The power of technology first dawned on Jason Pellegrino in the dusty backstreets of rural South Africa. The wide-eyed executive for snack food giant PepsiCo had been dispatched to some of the country’s poorest regions to find out why sales had slumped. “We found something extraordinary and it blew my mind,” he says.
Pellegrino and his team realised the decline in food purchases correlated with the rollout of South Africa’s first mobile phone network by telecommunications company Vodacom. Instead of the packets of chips and soft drink cans that had been there on his last visit, the stalls and makeshift retail outlets in regional towns were filled with pre-paid SIM cards and mobile phones.
“In areas where there were constrained budgets people were choosing communication and technology over food. That was incredible: the power of technology, the power of mobile devices particularly hit me.
“It flipped almost overnight. The desire to connect and communicate was so strong. That’s why to this day I’m so excited about the future of what mobile devices will do for users, for business, for our society in Australia, in Asia and globally.”
That was early 2000 and there was no Twitter, no Facebook and no iPhone; Google had only just outgrown its original office in a Silicon Valley garage. Pellegrino’s epiphany put him on a career path that led him to one of the world’s most powerful companies.
Pellegrino has been Google Australia and New Zealand’s managing director since July, replacing his high-profile predecessor Maile Carnegie in one of the most influential technology jobs in the country. In his first interview since his appointment was announced, Pellegrino talked to BOSS about his journey from accountant to “techie” and outlined his ambitious strategy for the US technology giant’s operations in Australia.
Low-profile
Pellegrino is cut from a different cloth to American-born Carnegie, who has taken up a challenging new role as head of digital banking at ANZ. The son of Italian immigrants who grew up in Wollongong, he is relatively low-profile compared to Carnegie, although his grey suit jumps out among the legions of engineers and software designers in T-shirts and sneakers riding scooters who populate Google’s Sydney headquarters.
Carnegie cleverly positioned Google in Australia as an agent for innovation.
“My key focus is bringing the best of Google to Australian businesses and helping them to make the most of these tools,” says Pellegrino, citing Deloitte research which shows that 91 per cent of Australian businesses are not making full use of digital tools to help them grow their business. “This is not about building new products.”
Google Australia is reported to be moving to the new innovation precinct being built at the former White Bay power station on the city’s inner west harbour foreshore. Pellegrino says the move will be a “major investment”.
Right decision
Pellegrino, 40, started his career as an accountant at KPMG but he says he has been a “gadget tech guy” since his father, who was an engineer, brought home an IBM computer and pushed him into learning basic programming. Pellegrino also discovered he had an appetite for strategy and was drawn to Google, almost by accident, eight years ago.
“You see a lot of these superficial elements at Google,” he says. “You walk in and it’s a wonderful environment and there’s the food and the scooters to move within office buildings. But what really has grown on me over time are elements of the culture that make this a wonderful place to work.”
Because of its size and dominance, Google faces the risk of being disrupted by younger businesses. Parent company Alphabet may have a market capitalisation of $US560 billion but it is paranoid about maintaining a high rate of innovation.
“You might look at Google and think you don’t have to worry about innovation, you’ve got it covered. I can tell you, when we talk to our staff one of the biggest concerns raised is that we’re not innovative enough,” says Pellegrino.
Former Google boss Carnegie gave some rare insights into the way Google manages its workforce to keep its edge, at the Australian Financial ReviewInnovation Summit in August. “At the core of how Google manages its innovation engine is this absolute obsessive focus about the culture and optimising that engine and this absolute belief it is all fungible; it can all be changed and moved,” Carnegie says.
“[This obsession is based on] the belief that all organisations that have experienced success are at risk of losing their innovation edge. As soon as you have something to protect your mind starts going there, if you are not very careful, instead of continuing to imagine the future.
“People focus on the employee freedom aspect of the Google culture,” she says, referring to the 20 per cent time that allows staff to work on their own projects one day out of every five. “But it really is just the veneer.”
That freedom has a “tonne of constraints” which include quarterly evaluations of an employee’s work-plan against the company’s overall goals, she says. “I have never been involved with an organisation that has such incredibly disciplined and robust work-plan discussions on a quarterly basis to make sure that the work that everyone is doing is actually in the right direction and is going to deliver on the mission of the organisation,” she says.
“At Google, if you deliver over about two-thirds of your work-plan, you haven’t set lofty enough goals, you don’t have enough transformative stuff in your work-plan.” The embrace of failure and taking risks is baked right into that, she says.
The human resources department is called People Operations, because they treat it like an engineering department, says Carnegie. It generates an extraordinary amount of data to understand how to optimise the culture.
“They literally have done tests on where to put unhealthy food in the micro-kitchens to try to encourage people to eat healthier options and they have that data on what shelf to put that food on.”
Consultative
Pellegrino’s affable collaborative style also gels with the culture that brings together diverse teams and gives voice to the most junior employees. “He’s extremely consultative at all levels, whether he’s talking to an internal or a client audience, a vital skill in bringing teams with you on any journey,” says Karen Stocks, who was Pellegrino’s first boss at Google and who ran Twitter Australia until recently.
Pellegrino says he often reassures staff that although they are not working on the high-profile, groundbreaking projects such as driverless cars, it does not mean they are not contributing.
