Alphabetic Order: the benefits of Google's corporate restructuring [Part 1]
Google was founded as a company that specialized in Internet search. Over time, it has broadened into other areas from drones, pharmaceuticals and venture capital to advertising, hardware, and even artificial intelligence. Today, Alphabet Inc., formerly known as just plain old Google, has arms that reach far beyond just the worldwide web.
The tech giant is separating its moneymaking search and advertising businesses from the other “moonshot” subsidiaries. Alphabet is now the parent entity, and houses several companies, with Google the biggest among them.
Under Alphabet, subsidiaries such as Google (the search engine) will be run autonomously, with each being able to focus on its own particular business. This would be a significant shift from the original setup, which had Google as the parent company in charge of a number of diverse verticals. Now, the various businesses will operate independently and be folded into Alphabet, while Google's stock will also convert into Alphabet stock.
Reasons for the change
Google co-founder and Alphabet CEO Larry Page claims that the move will allow for cleaner operations and more accountability. Still, some suspect the restructuring was an attempt to please investors annoyed by Google’s wild investments. The split would allow the founders more time to pursue new game-changing technology, while also increasing operational independence between businesses that are unrelated to each other. This will improve focus and accountability, and create a house of brands as a catalyst for innovation.
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Only a few Alphabet businesses — namely Nest and Fiber — currently generate significant revenue. Some estimate those units will bring in about $500 million in total revenue in 2016, with about $100 million to $150 million in gross profit. The rest of the Alphabet businesses, many of which are still in early stages — such as the self-driving cars that are part of Google's X lab — consistently operate in the red.
Alphabet’s non-Internet-related businesses could be hemorrhaging up to $4 billion a year, risking having a negative value when they are spun out into separate businesses under the Alphabet holding company.
Perks to the shake up
One overlooked aspect is how the new structure stops forcing subsidiaries to work dependently. Since everything doesn't have to report through corporate, Alphabet's businesses may begin competing against each other or overlap in ways that may have once seemed like conflicts of interest.
This has happened even before the recent shakeup. When Google was working on a ride-sharing app, finance experts pointed out the competition with Uber, notable because Google Ventures had invested roughly $250 million in Uber back in 2013.
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Today, a situation like that wouldn't have to face the same criticism. Sidewalk Labs, Alphabet's subsidiary project to improve cities, could potentially find ways to foster connectivity without being obligated to partnering with Google Fiber, the super-fast internet subsidiary.
Alphabet companies may even be able to seek investments from other outside sources, such as other corporations or financial entities, to jump-start projects that don’t fit with Alphabet’s corporate priorities or strategic interests. The rules will be completely different than in the old days under Google, and that could have a big impact across the technology industry.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.