Credit: Big Think
In the world of artificial intelligence, one company stands out above the rest: Google, or rather, its parent company Alphabet. Fueled by its near-monopoly on search ads and an unwavering commitment to AI research and development, Alphabet’s supremacy in the AI field seemed almost inevitable.
For years, Alphabet had been pouring substantial resources into generative artificial intelligence, a discipline that seeks to enable machines to create content and data. With deep pockets and an unrivaled ability to attract top talent, the tech giant had positioned itself as a formidable force in this rapidly evolving industry.
“After aggressive hiring and the acquisition of DeepMind, we had two-thirds of all the superstar AI talent,” said multiple Google executives. This statement reflected the company’s relentless pursuit of excellence in AI. With such advantages, the question seemingly wasn’t whether Google would come to dominate the AI industry — people took that for granted. Instead, they wondered whether governments would intervene to prevent its control or perhaps whether AI would become sentient and try to dominate us instead.
Then, out of nowhere, a startup funded by Microsoft managed to win the AI race with ChatGPT. Google’s leaders panicked, declared code-red, and quickly released a ChatGPT imitator with a flawed demo. The company’s stock lost a third of its value, while Microsoft, long derided as a dead-end for innovation, regained its earlier heights. It’s too early to count Google out, but the company was so alarmed that it called in help from founders Larry Page and Sergey Brin.
Google was poised to win this race but couldn’t deliver with an overwhelming advantage in talented software engineers and other vital knowledge workers. Years of talk about “the war for talent” had distracted its leaders — and us — from a better route to success: unleashing the talent you have. Google had allowed its excellent people to get stuck making incremental improvements. Managers were sitting on a goldmine of talent, but they couldn’t capture the value.
In recent years, a collaborative effort involving a team at Stanford University has been dedicated to identifying the key components that drive agile innovation within companies, a critical factor for long-term success. This research began by examining numerous companies operating in industries prone to disruption, eventually narrowing down the list to 26 entities for analysis, covering the period from 2006 to 2022. These companies were categorized into groups representing high, medium, and low levels of agility and innovation. Interestingly, the research revealed a strong correlation between agility and innovation within a company.
The pivotal question that emerged from this analysis was what differentiated the high-performing, moderately-performing, and low-performing companies in terms of agility and innovation. After extensive investigation, the research team identified eight primary drivers that played a crucial role in these outcomes. Surprisingly, the data indicated that effective hiring or talent retention, while important at a fundamental level, did not significantly impact a company’s capacity for agile innovation. Instead, the focus shifted to how managers within these organizations harnessed their existing talent.
The success factors that emerged from this research included whether the talent within these organizations aligned themselves with an existential purpose, adopted and embodied the company’s culture in a manner reminiscent of the Pygmalion effect, maintained a startup-like mindset, leaned toward bold and innovative approaches rather than risk-averse strategies, fostered wide-ranging collaboration rather than rigid hierarchical structures, and displayed adaptability in terms of adjusting pace and operational modes within the organization.
These findings presented some unexpected results. Despite its reputation and extensive resources, Google was found to be a relatively average performer in terms of achieving breakthrough innovations. In contrast, Microsoft, which had undergone a transformative journey over the past decade, demonstrated a significantly improved approach to innovation compared to its early 2000s strategies. Companies such as Apple and Amazon, known for their innovative prowess, unsurprisingly scored well in terms of agile innovation. On the other hand, Meta/Facebook, another Silicon Valley giant boasting abundant talent, did not perform as strongly in this regard.
“The maze is in the mouse”
One of the toughest drivers to maintain is the startup mindset. This was Microsoft’s undoing for many years: Having conquered desktops and feeling little urgency to address new challenges, most managers lapsed into a protective, conservative mindset focused on their own fiefdom. Success made them relax and play it safe — the opposite of a startup mindset.
By 2014, when Satya Nadella became CEO, the company had missed both the internet and mobile revolutions. Besides advancing a new existential purpose, he told people the company would thrive only if it realized the limitations of what it had. As in a startup, he encouraged partnerships with outside companies (long forbidden), and carried out strategic acquisitions, not just one to cement market share. Microsoft also invested in crazy launches like Open AI.
Google had likewise become fat and happy with its great innovation in online search, but with a key difference. The revenue has been so abundant that it never had the crisis that forced Microsoft to change direction. Rather than a startup mindset, the company gradually adopted a spirit of cautious incrementalism and fiefdoms. Sundar Pichai was promoted to CEO soon after Nadella rose to the top at Microsoft, and clearly had the better hand — but that meant he had little incentive to change.
As one former manager recently pointed out, the company “has 175,000 capable and well-compensated employees who get very little done, quarter over quarter.” That’s because those employees have internalized a culture of safe, small improvements. Or as he put it, “the maze is in the mouse.”
This strategy was going on for Google well before AI took off. Writing in 2018, a longtime tech observer argued that Google’s innovation since 2000 was either incremental or in copycat products such as Android and Gmail. None of its “moonshot” products have succeeded. The company was pampering its amazing talent with free meals by Michelin star chefs, onsite massages, and custom workstations. But those happy employees have had little incentive to do much.
Some of that talent eventually quit. Multiple authors of a landmark 2017 Google paper credited with sparking AI development have left the company to raise hundreds of millions of dollars for competing startu-ps. The situation is so bad that Brin returned partly to help Google with its personnel issues.
A productive “no”
Another way to unleash talent is by fostering radical collaboration. Everyone preaches collaboration nowadays, and most companies set up teams with people across functions and divisions. But few take it truly seriously, to the point of making people uncomfortable.
One company that does is Tesla. Despite its large size and huge market value, the company tells people to solve problems by seeking help from whomever has the relevant knowledge — even if they’re a few levels above or below you in the hierarchy. Let’s say you’re a veteran, senior engineer, overseeing teams of dozens of employees. A low-level guy in another area, a new recruit, has an idea, and he hears that you know something about it. So he approaches you to learn from your expertise. In most companies, he’d confront hierarchical barriers and be lucky to get an audience with your assistant. At Tesla, he talks to you directly, and you’re obligated (not just encouraged) to help.
The collaboration even extends to the type of advice offered. Maybe the guy’s idea is wildly impractical. You don’t just blow him off; you offer a productive “no” — meaning you work with where the guy is coming from and see if together you can find something doable that accomplishes the same goal. CEO Elon Musk, who set the example for this radical collaboration, has been known to fire people who gave him a simple rather than a productive no.
Employees want to be unleashed
The path to perpetual agile innovation sounds daunting — but a growing number of employees are open to the challenge. After all, only a third of Americans feel engaged at work. Young people are especially doubting their corporate commitment. Like their older colleagues, most of them feel either unengaged or actively disengaged from their employer. But there’s a difference: despite joining the workforce only recently, they actually feel more stressed and burned out: 63% (stressed) and 34% (burned out) for those born after 1979, vs. 56% and 27% for those born 1965-79, and 40% and 18% for their elders. Compared to older peers, they are also much more likely to seek positions that accelerate their career development, and much less impressed by a company’s brand or reputation. All that talent wants to be unleashed.
Of course, no one expects big companies to sustain the crazy hours and intense collegiality of actual startup firms. Radical collaboration can go too far, leaving people little time for their main work. But the agile innovators push hard against the longstanding tendency of big organizations to settle into comfortable arrangements of steady, predictable work with good pay and benefits. Big company cultures aren’t for everyone — but their success comes mainly in their willingness to take agile innovation seriously, and to give up many of the niceties of settled corporate life. More companies will need to follow them in order to thrive in the future.