On July 19, 2001, about a dozen early employees met to mull over the founders' directive [to elucidate Google's core values] ... The meeting soon became cluttered with the kind of easy and safe corporate clichés that everyone can support, but that carry little impact: Treat Everyone with Respect, for example, or Be on Time for Meetings.
The engineers in the room were rolling their eyes. [Amit] Patel recalls: "Some of us were very anticorporate, and we didn't like the idea of all these specific rules. And engineers in general like efficiency — there had to be a way to say all these things in one statement, as opposed to being so specific."
That's when Paul Buchheit, another engineer in the group, blurted out what would become the most important three words in Google's corporate history. "Paul said, 'All of these things can be covered by just saying, Don't Be Evil,'" Patel recalls. "And it just kind of stuck."
... In the months after the meeting, Patel scribbled "Don't Be Evil" in the corner of every whiteboard in the company... The message spread, and it was embraced, especially by Page and Brin... "I think it's much better than Be Good or something," Page jokes. "When you are making decisions, it causes you to think. I think that's good."
A Google poster that explained "Don't be evil". From Google - Behind the Screen
Paul Buchheit, Gmail's first engineer, who now works at a start-up called FriendFeed, remembers that user's trust was an important decision factor.
At the time that the phrase was created, paid inclusion was a big issue, and we generally felt that it was rather evil due to its deceptive nature. In general, anything that involves deceiving your users is likely to be evil.
I think the most important effect of "Don't be evil" is that it gives everyone license to question decisions instead of simply following orders. I expect that the result is therefore reflected in thousands of small decisions and debates rather than a few large, highly visible issues. The other effect of course is that Google is held to a higher standard.
It's difficult to keep this high standard when you're a big corporation that needs to stay competitive. The difference between Google and other companies is that you'll never see news articles that question if other companies did something evil.
Eric Schmidt sees "Don't be evil" as a starting point for interesting conversations:
One day, very early on, I was in a meeting where an engineer said, "That would be evil." It was as if he'd said there was a murderer in the room. The whole conversation stopped, but then people challenged his assumptions. This had to do with how we would link our advertising system into search. We ultimately decided not to do what was proposed, because it was evil. That kind of story is repeated every hour now with thousands of people. Think of "Don't be evil" as an organizing principle about values. You and I may disagree on the definition of what is evil, but at least it gives us a way to have a very healthy debate.
To sum up,
Don't be evil =
"When you are making decisions, it causes you to think." (Larry Page)
"The most important effect of Don't be evil is that it gives everyone license to question decisions instead of simply following orders." (Paul Buchheit)
"Think of Don't be evil as an organizing principle about values." (Eric Schmidt)