02 November 2014

How Google Creates Income Disparity (Or How Google Has Confused Their Ability to Hire Great People With the Ability to Make Employees Great)

Jonathon Rosenberg and Eric Schmidt have just published "How Google Works." Recently Yahoo CEO and former Google employee Marissa Mayer interviewed them about it at the Computer History Museum.
They had some great insights about the direction of technology and how to give talented people a degree of autonomy to work on products they were passionate about. I nearly missed that, though, because they started out with completely inane advice that they didn't even realize was inane.

Their foremost advice was to hire highly creative, driven, passionate, smart people. And as proof that their approach works, Schmidt mentioned that the most interesting startups and Google projects were run by people hired under a program that Marissa Mayer developed to recruit and cultivate such people.

This is obviously impeccable advice. It is also - less obviously - irrelevant to most companies. It's like Harvard or Stanford telling other universities that they should only admit amazing students with the highest SAT scores and most interesting backgrounds.

On average, the average company is going to hire average people, just as the average university is going to accept the average student. Presumably, every company will try to hire the best employees they can and every university will try to enroll the best students they can. And because Google is in such an amazing space right now - flush with resources and a culture of the best and brightest - they find it easy to hire the next best and brightest person. That's not advice though, anymore than Angelina Jolie might advise an aspiring actress to be seen as the most beautiful woman in the world.

There is a huge difference between creating a company that would make average people accomplish extraordinary things and a company that will allow extraordinary things. To Google's credit, they seem to have created an organization that allows extraordinary people do extraordinary things. Not every company does that. That's a huge plus. But it's not obvious that they've created a company that average people can use as a template for creating something extraordinary.

It's easy to say that such a thing is not possible but if you compare the productivity of modern employees with that of employees from 100 or 200 years ago, it's obvious that progress depends on enabling the average person - that individual who is in the 50th percentile - to do something better and more remarkable than such an individual could 5 years earlier or 30 years earlier. Comparing things historically, we have enabled the average person to do extraordinary things. By the end of the 20th century, progress had enabled the average person to be six times as productive, even while reducing the average work week from 6 days to 5. More recently, though, that hasn't happened.

Median household income is no higher than it was twenty years ago. There are a lot of reasons for this but maybe an overlooked one is how companies like Google are doing so much to select out the best and brightest and mistake that for making the average person more productive. Our strongest institutions - from Google to Harvard - aren't just ignoring the bottom 10 or 20% but are actually ignoring those outside of the top 1%. It might be that because of this, it's no coincidence that the divide between rich and middle-class is growing.

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