11/28/2010

Google's Human Capital

As companies mature there is often a period where supernormal growth is superseded by a lower level of constant growth. This is often problematic because despite the consistency of this trend and expectation that eventually it will happen no one actually wants it to happen. So companies will do everything in their power to prevent it and companies often have a significant amount of unnecessary upheaval and restructuring when it does occur. The real question is why does this happen? Why can't a larger version of the original continue to come up with new and winning ideas and carry on its success? Google is one company that has carried on this supernormal growth for longer than most and in doing so seemed to be a company that could beat the expectations. Recently many are starting to suspect that Google has indeed reached the end of its supernormal period. One answer as to why that may be despite Google's fervent efforts to be creative and develop new ideas is the loss of a portion of its most talented human capital. Google's as well as many other companies’ huge growth can be attributed to new and groundbreaking ideas with values far exceeding the cost of their implementation. But as Google has grown many of the creative visionaries who pioneered these are leaving to newer and smaller companies despite lucrative monetary inducements and offers of greater freedom to work. It begs the question what does the most productive portion of our society value as reward for its work: money, freedom, success, or something else?

3 comments:

walla walla said...

I have two comments on this post.

First, in answer to the question, “What does the most productive portion of our society value as reward for its work: money, freedom, success, or something else?” I believe that the answer depends on where one is in relation to Maslow’s hierarchy of needs. Those lucky enough to be “self-actualizers” have the latitude to follow their dreams. Otherwise, I believe the majority of employees will stay with the best paying job.

Second, in relation to supernormal growth, I believe the reason why investors continue to desire exponential rather than measured growth is due to the horizon problem. Long and short, with day traders and the like, investors seem to care more about short-term rather than long-term returns because they are generally in the market for the short-term

als22 said...

In answer to the question posed by Grant, I think Walla Walla hit it on the nail with bringing up Maslow's Hiierarchy of Needs. Coming from the HR and Management side of business experience, we learn that wage is only the third or fourth rated reason people stay at a job. The two top reasons are work/life balance and potential for personal development and growth. I think the reason many are leaving is they have reached the peak of what they are trying to do and need a bigger challenge. This would explain their migration to smaller, start-up companies. What better than a challenge with lots of growth opportunity.

Dave said...

I read this article too. It seems so pitiable: rats fleeing a ship that isn't sinking.

I like both the post and the comment, but I didn't see the article this way. For my part, a lot of the frustration with Google seemed to be micro rather than macro; employees were annoyed with their conflicts with bureaucracy, and projecting that over the whole firm. That's just my opinion though.