[vc_row][vc_column width=”3/4″][vc_raw_html]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[/vc_raw_html][text_output]Google recently announced a surprise overhaul of their business structure, creating a new parent company called Alphabet Inc.
Google, as a division of Alphabet, will house its revenue driving businesses such as the Search Engine, YouTube & Android.
The ‘moon-shot’ projects are to be run independently as standalone businesses. These more innovative businesses will be contained within Alphabet rather than within Google.
Projects such as Calico, which is a life longevity company, are “big bets”. They have monumental upside potential, but generally lose money for years on end. Segmenting these businesses from Google means that each company can be assessed on its own merits against its own objectives.
As Astro Teller, head of X Labs explained “Our goal is not to produce immediate results. We’ve been tasked with producing long-term results. That means that there’s more risk in any individual thing we take on. But we still aspire to a strong return on investment. We don’t take on Google Glass or the self-driving car project or Project Loon unless we think that on a risk-adjusted basis, it’s worth Google’s money to do it. But because these things don’t happen overnight, we have to use surrogates.”
Google in contrast, is at a level where it can be expected to deliver reliable, immediate results for its investors.
This news also means that the entities within Alphabet can flourish without the distraction of the potential impact on the core business. For example, Google will not have the burden of potential liability for X Labs (formerly Google X) – which experiments include driverless cars and balloon-based internet systems or Life Sciences which focuses on major technological advancements such as smart contact lenses to monitor diabetes.
There is optimism that under the restructure Google will maintain its growth under new CEO, Sundar Pichai. A by-product of the development is that each business has been assigned a leader. The dedicated CEOs for each business are likely to be given greater autonomy and accountability for their individual business.
With each division headed up by their own dedicated CEO, each leader will have a clearer path to make their mark and drive the company forward.
Co-founders Larry Page and Sergey Brin will become CEO and President of Alphabet respectively. The move should allow them to buy, set up and scrutinise businesses more easily. Ultimately, this latest development could serve as a more efficient platform to reinvent more industries, whilst setting aside the company funding it all.[/text_output][/vc_column][vc_column width=”1/4″][visibility type=”hidden-desktop”][gap size=”20px”][/visibility][vc_widget_sidebar sidebar_id=”ups-sidebar-2″][/vc_column][/vc_row]