Google's New Strategy for Growth and Innovation

Convergence is a buzzword (think: Netflix making House of Cards, or Comcast as a broadband provider). Google’s Alphabet announcement last week brought new meaning to convergence, merging in novel ways finance, entrepreneurship and innovation, and startups and mature organizations. 

To start, we now know Wall Street and Silicon Valley are not such radically different worlds after all. A few months ago, Google made waves by hiring then Morgan Stanley CFO Ruth Porat to bring big business savvy and discipline to the fun and quirky Google campus in Mountain View. 

Cultural misfit or business fit, some wondered. A quickly-trusted leader with the ear of Sergey Brin and Larry Page, it now seems clear. Porat is the new CFO not only of Google but of Alphabet as well. She is also seen as a major player behind the big corporate restructure in Mountain View. 

Reading between the lines, Porat is on the same page as Google’s founders, with 3 core tenets to the go-forward plan: 

1. First, allow the core of Google’s business (search, Android, email) to focus exclusively on what has made the company a titan, under new CEO Sundar Pichai who already had responsibility for these products.
2. Second, incubate radical new ideas like driverless cars and contact lens computers the chance to develop in an entrepreneurial spirit outside Google’s business core, but backed by all of the company’s immense financial muscle.
3. Third, wrap everything up in high quality financial supervision and management oversight, not in a heavy handed way to stifle innovation, but with a light and sophisticated touch that will turbocharge innovation while also pleasing Wall Street.

For all the energy of its start up culture, we are talking about a massive global conglomerate in Google. The new strategy is to nurture the entrepreneurial spirit that has made Google what it is today, while also fully embracing the responsibilities and challenges from its status as the bluest of blue chip firms.

Keeping these two worlds together and integrated is no small challenge. I am so pleased that Ruth Porat and Sundar Pichai, who both received their MBAs from Wharton, have been called on to lead the charge.

After all, scaling businesses is what Wharton expertise does best–from private equity to tech. We do so by focusing simultaneously on the drivers of innovation and on the analytics needed to manage and lead complex organizations. And at Wharton, we practice what we preach.

Wharton is itself a complex organization, which is why I've appointed Karl Ulrich as Vice Dean to lead our efforts in entrepreneurship and innovation–both in Philadelphia and from our San Francisco campus. But we're not finished. Stay tuned for a major announcement in the area of business analytics coming very soon.

Geoffrey Garrett is Dean, Reliance Professor of Management and Private Enterprise, and Professor of Management at the Wharton School of the University of Pennsylvania. Follow Geoff on Twitter.