11/8/2015

A is for Alphabet and G is for Google. Are you a conglomerate too?

The biggest news in the tech sector is the change in structure of Google.  A new company called Alphabet which will act as a holding company where Larry Page is the CEO, Sundar Pichai is the CEO of Google as we normally know it. Google X, Nest and a whole bunch of interesting companies will be under the holding company of Alphabet.

Each company will have its own CEO and run it as its own business. This is the classic conglomerate. The behemoths which became big at the turn of the 20th century and over time the strategy of specialisation meant, spin-offs, sell-offs, divestures etc. Ofcourse, GE is the classic version of this.

In Asia, it is a common occurrence to see it. Whether Tata in India with its 100+ companies, or Samsung from ship building to smart phones. Entrepreneurial CEOs/Founders have always run them like that. Even the internet age Alibaba and Xaoimi are a conglomerate in a way.

Why are so many entrepreneurial CEOs going for this structure that most professional CEOs and strategy specialists have said it does not work? My take on this: because it gives them more entrepreneurial energy and continue to do what they do best.

Entrepreneurs are more makers in retrospect to  professional CEOs as managers. Makers need to continue to want to make things. They get bored when there is nothing new on the horizon. At the same time, some are good at nurturing other makers.

The conglomerate structure provides the opportunity to be entrepreneurial and nurture new talent.

Have a look at your organisation? How big are you? What areas do you play in? Which ones need a maker and which ones need a manager? What are the growth areas?

What can we learn from the makers? What structure suits best for you?


Humanomics


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