Yesterday, August 10, 2015, Larry Page, co-CEO of Google, announced a dramatic restructuring of one of the world's largest and most innovated companies.
No longer will the company, Google, be a single company by that name led by Larry Page and Sergey Brin. Instead, it will be a collection of companies, each with its own CEO, coordinated through a sort of hub company known as Alphabet.
So Google will continue to exist as a company, but a company with its own CEO (Sundar Pichai), within a collection of other companies (Calico, Life Sciences, Ventures and Capital, and X Lab, among others) with their own CEOs, each focused intently on its core business, while coordinated, supported, and evaluated through Alphabet, where Larry and Sergey will be CEOs. Their key work, as Larry describes it on the new Alphabet website, aptly named https://abc.xyz, is "to have a strong CEO who runs each business, with Sergey and me in service to them as needed."
Much has been made in the media about the parallels between what Larry and Sergey are doing with Alphabet and how Berkshire Hathaway is built.
But here I want to draw another comparison-- to The United Methodist Church.
How Alphabet Will Be (More or Less) Like The UMC First, let me suggest an obvious way Alphabet will not be like The UMC. Alphabet will actually exist as a unified corporate entity.
This may surprise you. The United Methodist Church does not exist as a corporate entity. Instead, The United Methodist Church, corporately speaking, is a collection of separately incorporated entities (general agencies, annual conferences, and other bodies) connected under a common constitution and bylaws and commonly governed ultimately by the decisions and actions of our General Conference.
So, for example, the General Board of Discipleship (now doing business as Discipleship Ministries) and the General Commission on Communications (now doing business as Communications, though still commonly known as UMCom) are two entirely separately incorporated entities, each with its own board of directors, its own budgetary processes, and its own General Secretary chosen by its board. These two separate agencies do seek to work in coordinated ways, but neither governs the other in any way. Instead, both are held accountable for their work through the oversight of bishops (who chair their boards of directors), the ongoing work of the Connectional Table (where agency leaders and other leaders across the connection work coordinate their efforts toward common denominational goals), and, ultimately, the decisions of General Conference.
Still, they are fundamentally separate corporations with separate boards, distinct missions to accomplish, and staff hired to help them accomplish those distinct missions. Through the leadership of bishops and participation in the Connectional Table, the general agencies are both challenged and supported, individually and collectively, to deliver on their distinct missions.
That's pretty much what Alphabet will be like, too. Though Alphabet will exist as a corporation, and its new companies will be wholly owned subsidiaries of it, those new companies will be staffed, challenged and led from within each one to develop and enhance focus and performance on its own particular mission and brands. Alphabet will exist to promote the success of these companies and their brands as each pursues its particular work.
Why are Larry Page and Sergey Brin doing this?
They say it will enhance focus on effective companies innovating and delivering the most effective products and services they each can.
As those companies each succeed in their core businesses, the whole of Alphabet succeeds. And as Alphabet succeeds, they hope the result is "improving as many lives as we can."
Better focus. Stronger individual companies and brands. And a mechanism (through Alphabet) to generate greater accountability, transparency and effectiveness for all of that.
What Alphabet Isn't Doing (But Many Restructuring Plans for the UMC Do)
When Larry Page and Sergey Brin unveiled their restructuring plan yesterday, it was fairly remarkable to me what they didn't propose.
1. They didn't propose "streamlining." Alphabet isn't an initiative to combine functions across different parts of the former Google enterprises. If anything, it is an initiative to increase differentiation among them, in an effort to increase the focus on each of them.
Contrast this to efforts in a variety of restructuring plans for The UMC to collapse the unique work of existing general commissions (notably GCORR, GCSRW, GCAH and even UMCom) into others thought to be doing similar (but not identical) work-- all in the name of a more "streamlined" structure.
Alphabet doesn't think long-term success comes this way. They believe it comes by keeping separate functions truly separate.
2. They didn't propose "cutting back."Nothing in Alphabet's business plan speaks of cutting back on any enterprise in which the former Google was engaged. Instead, Alphabet's role is to make sure each gets the kind of funding each needs to be as successful as each can be in its market space and hold them accountable for their success. For Alphabet, success in each new subsidiary-- subsidiary by subsidiary-- is what ensures sustainablity.
