,000 external emails a year, compared with roughly 1,000 communications in the 1970s. Organisations spend 15 per cent of their collective time in meetings of some description, half of which are unnecessary.

Bain’s Michael Mankins told a group of chief executives, consultants and bankers at this year’s World Economic Forum (itself a sort of annual celebration of corporate time management – or lack of it) that turning down a meeting was “the managerial equivalent of belching in church”.

Mankins adds that “organisational drag”, caused by a combination of the wrong structure and inefficient use of time, can cripple companies’ productivity.

Time running out

Google imposes some strict rules to prevent its meetings running out of control (rule seven: timekeeping matters). Such top-down edicts are valuable. But companies that allow their creative employees to set their own limits also increase the threat that staff will overload themselves.

A recent study of the psychological effects of being “pressed for time” suggests people who think time is short because of multiple conflicting goals become more anxious. Their anxiety in turn makes them feel they have less time on their hands, and so on.

The good news is that the same study offers some sensible (and refreshingly non-digital) advice about how to avoid feeling pressed for time: recast your anxiety as excitement and “take a deep breath”.

Until now at least, Google staff have run on excitement. The group has itself built or bought some of the tools that are supposed to give people breathing space to live and work more efficiently. It recently acquired Timeful, a time-management app developed by, among others, behavioural scientist and author Dan Ariely.

But as the search company enters a new organisational era, its managers should be under no illusion about the increased pressure they will now face. Sir Owen Green, who ran the big British conglomerate BTR until the early 1990s and staunchly defended the model, once said that managing it involved “working harder than most people want to work”.

If Google succumbs to overload, innovation could be stifled. Employees may become less willing to exchange information between different parts of the growing business. Google must continue to champion that virtue even as different divisions develop their autonomy.

The test will be whether Page has got the trade-off right.

Will the creation of Alphabet really allow him and his colleagues to focus on the group’s productive future? If it does not then he may just have created a machine to waste time, rather than save it.

– Copyright The Financial Times Limited 2015

Twitter: @andrewtghill