G is for Google
Wow, they are doing letters? Really? Letters? Hey is Eric Schmidt still in the building somewhere? Ask him how well Planets worked out for Sun Microsystems.Interesting strategy, hard to second guess from the outside of course. Sun's motivation was to figure out whether the other parts of the company could stand on their own[1], it also makes it less fiscally complicated to discharge an entire group into the void. Think HP selling off the Agilent half of itself.Generally though this sort of move is a way of containing and then "fixing" cost problems. Divestiture is so much easier once you've created the framework of a whole organization around each chunk. It can also be weirdly inefficient, at Sun each of the "planets" paid in a sum of money to IT (Bill Raduchel's organization) for "Corporate IT support" except that Corporate IT didn't work for them, they were just the only vendor you could use to get your IT services, so what you ended up with was really crappy IT work that you couldn't shop around for. It was maddening. But the 'collection of companies' design pattern requires either that you have your "service providers" that everyone uses (HR, IT, Legal) which gives little incentive for quality service, or everyone gets their own version which means a lot of excess overhead and duplicated work.I could think of at least two other ways Google could have re-organized without bringing that pain upon them, and as Eric lived through it at Sun as well I'm sure he has an opinion.Oh, and having one of the sub-companies get the world's #3 brand? I wonder how that works out.[1] Answer "No" for SunSoft, "Yes" for Sun Hardware, "No" for Sun Labs.