To much fanfare, in March 2019, Google announced Stadia, it’s cross-platform cloud gaming service, and the development of its own game studio to produce exclusive titles. Fast forward two years, Google announced last month that it was closing down the studio, laying off 150 game developers.
Last week Wired magazine publisheda piece telling the story of the layoffs, and the failure of the game studio. Whilst the article is interesting as a take on Google’s gaming strategy, for those looking (yes, that’s us management nerds) it also contains various insights for managers on the difficulties of integrating different cultures, communicating layoffs, and managing in a downturn.
Although Stadia was a strategic failure, various sources told Wired about some of the ways the company struggled to integrate game developers into Google’s ways of working. It’s a timely reminder if you’re a manager trying to hire a different profile of person that you may have to change the way you do things.
You may have heard about the communications myth of the shit sandwich. This is the idea that you should wrap bad news in bits of good news in order to make it easier to swallow. This has variously been found to be, well, total shit. Employees would far rather you were just honest with them. Which makes the way the layoffs were announced all the more extraordinary.
On 27 January, Phil Harrison, head of the division, had emailed Stadia employees claiming:
“Great progress building a diverse and talented team and establishing a strong line up of Stadia exclusive games.”
Yet only five days later on 1 February he was announcing the job losses.
When he was confronted by the frustration and confusion of Stadia employees in a call on 4 February, Harrison admitted that he knew about the impending layoffs when he sent his original email. It’s hard to understand why on earth he sent it. Was the dopamine shot of team goodwill really worth all the pain and confusion to come? We won’t sugarcoat it Phil, this seems to have been a shocking failure of leadership.
The initial reporting suggests these events will go down as a strategic failure. Google committed to producing capital-intensive, complex content in a sector it didn’t fully understand, and decided to cut its losses when the going got tough. In that strategic context, some layoffs should be expected. If you’re a manager in that team, what can you really do?
Your options are limited, but with some planning and perception hopefully you can at least manage expectations. When downturns hit, companies often retrench to core, profitable business lines. Managing a team in a new venture, even within a corporate as well-capitalised as Google, always comes with some element of this risk. In April 2020, that’s exactly what happened. Google instituted a hiring freeze which crippled Stadia, but kept hiring elsewhere “in a small number of strategic areas”.
If you manage a team that’s in a non-core area, particularly in a downturn, you should consider redoubling your efforts to know your company and understand the impact of wider strategic decisions on your team. Even if you can’t affect the direction, you can hopefully learn any relevant news early, manage expectations and avoid any emails like Paul Harrison’s.