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Case Study Analysis- Alphabet Inc.: Restructuring Google

Student’s Name

Institutional Affiliation
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Table of Contents
Company/Industry Synopsis........................................................................................................................3
Problems/Goals of Alphabet.......................................................................................................................4
Lack of Clarity on Reporting and the Strategic Plans...............................................................................4
Dismal Performance in all its ‘Other Bets’ Segment................................................................................5
Erosion of Innovation Focus and the Organizational Culture..................................................................5
Evaluation of the Problems/Goals...............................................................................................................6
Assessing Alternative Solutions/Changes....................................................................................................7
Recommendations.......................................................................................................................................7
Reach a Proper and Adjustable way of allocating Resources to Other Bets............................................8
Develop Proper and Clear Strategies in ‘Other Bets’ Firms.....................................................................8
Retain Its Innovation Strategy for all Members and implement the same for all....................................8
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Company/Industry Synopsis

This is a case study analysis based on Alphabet Inc., a global technology giant that has

changed its name from Google Inc. and restructured itself to become a holding company for a

vast array of different companies. It shall first provide the necessary information and they shall

point towards the problems or goals that could be derived from the totality of the facts in the

case. Evaluating them shall provide with the necessary focus and analysis required to present

alternative solutions or changes. By selecting the most appropriate solution with justifications,

the strategies that are necessary to serve it would be recommended alongside realistic choices for

actions alongside clear associated details.

In 2015, the global giant and the biggest Internet-based company Google Inc. rebranded

and restructured itself into Alphabet Inc. (Qumer and Purkayastha, 2022) The main point of this

major change was to spin off its numerous non-core businesses, such as life sciences, virtual

reality, self-driving automobiles, etc. into distinct business entities. Meanwhile, Google Inc. was

the company under which all its Internet services and products like search engine, enterprise

suite, YouTube, Android, etc. Google and all its non-core business enterprises were owned by

Alphabet, as it marked a massive shift in almost all aspects of the company (Qumer and

Purkayastha, 2022). Google was established as a startup in 1998 by Larry Page and Sergey Brin

who established it as the major breakthrough in Internet search technologies. However, the

company found so many other inroads, including online advertising, cloud computing, software

applications, consumer content, and many more.

Nevertheless, the most important aspect about Google was its significant focus on

research and developing disruptive technologies by focusing on what are generally referred to as

‘moonshots’ (Qumer and Purkayastha, 2022). They are overly ambitious projects of innovation
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that extend to becoming exploratory and groundbreaking achievements without any prior

expectations being made. That informed the entire business structure that became open to the

public in 2004 when the co-founders stressed the unique characteristic. The share classes in the

structured ownership of Google drew significant criticism because the owners had retained a

significant majority of voting powers in Class B shares, in which both Brin and Page along with

other company insiders were owners (Qumer and Purkayastha, 2022). It was justified on the

account of retaining the innovation pursuits in the company that would be essential for growing

the business beyond the Internet as well as the entire sector.

The controversy at the time of its public offering continued years of analysts and

investors issues that such non-core businesses highlighted. The contrast, however, reflected the

strong growth and expansion that continued happening in its Internet businesses. For example,

Google X was established in 2010 to focus on coming out with ‘moonshot projects’, which for

almost all of its existence (Qumer and Purkayastha, 2022). There were numerous other

businesses established under Google Inc. with very little in the way of its transparency. To

counteract slow decision making and stagnant growth, the restructuring under Alphabet was

established (Qumer and Purkayastha, 2022). However, it did not solve the technology giant’s

many problems but also created some uniquely new ones.

Problems/Goals of Alphabet

The consideration of Alphabet as a whole requires the consideration of the most major

problems that could be identified in the case.

Lack of Clarity on Reporting and the Strategic Plans

Critics of the reorganization under Alphabet have identified that when considering clarity

and transparency reflected on the organization there was not a great deal of change from the
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situation before (Qumer and Purkayastha, 2022). It is important to note that the quarterly

financial information reports did not clarify any changes in reporting and neither did the

inclusion of any strategic plan for profitability and valuation increase (Qumer and Purkayastha,

2022). Their impact on Alphabet would be the decreasing valuation, specifically in terms of its

core strategic element of innovation. The leadership of the organization could be attributed to

this problem as they were the architects of the restructuring.

Dismal Performance in all its ‘Other Bets’ Segment

Other Bets is the segment that under restructuring would differentiate the non-core

businesses from Google under Alphabet’s requirements for reporting (Qumer and Purkayastha,

2022). The initial fiscal results of these businesses have significantly underperformed now that

the reporting is a bit more transparent regarding the individual business enterprises. The loss of

billions of dollars that have already taken place with this entire segment has wreaked havoc for

them as well as the entire organization (Qumer and Purkayastha, 2022). The high fiscal

discipline brought by Alphabet’s leadership has directly caused the exits of several key

executives and shutdown of a few important projects.

