google-organizational-structure

Google Organizational Structure In A Nutshell

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Understanding the Google organizational structure

The traditional hierarchical corporate structure has employees at the bottom, supervisors and middle managers above them, and upper management above all. In this top-down approach to management, directives are sent from senior decision-makers down to employees.

Google’s organizational structure has characteristics of a matrix structure, borrowing elements from both functional and product/project-based organizational structures. Google also has aspects of a flat structure with a decreased prevalence of middle management.

Following are three characteristics of the Google structure:

  1. Function-based definition – Google has functional groups pertaining to sales, marketing, engineering, legal, products, and finance. Each group is led by an executive responsible for organization-wide strategy direction and decision-making.
  2. Product-based definition – the company also has groups responsible for artificial intelligence and cloud operations, among others. These product groups enable innovative product development and competitive advantage. They also fulfill Google’s mission statement and corporate vision.
    1. Flatness – Google takes more of a team-based approach to management. Employees take an active role in decision-making, which fosters a belief that their input has a direct impact on company success. Google places more of an emphasis on intelligence and less on seniority, allowing employees to communicate directly with upper management. This promotes the innovative exchange of information between employees with different skills or expertise.

Unique aspects of Google organizational structure

Google’s matrix structure is well studied, but there is nothing particularly special about the approach the company takes to management.

Having said that, it does utilize some leadership positions with unique titles. These include positions such as Chief Culture Officer and Chief Internet Evangelist.

Flatness and employee autonomy

The company is also renowned for its degree of flatness. Indeed, the company has created a culture where employees are given substantial freedom to develop new ideas. 

To provide some semblance of structure to a workday, Google stipulates that employees must follow the 70/20/10 rule. In other words, 70% of the workday should be devoted to projects assigned by management. A further 20% can be spent on new projects or ideas related to management-assigned projects. The last 10% can be utilized to explore any idea regardless of topic or relatedness.

Restructuring

In 2015, Google somewhat abruptly renamed itself Alphabet and made Google as most know it a subsidiary.

This allowed the company to become a true technology conglomerate, expanding into domains beyond its traditional staples of internet search and advertising.

Key takeaways:

  • Google has a cross-functional – or team-based – organizational structure. This is also known as a matrix structure.
  • The three primary characteristics of Google’s organizational structure include function-based definition, product or project-based definition, and flatness.
  • Google’s organizational structure has been well studied and even celebrated, but there is nothing particularly unique about it. Having said that, the company has created an excellent culture by funding culture-based positions and incorporating a high degree of flatness in employee management.

Related Case Studies

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Google is a platform, and a tech media company running an attention-based business model. As of 2021, Alphabet’s Google generated over $257 billion in revenues. Over $209 billion (over 81% of the total revenues) came from Google Advertising products (Google Search, YouTube Ads, and Network Members sites). They were followed by over $28 billion in other revenues (comprising Google Play, Pixel phones, and YouTube Premium), and by Google Cloud, which generated over $19 billion in 2021.
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The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years Google has been able to reduce its traffic acquisition costs and in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.
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Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).
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The hidden revenue generation model is among the most profitable patterns for business models built on advertising. In fact, businesses like Google and Facebook have managed to gain more than $290 billion in 2021 from advertising on their platform, even though many users might not be aware of the mechanisms that drive those platforms.
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Read Next: Organizational Structure, Google Business Model, Google Mission Statement, Google SWOT Analysis.

Organizational Structure Case Studies

Airbnb Organizational Structure

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Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

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eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

ibm-organizational-structure
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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