Google Business model

1. Members: Davide Sigillo
Lorenzo Atti
Lucia Gramellini
Sofia Mambelli
Marco Morselli
Giovanni Vascellari

2. Google Googlers Googley
Google’s revenue over the last several years. Number of Google employees between 2007 and 2014
Google remains fast and flowing as it was composed only by Page and Brin, their goal is to
let employees consider Google not only as a place to work, but especially as a state of mind
Did they really succeed?
…but…
Since it was founded, Google keeps growing and growing, becoming one of the emblems of
our time

3. 2002 2007
REVENUES 439 508 $ 16 593 986 $
TOTAL COSTS (as % of
revenues)
253 092$
(57%)
11 509 586 $
(69%)
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
2002 2007
Costs and Revenues
Revenue Costs
Google scale up good!
The success of Google
Big G has been able to grow in terms of
revenue and market share, keeping costs
under control and always ensuring an income,
but most important it continues being
“googley”

4. Why did google scale up good?
Keeping and entrepreneurial atmosphere
with small and nimble teams
Changing processes an think on what can be
eliminated, automated, outsourced.
…never changed value proposition…
2010 2011 2012 2013 2014
17.77 % 15.3 % 13.51 % 13.6 % 12.63 %
…always ensure a payoff from rapid growth…
Google’s ROI 5 year avg: 14.56 %
Sector ROI 5 year avg: 13.74 %
Google Annual Return On Investment
Source: csimarket.com
…its business model encourage rapid growth…
INCREASING RETURNS TO SCALE
A lot of people use Google as
search provider
+ Clicks on Ads
+ Impressions
+ Income from Ads

5. So operating profit margins vary over the range of volume that Google targets
Why did google scale up good?
WINNER-TAKE-ALL DYNAMICS
PREVAIL
Google’s rapid growth in the period from 2006 to 2010 ensure an high market share,
now that the market decrease its growth rate, Google puts high barriers to entry to other competitors thanks
to:
HIGH
SWITCHING
COSTS
ADVISORS DEPENDENCY ON GOOGLE ADS
If online publishers purchase AdSense to be part of Google Content
Network giving spaces on his pages available to advertisers, then
advertisers who want to have ads on that particular type of sites are
obliged to purchase AdWords, so they cannot switch to another Ads
provider
Thanks to this, from 2011 Google keeps leading the
Online Ads market with constant market share
0%
20%
40%
60%
80%
100%
2011 2012 2013 2014
Other
AOL
IAC
Microsoft
Yahoo!
Facebook
NET DIGITAL AD REVENUE SHARE
WORLDWIDE
Source: eMarketer.com

6. Structur
eDecision making: Build
consensus
Senior executives organized
by function, but team works
in Meshes/ Matrixed
structures
Cultur
e“Innovative culture
and can-do attitude”
Fast moving
Continuously up to date
Identity
Free training classes to help
develop its employees
Peer performance reviews:
not seen like a punishment ,
but like a way to improve themselves
Not managed but mentored
Key of the success
Ask forgiveness
instead of
permission!
Innovate even
if you are new!
Move ahead only
if 80% of the
decision makers
agree!

7. RECRUITIN
GData driven hiring process
Research of people who fit culturally
with the organization
Didn’t want to overhire
RETENTION
The importance of being a Googler
20% work time is for personal projects
Benefits for families
«Genius» co-workers
Unparalleled career opportunities
Collaborative thinking

8. How
motivate?
Engineers spend 20% of their
time working on their own
ideas.
No hierarchy.
Contest + awards.
How?
Risk taking and innovation
Act fast
Accept the cost of resulting
mistakes as a natural
consequence of working
Where ?
Open office environments
Attraction
Motivation
Teamwork
What is unusual about Google ?
“Ideas are most important. Things get
done through a common mission, shared
goal, and personal responsibility. People
are self-managed and self-motivated at
every level.”
“I know it may sound like a
cliché, but failure is really
OK here.”

9. What practices support Google BM
CORE
BUSINES
S
Free BM based on advertising.
Google helps advertisers create text-based Ads and extend their Ad campaigns to
the Google Network members’ websites through :
“Online advertising generated
99% of Google’s revenues”
“70% of the company’s research
and development resources are
dedicated to their continued
success”

10. Problems at the end of the case
U.S.A. Economy is slowing down.
This could affect Google’s
employees and let them change
attitude.
Focusing on revenues, they could lose
some of their entrepreneurship at their
work place…
Google as company is keep growing, so an
improved organizational structure is required.
Study Environmental and business
trends
Focus on trends Improving core activities Improving information flow

11. Bureaucracy
Too much Too little
Slow down of
creative processes
and less ideas
development
Google’s values are
going to fail
People who doesn’t
work without
inspiration
Chaos at the work
place

12. “Hackathons”
It’s a way to resolve some of
the company’s problems
and at the same time to
make employees work
Google could establish
Hackathons for example
twice per month
Bureaucracy

13. International consistency
Virtual team to improve work among international offices and to avoid replication of efforts.
Share solutions for local problems in order to help the solving of global problem  no competition between
different plants, encourage the communication!
Employees overseas rotation (respecting people willing) to maintain “Googley” culture  right balance between
cultural diversity and cultural homogeneity among Google offices around the world.
Google ERASMUS!

14. How to keep google Googley?
Put some flyers all
around the offices just
to remind people what
does it mean «be
googly»
Share an ancedote or
a keyword every day
through employee’s
PC and e-mail. This
story would motivate
them to be googley
Divide employees into
the care*potential
matrix in order to
improve and their
motivation and skills
employees
POTENTIAL
CARE

15. More suggestions…
Institute Bootcamps:
To keep offer a unique service all over the world, Google should introduce
new entries
to their culture and products.
In those Bootcamps there are senior engineers or other expert employees
able to provide technical advices, too.
Support ideas:
Foster best ideas from employees by giving them the opportunity to
develop them entirely, without giving it to a developing function and
having no possibility (or only occasionally) to work on it.
Small and heterogeneous teams:
To avoid delegating efforts and achieve a fast decision process.