Large Organizations Have Unique Problems—Just Ask Google
Google's innovation strategies have always been the talk of the town. Google has been famous for allowing its employees to spend 20 percent of their time working on something company-related that interests them personally. This policy was formally announced in 2004 and is even listed in the IPO launch memo. However, recently there has been growing speculation that this policy is kind of dying within Google.
Looking a bit deeper into the situation, one of the fundamental things that has changed within Google since 2004 is its size. Google's 2004 headcount was around 3,000; the 2013 headcount seems to be nearing 45,000 employees. It would be unfair to comment that Google is struggling to maintain this policy just because of increased headcount, but at the same it is true that large organizations tend to deal with some unique problems.
One of the problems that large organizations face is social loafing. Social loafing is when one or more members of a group do less work than if they had to do it by themselves. Some members may over-rely on others to complete the work. One of the possible causes of social loafing is the lack of clarity of roles in large teams. In the absence of clearly defined roles, there tends to be duplication of effort.
The communication loops in large organizations are usually larger, and if not managed proactively, they can negatively impact teamwork. If the recognition system is not balanced to reward the right candidates on a team, social loafing can have a discouraging impact on the team's deliverables and innovation potential. Even making agile work in large teams is a challenging proposition and requires some focused strategies.
Organizations suffer from another problem, commonly referred to as the Principal Agent problem. The principal–agent problem concerns the difficulties in motivating one party (the “agent”) to act in the best interests of another (the “principal”) rather than in his own interests. As an example, the agent could be employees, and the principals could be the management team. Agent, in a different context, could be management, and principals could be shareholders.
This problem may arise because of a lack of a clear incentive system or even due to employees being misaligned from the organization's vision. Organizations like Apple have found some ways to address this problem by ensuring that the executive team gets incentives related to meeting the shareholders' needs. Microsoft's recent reorganization is a possible fix for the problems pertaining to its size.
It is debatable whether any of these problems could be the root cause of Google's reported struggles with its 20 percent time policy. While organizational factors matter a lot, this policy or any other innovation endeavor, at its core, depends heavily on the internal motivation of an individual, team, and organization in general. External policies are really enablers in this case.
