Big Changes at Google

January 21, 2011
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    Google has made a very significant announcement in one of the biggest management shake-ups it has ever faced. The leadership of the company will be transferred to one of its co-founders in an effort to rediscover the ‘spark’ that gave it the means to flourish and become the biggest search engine in the world.

    There is no doubt about it – Google has grown up. It has become one of the biggest companies in Silicon Valley. Like any big company, it has arguably lost some of its entrepreneurial culture and, with it, become a slower-moving bureaucracy. Industry insiders are saying it has lost its agility and ability to innovate on the scale it was once famous for.

    The company announced that Larry Page, its 38-year-old co-founder, will take the reins from industry veteran Eric Schmidt.

    Mr. Schmidt, 55, will remain executive chairman of the company, which had a market value of only $27 billion upon going public in 2004, and is now worth over $200 billion today.

    “One of the primary goals I have is to get Google to be a big company that has the nimbleness and soul and passion and speed of a start-up,” said Mr. Page in a telephone interview on Thursday. He will begin his new post in April.

    The shake-up comes at a time of major upheaval in Silicon Valley. The company, and the search industry, face challenges on several fronts.

    Google remains immensely powerful and successful — as demonstrated by the stellar quarterly financial results it reported Thursday.

    Facebook’s rapid rise to stardom has exposed Google’s failures in crucial areas like social networking, and threatens its vast share of the online advertising market. Meanwhile, Google has enjoyed considerable success in other areas like mobile and display advertising, but at the same time has struggled to expand its business in other areas like television.

    According to employees speaking to us on conditions of anonymity, there is an unspoken fear within Google itself. They speak of an idea called “path dependency,” and its negative effects on any organizations culture. Google has grown to become a massive company, and with it, its bureaucracy has grown too. They say that it is much harder to find passion and that many of its brightest minds have competed relentlessly, and internally, to see their visions realized. Intead of fostering innovation and new ideas, many are instructed to just improve the products already released, to “optimize the user experience.” This unspoken fear is a very real possibility. Some argue that Google could become the new Microsoft. Currently, Google has 24,400 employees, and is no longer considered by many of the brightest and best engineers in Silicon Valley to be the most desirable place to work in the Valley. Many of these bright minds are pursuing passions closer to their hearts, with a new generation of start-ups currently set to begin.

    In recent years, Google has lost numerous high profile minds including Sheryl Sandberg (Chief Operating officer at Facebook) to competitors Mr. Page led the company in its early days but relinquished that role in 2001, when it was still private. In tapping him to return to the post, Google becomes one of the few major companies in the Valley to be put under the control of a founder after being run for so long by a professional manager. To some, the move signaled a kind of coming-of-age for Mr. Page and Mr. Brin, who were in their late 20s when Mr. Schmidt took over. Even Mr. Schmidt characterized it as a moment for the training wheels to come off.

    On his Twitter account, Mr. Schmidt wrote: “Day-to-day adult supervision is no longer needed.” Later, on a conference call with analysts after Thursday’s earnings report, he said, “I believe Larry is ready,” adding, “It’s time for him to have a shot at running this.”

    In the interview, Mr. Page also explained the move as an effort to streamline, saying the three had selected him as the top decision-maker because of “the pace of decision-making and the scale of the company.” Mr. Brin, who joined Mr. Page and Mr. Schmidt in the interview, said the three-way process confused employees.

    “We wanted to make it clear to all the executives and the managers who report to us where they should send an e-mail,” he said.

    Mr. Page and Mr. Schmidt said the decision was mutual. “I don’t think there’s another person in the universe that could have done as good a job as Eric has done in the company,” Mr. Page said.

    The relationship between the founders and Mr. Schmidt was rocky during its early years, as the founders frequently undercut Mr. Schmidt’s decisions. Although they worked well together for the last several years, there remained recurring strains.

    Ken Auletta, the author of “Googled: The End of the World As We Know It,” said in an interview that while Mr. Schmidt may simply have been ready for a change after 10 years, he may have received some encouragement to step aside.

    “I don’t think he was pushed aside, but he may have been nudged,” he said.

    What do you think of these changes? Do you think Google has lost its ability to innovate? It’s hard to imagine it being any more successful, but clearly, this is what they are going for. Google has changed the way we search and interact with information. Chances are, you use their Search, Email, and YouTube sites everyday. What else do you want to see from Google?

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