Google It: IT`s Competitive Advantage

By Brian P. Watson  |  Posted 12-10-2009

Google It: IT`s Competitive Advantage

When people talk about Google as a corporate entity, they often talk--jealously, at times--about the company's innovative culture, with its sprawling campus, free meals and endless amenities.

One of the people at the forefront of that culture is Google's CIO. Ben Fried believes that IT plays a pivotal role in building a great culture--and subsequently a great company--and he puts it into practice in a number of ways.

One part of that is making technology accessible and open. By giving users what they want--instead of what the company believes is best--Fried believes CIOs can empower employees to do more. "It's almost insulting to people when they hear, 'We know better than you how it's best for you to work,'" he says. And the company benefits not only from the increased productivity and morale, but also when recruiting talented support professionals.

But it also puts a good face on IT. In an era in which business users believe their IT organizations take too long and spend too much for products and services that don't meet their needs, CIOs and their teams need to make smarter decisions, he says.

Fried has gleaned these and other lessons from his time at Google, and from his previous work as an infrastructure architect at Morgan Stanley. Fried spoke recently about his IT leadership philosophy with CIO Insight Editor in Chief Brian P. Watson. What follows is an edited, condensed version of their discussion.

CIO Insight: You've worked in two industries--finance and technology--where IT is often a competitive advantage. What have you learned?

Fried: A lot of CIOs say their only job is to create competitive advantage for their company. I shade it a little differently. Creating competitive advantage is incredibly important, but I think you need to be aware that differentiation doesn't necessarily have to limit itself to competitive advantage. Competitive advantage is one important way in which a company can differentiate itself.

But more and more, people need to understand the way IT becomes part of corporate culture. Part of establishing a great company is establishing a unique culture. It's critical to find what defines your company and makes it different. It might not necessarily be making the product better or cheaper that creates competitive advantage. Technology has a unique opportunity to make your company different, and that's what CIOs need to focus on.

One thing CIOs--and other executives, I'm sure--have a hard time with is that the things that got you into that seat have very little do with the things you need to do once you're in it. You have to eliminate all sentimentality from yourself. It's very easy to want to continue doing the things that got you to where you are, but you have to realize that you have to take a broader view of the company.

What other mistakes do CIOs run into when it comes to differentiation?

Fried:A lot of CIOs don't get that there are different economies they can harness by forgetting the business of building out infrastructure. Infrastructure, in general, is rarely something that is a great differentiator. You have to carefully consider how many endeavors you want to be engaged in that are notable to your company only in their absence.

No one ever calls you up because packets were really fast today, or because they hit "send" in an e-mail client and the window disappeared right away. No one will ever thank you for doing those things. There are only so many things that any one organization or CIO can spend time on. How much time do you want to spend on things that aren't noticeable? A lot of CIOs got started by building all this stuff out, so it's really hard to look back and say, "Do I really need to keep doing this?"

At Morgan Stanley, we were very early customers of the Google search appliance. A lot of the young people there had their first exposure to productivity applications via Google Apps. That's what they wanted. We gave them something else, which was more expensive and not what they wanted to deal with. It made me think: How do you deal with this, because there's only so long you can give them the tools they don't want and expect to get out of them everything they're capable of.

Why CIOs don't grasp differentiation

Why do you think so many CIOs don't grasp the potential for differentiation? Is it because they're too techie?

Fried:There are a bunch of things CIOs struggle with. A lot of it is tied to demographics. When a lot of us entered the work force, the expectation was that the best technology would come from your employer. I was never going to get a computing environment at home that was better than what I got at work--you couldn't afford it, there were no networks, there were no routers, etc. It's hard to imagine those dark ages, but a lot of people grew up in that era with the expectation that there was a tremendous expertise in corporate IT that determined what the best technology choices were for a company, and they gave them to the people in the company.

With access to the Internet, there was an inversion. People coming into the work force now typically have better home technology than what they get at work. They're not tied to refresh cycles, they have bigger monitors, they have a faster Internet connection. I remember when all Morgan Stanley ran off of two 1.5-megabit T-1 line connections to the Internet, and now RCN gives me a 20-megabit connection to the Internet at home. So the inversion we've discovered is that the younger generation has already made their technology choices, and they're frequently able to acquire better technology than their company gives them. That makes this very, very hard.

So are you saying CIOs should embrace what their users want?

Fried:It's hard to accept the fact that people want to work differently from the way we've told them they had to. When I spent my full time developing software, we used to joke that you chose the text editor you used to write programs based on a religious opinion you had. It's hard for CIOs to accept that people feel strongly, passionately and personally about the technology tools they use to work. It's almost insulting to people when they hear, "We know better than you how it's best for you to work." It's tough for people who came from a generation where they weren't empowered and technically capable of making choices.

There was this example at Morgan Stanley where a summer intern looked at the technology the company gave him and came back the next day with his own PC. He had more memory, a faster processor and a different software set than the company had given him. He didn't even connect to the corporate network; he just bought a WAN card. And he was the highest ranked intern in his class. My bet was that some of these fast movers will sit on a rocket to the C-suite. Some of the people from that generation are going to be the CIO's bosses. And they'll say, "What do you do? I've never used any of your services or respected any of them."

Speaking more directly about differentiation ...writing software is hard. It has elements of art, science and engineering. Building infrastructure is largely determined for you--if you have good people and good vendors and experience, you can accurately predict when you're going to build architecture or a data center.

When you talk about differentiation, custom software that does something that's unique to your company is one of those things that adds differentiation, something that people talk about. There's where CIOs should focus--it's where you can most interestingly differentiate your company.

