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I believe that Googles problem, as with most other large aging organizations, is overflowing middle management.

It remains to see if they will admit and fix it or just screw over the lower layers.

Its extremely hard to identify bad middle management, as well as do anything about it. Unlike upper management, which is pretty mercenary and out for itself, and can be fired albeit with large golden parachutes, bad middle management is pretty opaque to top management. It is hard, by design, to figure out what outcome is a particular middle manager having on the company bottom or top line. There is vicious politics, and trying to trim it down can actually do more damage, at least in the short term, than leaving it in.

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