Thursday, December 27, 2007

Vital Signs: Google's others numbers!

In "Google: A Druckerian Ideal?", Rick Waltzman of the Drucker Institute unveils an interesting set of measures that help to tell the story behind the financials:

Google (GOOG) turned out quite a dazzling display of data recently when it released its third-quarter results: Profit jumped 46%. Revenue soared 57%. The company's shares shot up $6.14, to more than $639 each, on the news. But it's another set of figures that most impresses me: 17, $0, and 20%.

These refer, respectively, to the number of caf├ęs at Google's Mountain View (Calif.) campus; what it charges employees for all the meals and snacks eaten there; and the amount of time it encourages its engineers to carve out each week to tackle company-related projects that interest them personally but aren't part of their core assignments.

The 20% Google allows engineers to follow their passions and this has resulted in innovative products such as Gmail, Google News, and the Sky feature on Google Earth. They've certainly taken a page from 3M's innovation playbook described in a recent article At 3M, A Struggle Between Efficiency And Creativity":

Official company policy allowed employees to use 15% of their time to pursue independent projects. The company explicitly encouraged risk and tolerated failure. 3M's creative culture foreshadowed the one that is currently celebrated unanimously at Google (GOOG ).

Thanks Rick for highlighting other vital signs that help us understand more of the story that underlies Google's financials!