It's easier to be distracted by the idea that we can make a whole set of technology decisions for the work force, when the reality is that we're probably best off making decisions about what makes our company really different.

You talk about productivity. It's a top concern for CIOs right now. Why not give these younger people the tools they want?

Fried:The reality is that you build up an entire ecosystem around this set of decisions. I know a lot of organizations that try to take internal help-desk customer support and try to outsource it and turn it into pay-per-ticket or something like that. A common approach to driving costs out of customer support is rigid standardization--the thinking there is, we're choosing only one tool for each job and, in so doing, we'll make the support very easy and low cost.

People have all kinds of great metrics for measuring this. But those CIOs end up getting painted into a corner. They take a standardization approach, which is "all or nothing" for the organization and do things all one way; it may be a Socratic extreme, but it describes the philosophy by saying, "By not doing, we'll knock costs out of the system."

We try to give people some measure of choice that we can support and build an ecosystem around. We support Macintosh and two versions of Windows and Linux on the desktop. We obviously like and prefer when people use Google Apps, but we also have Microsoft Office, OpenOffice and iWork in the environment. So there's a lot of choice, and we've made an investment to do this.

When you create an environment where support is interesting, you get support people who are attracted to it. We're able to hire people who maybe used Macs at school but now want to learn Windows. You get people who have an inherent interest in the technology and in the work.

Like anything else, finding good people isn't easy, but it's not markedly harder to find these sorts of people. When you have them, you don't have to worry about canning every response to every problem. You definitely have to build up knowledge bases; but here, the person you present your problem to is the person who solves your problem.

That's very different from my experiences at other companies. A lot of other companies try to optimize as much out of it as possible, and they'll deal with cookbook responses and escalate as few as possible. That's a very different model.

Users know when they are talking with someone who clearly doesn't understand the problem and is reading off a worksheet they've been given--and they don't like it. Having a diverse technology environment allows you to get better support people. Having better support people allows you to close out more problems on the front lines than you would be able to otherwise. That turns out to be a material cost benefit.

Secondarily, it makes technology change management much easier. Then you have support people that think on their feet and react to changes and probably get there without having to do a large amount of planning. We've had a few cases like that this year.

In one case (where we discontinued a product that thousands of people used every day), I would have expected that, as a result of that change, there would have been people in colored shirts saying, "I'm the person to teach you how to change your work habits from using this technology to that technology."

But I got no escalations when we shut it down. To a large degree, that was because the support people knew how to handle these potential problems.

Difficult for IT leaders to shift thinking

But isn't it difficult for IT leaders to shift to that way of thinking?

Fried:I liken it to something I read in an article last year in The Economist. In Europe, it's been becoming more common to take down road signage in towns around common squares. The observation was that strict traffic laws in pedestrian-centric, central towns were actually driving up accidents. There was too much distraction--drivers were following signs and not thinking and looking around for themselves. A number of European cities ended up removing signage. It sounds completely counterintuitive, but they found marked decreases in accident rates.

So my observation is that it's possible to give people choice. Google is a place with a very high percentage of tech-savvy people. But I think we're proof that you can create a technology environment where you give people choice. You actually get a better support organization, which gives you better change management, which gives you happier users.

The argument against it is that support costs will go through the roof. Yes, you do have to invest in having more expertise in more operating systems, etc. But virtually all of our applications are Web-based, so we don't worry about desktop installs and supporting native applications and clients.

But wouldn't some say that could only happen at a company like Google?

Fried:I don't think that's true. I talk with a lot of people who are thinking about doing it. Approaches like that are attractive.

One of the problems you encounter when you have a desktop-centric IT stack is the high cost of opening new offices. I saw it at Morgan Stanley. We had so much internal technology that was needed to power the Morgan Stanley desktop. It was very expensive, so the technology costs associated with opening a new office were very high. The joke was we were looking at a business deal with a company in China, and the cost of putting one ex-pat who understood and could support the technology used there was more than the payroll of the entire office combined, and that the cost of one decked-out computer was more than any one employee's annual salary.

This ties back to the Google approach, in that there's a lot less infrastructure needed. You worry about more Internet connectivity. That means you can be more nimble.

CIOs are thinking about where to invest in the next surge. I came to Google for this reason, and I don't say it because I'm at Google: Cloud technologies offer us a way to get into new locations cheaper than we could with fully installed software-based approaches before. That's going to be important as companies look to "seek alpha," as we used to say on Wall Street, in new locations--especially in the developing world, where no CIO wants the dominant cost to be whether or not there's an ROI to opening a new office. Don't be in that business. Don't have that bull's-eye on you.

Google is obviously a tech-savvy company. Does that put more pressure on you and IT?

Fried:I haven't counted up all the numbers, but probably a plurality of people on our operating committee have Ph.D.s in computer science or were in Ph.D. programs. So it's a very different job from that of a lot of other CIOs.

Does it put pressure on us? IT is considered an engineering discipline here, so that puts me in a group with the people in charge of search, Apps, Maps, Google Earth and so on.

I think it's fantastic that IT is held to the same engineering standards as the rest of what Google does. In the fight for talent, it turns out to be a huge advantage. We want the same caliber people working in IT as those working on search, Maps, etc. You can come into Google and have access to all these things and be judged on the same playing field. It creates pressure, but it creates the kind of pressure I want--to be excellent.

I started out talking about my belief that the best way to create differentiation is creating technology. Being part of a broader organization that's all about building technology adds pressure, but pressure that moves us in the right direction.