Part of the battle-cry for nearly every restructuring plan we've discussed is "sustainability." Having all of these separate general agencies with separate functions is decried as "not-sustainable." Cutbacks are necessary so we can "live within our means." Cutting back is heralded as a key strategy to ensure we are or become more sustainable going forward.
Yet cutting back isn't a leadership strategy for success. In successful enterprises, it's just a tactic, and usually a temporary one, sometimes used to reallocate resources from lower potential to higher potential initiatives. I've said it before-- and Don House is putting some of his money behind it-- that the current drive to keep reducing investments in our common work is counterproductive. We need to increase our investments-- substantially-- in those things most likely to generate success for the long term.
That's exactly what Alphabet proposes to do.
3.They didn't propose a reduction or simplification in "bureaucracy," but, if anything, by creating more CEO positions across the whole of what will now be wholly owned subsidiaries, they actually increased bureaucracy and corporate complexityto a certain degree.
Most of the restructuring plans proposed for The UMC seek to make the UMC "more nimble" by appealing to an argument that reduced administrative structure across all systems almost necessarily leads to greater capacity for each system and the whole to act.
The thing is, and Alphabet's creation affirms, that isn't necessarily the case at all. Simply reducing administrative structure doesn't necessarily increase responsiveness to the environment. What enhances responsiveness is enhanced capacity to act on the mission of the organization-- which often requires more administrative support rather than less.
Alphabet recognizes the different kinds of efforts their different subsidiaries would be undertaking require different kinds of internal organization and enough leadership and management to make each work well on its own.
Related to this, is the belief that "simplifying" the brand experience increases success, and that to simplify the brand experience requires reducing the number of leaders, managers and, potentially, agencies.
And related to this is also the belief that having "too many" brands and brand messages out there is a problem more than an opportunity.
This also turns out not the work in the marketplace quite as is being advertised.
Alphabet understands the overall power of brand is both collective (Alphabet) and individual (Google, Gmail, YouTube, X-Labs, etc.) and that having not just different companies, but within them fundamentally different brands with distinctive brand identities isn't problematic, but the way forward. Greater complexity with more discrete, successful brands tends to increase overall market share. And it does take more leadership and management-- and usually not less-- to lead and manage greater degrees of complexity.
4. They didn't create Alphabet to uniformize or micromanage the subsidiaries. Instead, Alphabet is an entity that, like Ronald Heifetz describes in his work on adaptive leadership, takes the "balcony perspective" with the purpose of directing financial and leadership support services to each of the companies under Alphabet's umbrella. The key concept
behind the restructure of Google, Inc. into Alphabet and its wholly
owned subsidiaries is differentiation can increase opportunity when each
of the different companies is highly focused on its particular mission
and provided the leadership and financial resources necessary to deliver
on its particular mission.
Alphabet doesn't assume it know best how to manage those very different companies. Nor would it seek to apply a "one size fits all" solution to achieve just one kind of business outcome across the gamut of them. What Alphabet does assume is it can have the wisdom and perspective, in close association with the CEOs of the subsdiaries, to direct resources and leadership support in ways that maximize the effectiveness of each of them and, thus, their whole portfolio.
Several iterations of UMC restructing plans, some of which claim to be based on "sound business principles," have proposed the creation of one smallish and rather independent central body that would function more or less as a single governing board for all of the existing agencies of The United Methodist Church (the plan from the Interim Operations Team and the heart of what would become Plan UMC).
That basic plan was found to be "constitutionally unsalvageable" by the Judicial Council in 2012.
After that, some of those powers were then proposed to be taken on by a "beefed up" Connectional Table under Plan UMC 2.0, now undergoing Judicial Council review. The new Connectional Table would get an Executive General Secretary, to whom the GSes of (at least) GBCS, GBHEM, GBOD and GBHEM would report and be accountable on matters of fiscal management and the performance of the agencies, while agency boards would be reduced to program management only. Based on an annual review process carried out by the EGS of CT, CT could also vote to reduce or change the funding for (any?) of the general agencies on an annual basis. The new CT would also have the final say on employing general secretaries for these four General Boards (GBCS, GBOD, GBHEM, GBGM), a role now given to the boards of those separate agencies.
Does that sound like what Alphabet proposes to do, or something else?
In one way, yes. Per Larry Page, "We will rigorously handle capital allocation and work to make sure each
business is executing well. We'll also make sure we have a great CEO
for each business, and we’ll determine their compensation."
