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June 12, 2013

Thinking in 10x and Other Google Directives

When Google founders Larry Page and Sergey Brin set up shop in Susan Wojcicki's garage in Menlo Park 15 years ago, they had a fairly straightforward plan: Organize and make useful all of the world's information. That may have been the company's first example of 10x thinking, according to Patrick Pichette, the company's CFO, but it certainly was not--and won't be--the last.

Pichette recently spoke to a group of graduate students at the Tuck School of Business at DartmouthCollege on the power of Google's 10x thinking. Thinking in 10x doesn't come easy to most people, who would gladly take a 10 to 15 percent improvement in something, says Pichette, who is also a senior vice president with the Internet giant.

"They think they can save more money, they think they can increase profits, they think they can get their next version...out. That's the essence of what I see around the world around me: 10 and 15 percent improvement," he says in the video of the talk. "And by the way, 10 to 15 percent improvements are not easy feats. You have to work hard to get 15 percent. At Google, we actually have a fundamental belief that that's not the way to tackle opportunities."

Thinking in 10x is Google's development imperative, both in the amount of data it can process and the reach of its products and services. According to Pichette, who also leads the Google Fiber group, Google won't even consider making a new product or providing a new service unless it will be used by a billion people. "If it's not going to be at least one billion people, it's probably not worth our time," he says. "It puts an incredible filter on how you think about opportunities. And as a CFO, I have to tell you, it makes my job so much easer."

One example of the "outlandish things" that come out of 10x thinking is Google Fiber. Pichette says the initiative to lay fiber optic cable in the ground and provide end users in select towns with blisteringly fast access to the Internet was initially was pooh-poohed by the so-called analysts, because, it was assumed, Google would use the same business model used by other Internet service providers. Nope.

What the analysts missed was the part where Google develops and runs the entire thing all by itself. "When you build an end-to-end stack, both my cost structure and my cost curve are completely different than anybody else's," Pichette says. "Everybody else's is exactly the same cost, because they all assemble the same stuff. I'm in a completely different position, and I control my destiny, not only on cost, but also the pace at which I can innovate."

Google Glass, the computer that resembles a pair of eyeglasses, is another example of 10x thinking. When it was first unveiled, nobody though it would do anything, Pichette says. But the idea of having voice-directed computer attached to your head, which frees up your hands, is clearly catching on, he says. "It's going to morph into 17 different things in the next decade," he says. "That's the essence of 10x."

Pichette encouraged the students to open their minds and realize the vast opportunities that exist before them. "We have a natural tendency as humans, when you think of search or the digital economy, [to say that] it's mostly done. That's the mindset, a natural instinct, that we have," he says. "My message to you is, that's the wrong premise. We're really in early days. You should look at the world as the first inning of this… baseball game, which is the digital economy, which is big data, which is the opportunity around you.

"We only have a couple billion people with cell phones," he continues. "There's another five billion that will show up…They want a better life, and better tools, and they want amazing things. And the real question is, Who's going to give it to them.? What's it going to be?  Here is the opportunity in front of you."

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