Erosion of Innovation Focus and the Organizational Culture

The very large employee base of nearly 60,000 were motivated to work for Google

because of its focus on innovation, exemplified by the plan of ‘innovation time-off.’ (Qumer and

Purkayastha, 2022) The campus-like atmosphere and the opportunities presented in the form of

new businesses created an ecosystem that would be known for innovation above everything.

However, the restructuring of the companies and the effects have devastated the organizational

culture, reducing the possibilities to innovate (Qumer and Purkayastha, 2022). As already noted,
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it also led to exits of key leadership from non-core businesses, which have completely

jeopardized their future.

Evaluation of the Problems/Goals

The area of the case study to necessitate focus lies in its strategic composition and how

the restructuring has starkly veered from it. It has resulted in the major problems that have been

accounted for before and seriously jeopardized the growth possibilities for the entirety of

Alphabet, even extending the highly successful Google in some ways (Agbim, 2013). The

problems impacting the company seem not to be easily resolvable, especially when considering

the previous issues that Google had as a horizontally-oriented, cross-functional organization

(Qumer and Purkayastha, 2022). The problem also lies completely with leadership as they have

failed to recognize a coherent strategic plan for their growth and success to continue in the

future. However, the restructuring only created a few problems except for resolving some that

existed because it was a stark shift that impacted Alphabet in so many different ways.

The fiscally disciplined approach to strategic management completely opposed the values

of innovation. One might argue that as Google the moonshot mentality came to overwhelm it

after a notable point (Agbim, 2013). However, technology also needs a proper environment to

thrive and to create entrepreneurship costs need to be stated aside in decisive terms. The ‘Other

Bets’ businesses collectively lost $1.1 billion in 2015 and $3.6 billion in 2016 (Qumer and

Purkayastha, 2022). Such high figures properly justify the calls for containing the expenditure in

decisive ways. However, Google’s unique position and the possibilities in financial success and

growth are needed to be an important part of innovation and new business development.
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Assessing Alternative Solutions/Changes

There are a number of possible solutions that are available for Alphabet’s major

problems, among which the most prominent is to go back to its original structure. This is

appealing because of recreating a closed and non-transparent organizational environment but

something that would protect its future businesses (Daher, 2016). The company shall also gain

prominence with its core brand that is most valued with Google (Damanpour and Aravind,

2012). However, such a step-back would probably increase the losses that it would be associated

with in terms of perceptions and behaviors of shareholders.

Another possible solution is to apply innovation on the structure itself to create

something entirely new. This would retain its major strategic core of innovation to pursue this

critical goal and showcase to the entire world why Alphabet/Google is an innovation company

first and foremost (Daher, 2016). It is noted that the current structure has been modeled after

Berkshire Hathaway, which is in a completely different sector with no specific associative value

strongly attached to its brand (Damanpour and Aravind, 2012). Meanwhile, Google has always

been known more as an Internet company rather than innovation-oriented one like IBM

(Iranmanesh et al., 2021). It is possible that such an innovation structure might take time but it

could resolve all the problems at once and, therefore, should be the choice that needs to be made.

Recommendations

The chosen solution for Alphabet is to embark on a mission of strategic innovation to

develop its own unique business structure that shall tackle all its problems at once. The strategies

underlying this solution are:

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Reach a Proper and Adjustable way of allocating Resources to Other Bets

This is responsibility of the entirety of Alphabet’s entire leadership wherein a proper

code and system would be agreed upon to allocate capital resources in billions to businesses in

‘Other Bets’ (Daher, 2016). This needs to be made in a year and shall vary on the basis of

different performance metrics applied to different organizations, in addition to the financials.

Develop Proper and Clear Strategies in ‘Other Bets’ Firms

These firms and their own leadership must also be tasked with providing coherent

strategies along with evaluative factors concerning what would make their performance different

from usual financial performance (Damanpour and Aravind, 2012). This would result from

research and development that must happen at each individual organizational level.

Retain Its Innovation Strategy for all Members and implement the same for all

It is made clear that negative impact on Alphabet by the exit of major talents and leaders

as well as in possibilities for the future (Iranmanesh et al., 2021). As a result, there must be a

proper implementation of Google’s innovation-based culture where all possible innovation

would receive equitable allocation of resources and opportunities.

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References

Agbim, K.C., 2013. The impact of organizational structure and leadership styles on innovation.

IOSR Journal of Business and Management (IOSR-JBM), 6(6), pp.56-63.

Daher, N., 2016. The relationships between organizational culture and organizational innovation.

International Journal of Business & Public Administration, 13(2).

Damanpour, F. and Aravind, D., 2012. Organizational structure and innovation revisited: From

organic to ambidextrous structure. In Handbook of organizational creativity (pp. 483-513).

Academic Press.

Iranmanesh, M., Kumar, K.M., Foroughi, B., Mavi, R.K. and Min, N.H., 2021. The impacts of

organizational structure on operational performance through innovation capability: innovative

culture as moderator. Review of Managerial Science, 15, pp.1885-1911.

Qumer, S.M., and Purkayastha, D., 2022. Alphabet Inc.: Reorganizing Google, in Hitt, M.A.,

Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and cases:

Competitiveness and globalization (pp.1-32). Cengage Learning.