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<a href="http://www.businessinsider.in/Know-how-the-local-boy-Sundar-Pichai-made-a-global-mark/articleshow/48447792.cms">Google</a> has overloaded us with news of its restructuring. From appointing a new <a href="http://www.businessinsider.in/New-Sense-Of-Excitement-In-India-Googles-Sundar-Pichai-Says/articleshow/42598774.cms">CEO</a> <a href="http://www.businessinsider.in/Googles-New-CEO-hopes-to-meet-with-Narendra-Modi/articleshow/48447897.cms">Sundar Pichai</a> to restructuring into ‘Alphabet’, <keyword id="6355629" type="CITY" weightage="100" keywordseo="Google">Google</keyword> has expressed its serious intentions to be a 21st century innovator, a bold creator of new products, not simply a harvestor of profits from its lucrative search engine business. 
 But 20th-century business history offers three ways to think about what Google is up to here, embodied in three potential analogues: <keyword id="6362665" type="COMPANY" weightage="100" keywordseo="Berkshire-Hathaway">Berkshire Hathaway</keyword>, the conglomerate run by Warren Buffett; <keyword id="114046" type="CITY" weightage="100" keywordseo="General-Electric">General Electric</keyword>, the industrial conglomerate; and <keyword id="28808" type="CITY" weightage="100" keywordseo="ATT">AT&amp;T</keyword>, which operated the wildly innovative Bell Labs until 1996. 
 
Google is to become but one subsidiary of a holding company called <a href="http://www.businessinsider.in/Google-Just-Redefined-What-Android-Is-All-About/articleshow/21260943.cms">Alphabet</a>. The other initiatives like driverless cars that Google has taken on will be separate subsidiaries, as will future shoot-the-moon ventures that the firm buys or builds. 
 
If the new Alphabet can be remotely as successful - in terms of innovation or financial returns - as these companies, its shareholders and users of its products will be very happy. But the historical parallels suggest that there may be a trade-off in which what is best for shareholders and what is best for innovation aren't always the same thing. 
 
Here's what each of the three pathways looks like and what they might mean for Alphabet, Google and innovation in the decades ahead. 
 
Berkshire Hathaway 
 When Google announced its new structure, a rather uncommon word started appearing in business media: "conglomerateur." As in, that may just be what the Google founders <keyword id="100155" type="PERSON" weightage="100" keywordseo="Larry-Page">Larry Page</keyword> and <keyword id="100154" type="PERSON" weightage="100" keywordseo="Sergey-Brin">Sergey Brin</keyword> are becoming - builders of a corporate empire that will stretch across industries into whatever field they find interesting and lucrative. 
 That is the strategy that has made Buffett one of the world's wealthiest people and Berkshire Hathaway one of the world's most valuable companies. Its largest interests are in insurance, but those interests stretch far afield, from mobile homes and private jets to <keyword id="141837" type="COMPANY" weightage="100" keywordseo="Heinz">Heinz</keyword> ketchup and Duracell batteries. This week's $37 billion deal for the aerospace parts maker Precision Castparts is Buffett's largest acquisition to date. 
Already Page gave a nod to this strategy in his letter announcing the new structure. "Alphabet is about business prospering through strong leaders and independence," he said, with the subsidiaries each having a strong CEO. He and Brin "will rigorously handle capital allocation and work to make sure each business is executing well." 
 
Buffett could say much the same; he gives his managers wide discretion to manage the operational details of their business; Berkshire's corporate office in Omaha, Nebraska, is minuscule - 24 employees overseeing a company with 340,000 employees. 
 
But the differences may be more important. Berkshire is all about acquiring companies that are well established, with proven models for profitability, at favorable prices. Buffett has eschewed technology businesses or pretty much any company with a business model or prospects that are hard to project. 
 
Page and Brin, by contrast, build things that have never existed before, or that are hard to imagine. A more Buffett-style approach might be welcome news for Google shareholders, but it would mean a pivot from the grand ambitions of their recent ventures. 
 
General Electric 
 Maybe a different type of conglomerate is the model for Alphabet. <keyword id="199518" type="PERSON" weightage="100" keywordseo="Thomas-Edison">Thomas Edison</keyword> helped found General Electric, and a long-lasting light bulb and electric lights were some of the original products. It soon expanded into locomotives and then X-ray machines and electrical appliances. It made radios and then televisions, and the broadcast networks that produced content for them. Its researchers played key roles inventing fibre optic cables, MRI body scanners and countless other technologies. 
 
But GE has prospered by combining a strong organizational culture in which the different arms of the company are operationally independent, but have linkages that benefit them all. The ability to take centralized research and development work and apply it to a wide range of usable products has been a boon; the laser, on which GE researchers did key work, found its way into both medical uses and telecommunications uses, for example. 
 The idea is that though the GE business lines might be different, each is stronger together than any one of them would be on its own. It's easy to see why Google's leadership might want to emulate <keyword id="2997704" type="UNKNOWN" weightage="100" keywordseo="General-Electric-GE">General Electric - GE</keyword> has created products over the last century that have revolutionized daily life and rewarded its shareholders handsomely in the process. 
 
Alphabet may have the same grand ambitions that GE had a century ago to create groundbreaking products. An important question is whether it becomes a centralized innovation machine or a bunch of separate projects that happen to have the same corporate parent but not much else in common. 
 
