Description

Chapter Ten
Organizing for
Innovation
Organizing for Innovation at Google
Google was founded in 1998 by two Stanford Ph.D. students, Sergey Brin and
Larry Page, who had developed a formula for rank ordering random search
results by relevancy. Their formula gave rise to an incredibly powerful Internet
search engine that rapidly attracted a loyal following. The search engine enabled
users to quickly find information through a simple and intuitive user interface.
It also enabled Google to sell highly targeted advertising space.
The company grew rapidly. In 2001, Brin and Page hired Eric Schmidt, former
CTO of Sun Microsystems and former CEO of Novell, to be Google’s CEO. In
2004, the company went public, raising $1.6 billion in one of the most highly
anticipated IPOs ever. Under Schmidt, the company adhered to a broad yet disciplined mission: “To organize the world’s information and make it universally
accessible and useful.” This led the company to leverage its core search and
advertising capabilities into blogging, online payments, social networks, and
other information-driven businesses.
By 2014, Google had sales of over $66 billion, and employed more than
57,000 people. Despite this size, however, the company eschewed hierarchy
and bureaucracy and sought to maintain a small-company feel. As noted by
Schmidt during an interview, “Innovation always has been driven by a person or
a small team that has the luxury of thinking of a new idea and pursuing it. There
are no counter examples. It was true 100 years ago and it’ll be true for the next
100 years. Innovation is something that comes when you’re not under the gun.
So it’s important that, even if you don’t have balance in your life, you have some
time for reflection. So that you could say, ‘Well, maybe I’m not working on the
right thing.’ Or, ‘maybe I should have this new idea.’ The creative parts of one’s
mind are not on schedule.”a
In accordance with this belief, Google’s engineers were organized into small
technology teams with considerable decision-making authority. Every aspect of
the headquarters, from the shared offices with couches, to the recreation facilities
and the large communal cafe known as “Charlie’s Place,” was designed to foster
225

226 Part Three Implementing Technological Innovation Strategy

informal communication and collaboration.b Managers referred to Google as a flexible and flat “technocracy,” where resources and control were allocated based on
the quality of people’s ideas rather than seniority or hierarchical status. Schmidt
remarked, “One of the things that we’ve tried very hard to avoid at Google is the
sort of divisional structure that prevents collaboration across units. It’s difficult. So I
understand why people want to build business units, and have their presidents. But
by doing that you cut down the informal ties that, in an open culture, drive so much
collaboration. If people in the organization understand the values of the company,
they should be able to self-organize to work on the most interesting problems.”c
A key ingredient in Google’s organization is an incentive system that requires
all technical personnel to spend 20 percent of their time on innovative projects of their own choosing. This budget for innovation is not merely a device
for creating slack in the organization for creative employees—it is an aggressive mandate that employees develop new product ideas. As noted by one
Google engineer, “This isn’t a matter of doing something in your spare time, but
more of actively making time for it. Heck, I don’t have a good 20% project yet
and I need one. If I don’t come up with something I’m sure it could negatively
impact my review.”d Managers face similar incentives. Each manager is required
to spend 70 ­percent of his or her time on the core business, 20 percent on
related-but-­different projects, and 10 percent on entirely new products. According to Marissa Mayer, Google’s head of search products and user experience, a
significant portion of Google’s new products and features (including Gmail and
AdSense) resulted from the 20 percent time investments of Google engineers.
In 2015, the company was reorganized into Alphabet Inc., a holding company, wherein Google and other divisions such as Access, Calico, CapitalG,
Nest, and others were wholly owned subsidiaries. The divisions retained their
flat and flexible reporting structures.e
In a podcast interview at Stanford ­University, Andy Grove (former CEO of Intel)
remarked that the company’s organization appeared chaotic, even noting “From
the outside it looks like Google’s organizational structure is best described by . . .
Brownian motion in an expanding model” and questioned whether Schmidt
believed this model would continue to work forever. In his response, Schmidt
responded, “There’s an important secret to tell, which is there are parts of the
company that are not run chaotically. Our legal department, our finances. Our
sales force has normal sales quotas. Our normal strategic planning activities, our
normal investment activities, our M&A activities are run in a very traditional way.
So the part of Google that gets all the attention is the creative side, the part where
new products are being built and designed, and that is different. And it looks to
us like that model will scale for quite some time . . . it looks like small teams can
run ahead and that we can replicate that model for that part of the company.”f

Discussion Questions
1. What are the advantages and disadvantages of the creative side of Google
being run as a flexible and flat “technocracy”?
2. How does Google’s culture influence the kind of employees it can attract
and retain?

Chapter 10 Organizing for Innovation

227

3. What do you believe the challenges are in having very different structure and
controls for Google’s creative side versus the other parts of the company?
4. Some analysts have argued that Google’s free-form structure and the
20 percent time to work on personal projects is possible only because
Google’s prior success has created financial slack in the company. Do you
agree with this? Would Google be able to continue this management style if
it had closer competitors?
a

J. Manyika, “Google’s View on the Future of Business: An Interview with CEO Eric Schmidt,” McKinsey
Quarterly, November 2008.
b
From “The Google Culture,” www.google.com.
c
Manyika, “Google’s View on the Future of Business.”
d
B. Iyer and T. H. Davenport, “Reverse Engineering Google’s Innovation Machine,” Harvard Business
Review, April 2008.
e
R. Price and M. Nudelman, “Google’s Parent Company, Alphabet, Explained in One Chart,” Business
Insider, 2016. Available at:
f
Podcast retrieved on April 13, 2009, at

