Is Google the next Microsoft?

How does an organisation evolve over time? From start-up to corporate giant. Is Google the next Microsoft?

I want to start off with a broad illustration of the steps first on how a start-up slowly gets into the corporate monolith -- but, taking it purely from the perspective of the Executive/Senior management. We can pretty much see where a company is headed purely by observing the profiles of the top management.

Stage 1: Start-up. The management and leadership is closely involved in the product development. In many cases, they are engineers, designers, developers -- the actual builders have all of the power and set the direction. "Lets create/innovate" is the mantra. The company is in the 'Yes we Can' mode.

Stage 2: Market-Development. In this stage, the sales and marketing people start to run the company. They gain power, they generate the revenue -- they dictate the next minor feature to appease the next new client. The product start to loose some coherence, but overall the company can still maintain the innovation. The Chief's in the company will be the Solution architects, Sales and Marketing people. Growth by adding customers is the mantra -- there is a whole lot of positive energy in the company.

Stage 3: Slash-and-Burn. In this stage, the financial and operational arms take control of the company. The easy growth phase is over. Revenues are fairly stable now. The only way to show profits is by optimising resources, cutting costs, being careful with every penny. The Sales and Marketing people are asked to put in a budget and estimate revenue. MBA's start taking control -- Excel is the tool of management choice. Optimisation is the mantra. The employees start to look back fondly at the old days when they made money solving customer problems. [If a company is considering Outsourcing -- they have entered this phase]

Stage 4: We-are-Borg. In this stage, the only way to keep growing is through acquisitions (or) by being acquired. The other options are via lobbying governments for preferential treatment. Monopoly practices, bullying, playing at the edge of law, re-interpreting ethics, borrowing as much as possible etc. The company is now run by the legal department the Chiefs tend to have a background in Finance, Takeovers and/or Politics. There are many mantra's by this point in time - 'Greed is Good', 'Last man standing', 'Heads I Win, Tails you Lose', 'Stealing is ok, getting caught is bad', 'It is only illegal till we re-write the law' etc.

Stage 5: Implosion / Explosion. The entity dies due to imbalances within itself as it becomes completely paranoid, inconsistent and diseased -- like in nature, the most useful parts are pickup up first by other companies and the rest is left to slowly decay.
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My contention is that almost all companies (or departments) run by normal humans will go through these phases -- the only question is how long they spend in each phase. If the company is large enough, different departments may be at different stages too. This is not a continuous linear process -- that is, companies can move back stage and then go forward again too.

Why does this happen? Simple -- most companies want to grow and be more profitable over time. In a finite world, there will come a time when growth is only possible by taking resources and profits away from someone else. There is no known example of an entity that has grown continuously forever -- and there probably will not be.

So the question is 'Where is Google?'. I think they are in Stage 2. They claim they have built a culture that slows down the natural forces that compel growth and profit taking ... the answer will be fairly evident in about a decade or so.

-- rv