[Eric Schmidt, CEO of Google, was interviewed by strategy guru Gary Hamel at the Management Lab Summit (which Hamel founded) on May 29, 2008 in Half Moon Bay, CA. You can find that interview on YouTube by doing a Google search on the above sentence. It is quite long, an hour, but fascinating and revealing].

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One of those obvious truths that needs constant restating is this:
To have an innovative organization, you need to hire – and keep – innovative people.
But how? Eric Schmidt reveals how in this remarkable one-hour interview.
Here is a brief abstract of the wisdom he conveys.

Culture defines an organization’s innovation. Google’s culture is a bit like a university. This could be fatal for many organizations. Who wants to have a business like a university? But Google makes it work. It hires people who love new ideas. Google has a Top 100 list of new ideas to work on. We call it that, even though there are more than 250 projects on the list! (How many companies are working on 250 new ideas??? S.M.).

Your talented people are your key stakeholders. Not your shareholders. When Google went public, the founders kept Class A (voting) shares. They now control the company’s destiny, even if they do not have a majority of the shares or anywhere near it. This will make the company ‘built to last’ rather than short-run myopic. 

We have a clear unique value proposition. Here it is. It has four parts.
1. End user happiness with search
2. End user happiness with advertising
3. Network of partners based on (1) and (2)
4. Grow and build the business based on (1) (2) and (3).

I much admire Rupert Murdoch. He has a sense for what his readers want to read in the newspaper. Murdoch is praised as a shrewd businessman, but I think the key is, is intimacy with his readers.

When people leave Google (and the retention rate is very high), we find out: What do they want to do at Google that they cannot do and are therefore leaving? And why is this so, and can it be changed or fixed?

Marissa Mayer is Google’s VP for search products. She has an uncanny ability to sense what people want, like Murdoch. Marissa helped create StreetView (street level view of your house). What good is it? Eventually it can be used for sophisticated devices to help you find your destination (such as an autopiloted car). Marissa is working on a database that will combine, integrate and organize your medical records. And she has a strong ability to sense which projects will succeed and which will not. And she is also an amazing talent finder.

In the end it is simple. Do the best brains in the world want to work for your company? Why? Or why not? If the answer is yes, then you will have the best brains, the best ideas, the best innovation, and the best management. If the answer is no, you must find out, why? 

Innovation, in the end, is about finding top talent and keeping it. We especially look for people who are good at doing things (implementing the ideas they have).