But in another way, no. There's a difference between "making sure each business is executing well" and creating a process that holds every separate entity to the fire for one (and only one) business result: increasing the number of "vital congregations," as the Plan UMC 2.0 legislation proposes to do. (See especially pages 9 and 14 of the document). Within the polity of The UMC, it needs to be noted that General Conference has never taken an action to state that our purpose as a church or the purpose of any given general agency or the purpose of Connectional Table was to ensure an increase in the number of vital congregations. Bishops and Connectional Table have been provided de facto leadership around this goal, but it has never been approved de jure. You will find it nowhere in the current Book of Discipline or Book of Resolutions.
There is a single business goal for Alphabet: make sure its subsidiaries succeed in their varying kinds of businesses and business environments.
But is there, really, a one-size fits all business goal for the varying businesses themselves, beyond that? Will Alphabet evaluate X-Lab for how well it contributes to "search," or Calico for how well it contributes to or collaborates with Android? I don't think so. Alphabet's sense is Alphabet prospers most when X-Lab, Calico, and Google, as separate companies, all do their own work and succeed in it, for necessarily different ends.
The is also an
overall single mission statement for United Methodists: to make
disciples of Jesus Christ for the transformation of the world. We go on
to say congregations are a critical (but not the only part) in this process.
So, if the mission is "world-changing disciples," in which congregations have a part to play, but only a part, why would GBCS be held equally accountable for vital congregations, or GBGM in the US, for that matter, when we already know congregational vitality is largely the result of effective pastors (whose formation and accountability is cared for by GBHEM) and local church and conference leaders in congregational and other forms of discipling ministries (the primary focus of the leadership and resources from GBOD/Discipleship Ministries).
Why indeed, unless there is some sort of a priori belief that increasing the number of vital congregations is the only measurable business outcome that matters, and others, such as international relief and development (UMCOR within GBGM) and advocacy for safe living and working conditions for all people at the highest levels of government (a big part of the work of GBGS) do not improve our "bottom line" around disciples of Jesus changing the world.
Alphabet clearly believes that diverse outcomes from diverse businesses do improve Alphabet's overall bottom line, and even can improve the lives of people everywhere.
How about us?
Overcoming Our Self-Persecution Complex
For too long, now, United Methodists have been telling ourselves that we're failing, we're bloated, we're ineffective, we're inefficient, we're unsustainable, we're... you get the point.
It's like we're telling ourselves we're irresponsible, and so we have to make all kinds of changes, and, yet, drastic cuts so we can "live within our means" and do just what "really matters," because we can't afford to do anything else. Our diverse entities and agencies are a fool's luxury, and now we've got to tighten our belts and get back to basics- or else!
Not exactly a happy message.
Yet this week's move to create Alphabet seems to tell a very different story, doesn't it? In a variety of ways, what one of the most innovative and effective companies on earth is doing actually both resembles and supports much of what our current structure is, has been doing, and can do-- with little or no further restructuring necessary-- if we'll just view it as opportunity for more and more focused investment that can yield multiple kinds of improved outcomes (as Alphabet seems to do) rather than as a burden we must shed while increasing our accountability (and austerity!) so we can generateprimarily one kind of outcome toward our overall mission.
We're seeing in the case of Greece, and before it, Ireland, just how damaging moving from a process of support for what's effective (as when the EU supported the building of highways and other infrastructure in Ireland that caused its tourism industry to boom!) toward a regimen of austerity (Ireland's economy is growing again, but that growth is still being hampered by the EU's austerity moves, and Greece's economy has only plunged more quickly as escalating austerity has been applied).
Perhaps the creation of Alphabet signals it may be time we saw and embraced our full organizational diversity as a church, and the vast variety of things we are doing under our common mission of making and living as disciples of Jesus Christ, not as a burden or a problem (much less THE problem!), but a remarkable opportunity.
After all, we don't have to go and create diverse companies that support our common mission in varying ways. We already have them! We just need to stop telling ourselves that our diversity of agencies and brands is bad-- and instead rejoice in it, then find effective ways to inspire and support each of them to do their best possible work toward supporting the making and deploying of disciples of Jesus who will and do transform the world in all sorts of ways, including, but not limited to, increasing the number of vital congregations.
Our complex "alphabet soup" as United Methodists-- America's second largest Protestant denomination and the only Protestant denomination with any real claim to be a global one-- may turn out to be one of our most undervalued assets, after all!
