Contemporary Strategy Analysis, 10th Edition

Case 19Google Is Now Alphabet—But What's the Corporate Strategy?*

On August 10, 2015, Google's CEO, Larry Page, announced that Google Inc. would become Alphabet Inc., a holding company of which Google (comprising the company's search and Internet businesses) would be the biggest operating company. Extracts of the announcement are reproduced in Exhibit 1. The organizational structure of Alphabet is shown in Figure 1.

EXHIBIT 1Google Announces Plans for New Operating Structure August 10, 2015

As Sergey and I wrote in the original founders' letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” … From the start, we've always strived to do more, and to do important and meaningful things with the resources we have.

We did a lot of things that seemed crazy at the time. Many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android. And we haven't stopped there. We are still trying to do things other people think are crazy but we are super excited about.

We've long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.

Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet. I am really excited to be running Alphabet ...