 
AT&amp;T/Bell Labs 
 Google's leaders want to invest in ambitious science and great innovation. Perhaps no corporate entity has done more of that than Bell Labs, which was the research offshoot of the telecommunications firm AT&amp;T from 1925 to 1996. (It was spun off as <keyword id="176793" type="COMPANY" weightage="100" keywordseo="Lucent-Technologies">Lucent Technologies</keyword> and is now part of <keyword id="16062" type="CITY" weightage="100" keywordseo="alcatel-Lucent">Alcatel-Lucent</keyword>.) 
 Just as GE's history dates to Edison, Bell Labs dates to telephone inventor <keyword id="205225" type="PERSON" weightage="100" keywordseo="Alexander-Graham-Bell">Alexander Graham Bell</keyword>. It played key roles inventing the transistor, the laser, communications satellites, solar cells and several important computer programming languages. It counts eight Nobel Prizes for work done at the labs. 
 
AT&amp;T, as the monopoly telephone service provider in the United States for decades, earned vast sums and funnelled some of the money into Bell Labs. 
 
Some of those Bell Labs innovations paid off in the form of profits that benefited AT&amp;T shareholders. But the connection between dollars spent on research and dollars earned from future products was a tenuous one, especially for work on basic research. 
 
Alphabet could emulate this. In this example, Google's dominant position in search advertising plays the role of the old AT&amp;T phone monopoly. It earns a lot of money, and its managers will siphon off a portion of the profits to fund all sorts of basic research. 
 
 
(Image credits: Indiatimes)

Google Alphabet: Has Google confused investors' interests and innovation?

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Here is what you need to know.The Bank of England kept policy on hold. In an 8 to 1 vote, the Monetary Policy Committee kept its benchmark interest rate at 0.50% and its asset purchase program at 375 billion pounds. Both were expected. The lone vote in favor of a rate hike was somewhat of a surprise as many economists were expecting at least two dissents. The British pound is down 0.5% at 1.5321. German factory orders gained steam. Orders <a href="http://uk.businessinsider.com/german-factories-just-destroyed-expectations-with-an-explosion-in-orders-2015-8">rose by 2% over last month</a>, easily outpacing the 0.2% gain that was expected. The 7.2% gain on a year-over-year basis was the strongest since May 2014, and, according to Claus Vistesen of Pantheon Macroeconomics, propelled the data to its best quarterly advance since May 2011. Germany's 10-year yield is off 4 basis points at 71.2 basis points.Tesla slashed its outlook. The electric automaker announced an adjusted loss of $0.48 per share, beating the $0.59 loss that Wall Street analysts were anticipating. Revenue surged 39.6% to $1.2 billion, which was in-line with expectations. However, the big news was the company <a href="http://www.businessinsider.com/tesla-q2-earnings-august-5-2015-8">cut its delivery outlook</a> to between 50,000 and 55,000 from its previous forecast of 55,000. Tesla still expects Model X deliveries to begin in the late in the third quarter. The stock was down as much as 8% in after-hours trade.Keurig's outlook disappoints. The maker of coffee brewers <a href="http://www.businessinsider.com/keurig-green-mountain-q3-earnings-2015-8">earned $0.80 per share</a>, topping analyst estimates by two cents. Revenue fell 5.2% to $969.5 million, missing the $1.04 billion that was expected. The company's fourth quarter earnings outlook of $0.70 to $0.75 per share was is well below Wall Street estimates. Keurig also announced it was laying off 5% of its workforce. The stock was lower by as much as 26% in after-hours action.Bill Ackman is loading up on Mondelez. Activist investor <a href="http://www.businessinsider.com/wsj-reports-bill-ackman-takes-mondelez-stake-2015-8">Bill Ackman has zeroed in on Mondelez</a> as his next target. According to the Wall Street Journal, the hedge fund manager has amassed a $5.5 billion stake in the snack food company, amounting to a 7.5% stake when taking into account options contracts that he owns.Facebook launched its own streaming feature. <a href="http://www.businessinsider.com/facebook-live-video-mentions-2015-8">"Live" is Facebook's answer to Twitter's Periscope and the standalone service Meerkat</a>. The streaming videos can only be hosted by celebrities and seen on Facebook. "Our goal with Live is to make it easy for them [celebrities] to share authentic moments and original, unique content with their fans on Facebook in real-time," Facebook said.It's more expensive to run a Superbowl commercial. CBS says the cost for a 30-second commercial during the Superbowl is $5 million, making for <a href="http://www.businessinsider.com/super-bowl-50-ad-rates-reach-a-record-5-million-on-cbs-2015-8">an 11% increase versus last year</a>. CBS CEO Les Moonves expressed his excitement about regaining the TV rights for the event saying, "You are going to see it in revenue and in profit in 2016, and we love having it. We're very excited about having it. There's no downside."Stock markets around the world are mostly lower. Australia's ASX (-1.1%) paced the decline in Asia after the country's unemployment rate jumped from 6.1% to 6.3%. In Europe, Britain's FTSE (-0.3%) leads to the downside. S&amp;P 500 futures are unchanged at 2093.75.US economic data is light. Initial and continuing claims are set for release at 8:30 a.m. ET and natural gas inventories will cross the wires at 10:30 a.m. ET. The US 10-year yield is down 1 basis point at 2.26%. Earnings reports continue to flow. Allergan, Duke Energy, Molson Coors Brewing, Mylan Labs and Viacom highlight the names reporting ahead of the opening bell. Bojangles, Con Edison, Post and Zynga are among the companies scheduled to report following the close. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/map-shows-how-religion-spread-around-the-world-2015-6">This animated map shows how religion spread across the world</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="F5aHR4dTob1y4-cHP5qNzXITGcq1vPVW" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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