OVERVIEW
The structure of an organization and the degree to which it uses formalized and standardized procedures and controls can significantly influence its likelihood of innovating, the effectiveness of its innovation projects, and the speed of its new product
development processes.1 For example, it is often argued that small, flexible organizations with a minimum of rules and procedures will encourage creativity and experimentation, leading to more innovative ideas. At the same time, it is also frequently
pointed out that well-developed procedures and standards can ensure that the organization makes better development investment decisions and is able to implement projects quickly and efficiently. How then do managers decide what structure and controls
would make the most sense for their firm?
A vast majority of firms use some type of product team structure to organize their
new product development process, and we will look closely at how teams are composed and structured in Chapter Twelve, Managing New Product Development Teams.
This chapter focuses on the organization-wide structural dimensions that shape the
firm’s propensity and ability to innovate effectively and efficiently. We will review
the research on how firm size and structural dimensions such as formalization, standardization, and centralization affect a firm’s innovativeness. By focusing on these
underlying structural dimensions, we will elucidate why some structures may be better
for encouraging the creativity that leads to idea generation, while other structures may
be better suited for efficient production of new products. We will also explore structural forms that attempt to achieve the best of both worlds—the free-flowing organic
and entrepreneurial structures and controls that foster innovation, plus the formalized
and standardized forms that maximize efficiency while ensuring coherence across all
of the corporation’s development activities. The chapter then turns to the challenge
of managing innovation across borders. Multinational firms face particularly difficult

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

College of Administrative and Financial Sciences

Assignment 2
Management of Technology (MGT 325)
Due Date: 02/11/2024 @ 23:59

Course Name: Management of Technology

Student’s Name:

Course Code: MGT325

Student’s ID Number:

Semester: 1 Semester

CRN:
Academic Year:2024-25

For Instructor’s Use only
Instructor’s Name: Dr. XXXXXXXXXXXXXX
Students’ Grade: 00 /10
Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.

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Course Learning Outcomes-Covered
➢ Explain of the concepts, models for formulating strategies, defining the organizational
strategic directions and crafting a deployment strategy.

Reference Source:
Textbook:Schilling M.A (2020),Strategic Management of Technology Innovation (6th Edition). McGraw Hill Education. Electronic Version: ISBN-13: 978-1260087956 ISBN-10:
1260087956, Printed Version: ISBN-13: 978-1260087956 ISBN-10: 1260087956

Assignment 2

Weight: 10 Marks

NEOM’s Collaborative Innovation in the KSA
NEOM is an ambitious Saudi Arabian project that aims to create a technologically
advanced, sustainable city, attracting global talent and investment. The project is designed to
be a hub for industries such as renewable energy, biotech, advanced manufacturing, and
digital technologies. Given the complexity and scale of this endeavour, NEOM has engaged
in multiple strategic collaborations with international partners, ranging from technology
firms to research institutions, to bring together the necessary capabilities and resources.
As part of this case study assignment, you are required to analyse NEOM’s approach to
collaboration based on the concepts discussed in Chapter 8.

Assignment Questions
Note: Include a brief introduction and conclusion that summarize your analysis.
(1 marks)
1. Evaluating Collaborative Goals and Advantages (3 Marks) (250-400 words)
✓ Identify and discuss the key strategic goals that NEOM aims to achieve through
its collaborative partnerships. How do these goals align with the reasons for
collaboration as discussed in Chapter 8?

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✓ Evaluate the advantages NEOM gains by collaborating with international
technology companies, research institutions, and other partners. Consider
aspects like acquiring capabilities, resource pooling, learning, and coalitionbuilding.
2. Types of Collaborative Arrangements (3 Marks) (250-400 words)
✓ Analyse the types of collaborative arrangements that NEOM has formed (e.g.,
strategic alliances, joint ventures, licensing, outsourcing, or research
partnerships). Discuss how these arrangements align with NEOM’s broader
innovation strategy and goals.
✓ Provide specific examples of any announced partnerships (such as agreements
with renewable energy firms, AI technology providers, or research universities)
and evaluate the strategic fit of these collaborations.
3. Challenges in Collaboration and Partner Selection (3 Marks) (250-400 words)
✓ Discuss potential challenges NEOM might face in collaborating with
international partners, including cultural differences, alignment of strategic
goals, or governance issues.
✓ How might NEOM effectively select and manage its partners to ensure
successful collaboration? Use the selection criteria and partner monitoring
mechanisms discussed in Chapter 8 to support your answer.

Guidelines for Submission
✓

Provide clear, concise responses to each question, with a total word count of 800 1,200 words.

✓

Use examples from NEOM’s partnerships and strategies, supported by theories and
concepts from Chapter 8.

✓

Incorporate real-world information and research on NEOM where appropriate,
ensuring you properly cite any sources in APA format.

✓

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Include a brief introduction and conclusion that summarize your analysis.

Note :✓ Do adhere to the word limit strictly, mere one or two sentence answers will not be
entertained, they need to be supported with further explanation and facts.
✓ It is mandatory to support each pointer with at least two scholarly, peer-reviewed
journals.

Directions:
✓ All students are encouraged to use their own words.
✓ Use Saudi Electronic University academic writing standards and APA style
guidelines.
✓ Use proper referencing (APA style) to reference, other styles will not be accepted.
✓ Support your submission with course material concepts, principles, and theories from
the textbook and at least two scholarly, peer-reviewed journal articles unless the
assignment calls for more.
✓ It is strongly encouraged that you submit all assignments into the safe assignment
Originality Check prior to submitting it to your instructor for grading and review the
grading rubric to understand how you will be graded for this assignment.

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