“If they don’t like the pace of innovation within Google they can go straight to the top and tell Sundar [Pichai, CEO], or [co-founders] Larry [Page] and Sergey [Brin]. Every week we have an all-hands meeting, connected by live video conference, and you can ask a question if you’re in the room or through an online system,” says Pellegrino.
He says to address internal concerns that Google isn’t innovative enough “we are moving away from talking about the need to innovate, towards highlighting how we are innovating locally and discussing what else we can do”.
Failing is OK
Google does not hide the fact it has had a string of product failures such as Google Glass and Google Plus among the huge successes such as Google Maps, Google Photos, Gmail and the search engine that made the company the world’s biggest advertising business.
“We fail frequently,” Pellegrino says. “Hopefully they are micro fails, not catastrophic fails, but micro fails are incredibly important. I’ve been involved in launching products that haven’t worked but we learn and we change and we optimise.”
He says the most challenging time can be when an idea emerges from initiatives such as 20 per cent time. “What happens next when one of those ideas starts to blossom and bear fruit. Have we got the risk tolerance to start pouring fuel on the fire to move that organisation into the next phase?”
One of those breakthroughs was Google Maps, which was developed in Australia and is one of the core areas of Google’s investments in the region. Most of Maps’ 600 engineers are based here. He says Google Maps is evolving from being a driving-focused tool to helping people navigate through buildings.
He says another potential growth area for Google is in content production, something Australians excel at. Economists at AlphaBeta estimate Google pays Australian creators such as broadcasters and publishers $60 million per annum to create new content, which it promotes on platforms such as YouTube and Google News. “Australia punches well above its weight in terms of movie production, television production and we have some incredible creative talent. It’s really about creating an ecosystem that flourishes.”
The company’s interest in White Bay sends a clear signal that Google is serious about expanding in Australia. Pellegrino will not comment on White Bay because the negotiations are ongoing but says part of his role is to advocate for continued investment in the Australian market.
Values diversity
Pellegrino inherited a sense of curiosity and a love of problem-solving from his parents, who migrated to Australia from Italy in the 1960s. His mother was one of the first female students at the University of Wollongong and went on to become a high school maths teacher. Pellegrino’s wife, Helen, is also a teacher. His father was a computer science engineer for BHP Billiton who later moved into accounting.
“I was deeply ambitious,” Pellegrino says. “I ran straight out of the school gate into a job.” He was working for KMPG while studying at the University of Wollongong part-time. “Wollongong is a melting pot of different cultures and backgrounds and seeing that happen, it sort of built my knowledge and my appreciation of diversity.”
Those who work with him say this is one of his strengths, as well as an ability to listen to even the most junior person in the office.
“Jason values diversity in the teams and showcases it in his actions. He is a great listener,” says Karim Temsamani, the vice-president of Google APAC and Pellegrino’s boss.
His family background helped Pellegrino when he moved to PepsiCo to work in senior roles building businesses across 20 different countries in the Middle East and Africa. He then joined strategy consultant LEK and later Dakota, before joining Google as head of sales and strategy in 2008.
Before his promotion to run Google Australia’s sales and operations, he led Google’s business strategy across all Asia-Pacific markets and he is keen to help Australian companies break into the region through digital web technologies, which help them identify their customers and build businesses.
“We can play a role at helping Australia move from the post mining boom economy to look at the next boom,” Pellegrino says. SEEK, REA, HotelsCombined, Xero, Blackmores and Fonterra use Google products to grow in Asia.
Google’s role in the innovation debate, he says, is to work with governments and large companies to encourage more investment in technology in Australia. Pellegrino lives in Malcolm Turnbull’s Sydney electorate and has met the Prime Minister several times.
“The biggest thing that I can do that’s within my wheelhouse is ensure that we continue to invest here, we continue to grow here and that we can actually help those partners,” he says.
But Google is under global fire for the small amount of tax it pays: an issue that was highlighted in a decision in August by the European Union to order Apple to back pay billions of dollars in taxes to Ireland.
Pellegrino’s predecessor, Carnegie, was called to front a Senate committee in 2015 to defend its small tax payments. Google paid $16 million to the Australian Tax Office in 2015, up from $11.7 million the previous year. Google Australia’s net profit was $47 million for the year to December 2015 on revenues of $502 million, comprising commission payments received from Google Asia Pacific. However, Google’s gross advertising sales revenue in Australia is believed to be around $2 billion annually.
The company is expected to pay more tax this year following the government’s tax avoidance crackdown. Pellegrino says he is “very empathetic to that discussion”.
“It’s a discussion that has to happen and has to happen globally. The solution really needs to be at the Organisation for Economic Co-operation and Development level. The solution needs to be an agreement amongst governments and jurisdictions globally, because the actions of an individual country have shown this actually creates more complexity.
“It’s a topic everywhere because what it really fundamentally is about, is the changing nature of commerce and the changing nature of society. There are some fundamental questions and some fundamental answers that need to be provided globally.”
Educational power
When he’s not working or travelling, Pellegrino’s young family takes up most of his time. He jokes about having a second job as a taxi driver ferrying around his four children aged six to 12.
Pellegrino says the educational power of technology was reinforced recently when his son had to wear a tie for the first time when he started at a new school. Pellegrino was wracked with guilt as he had returned on a 6am flight from overseas and raced home because he knew his son didn’t know how to tie a tie. When he burst through the door, his son was already wearing his tie.
“He had woken up in the morning and his instinct was to turn on YouTube and watch a video of how to tie a tie and it was perfect.”
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