Searching for Meaning in Google’s Leadership Changes

There’s been an almost comically wide range of reactions on the Web to the word today from Google CEO Eric Schmidt that he’ll become executive chairman effective April 4, handing the reins of the search and advertising giant back to co-founder and former CEO Larry Page, 38.

Over at Mashable, they were “reeling” from the “bombshell announcement.” Business Insider was quite a bit more blasé, saying “It won’t necessarily be much of a change.”

One thing is for sure: the commentariat can’t resist a good management shakeup. Though I’m not sure it counts as a shakeup when everything seems to be happening by mutual agreement—Schmidt wrote at Google’s blog that he, Page, and Google co-founder Sergey Brin “have been talking for a long time” about how to streamline the company’s decisionmaking, and jointly decided over the holidays to pull the trigger on the changes announced today.

Under the new structure, Schmidt will focus on government relations and other external outreach, Page will lead day-to-day operations including product development and technology strategy, and Brin, who’s long shared the co-president title with Page, will revert to co-founder, with responsibility for new products and “strategic projects.” In other words, the same three people will be running Google, but they’ll all have different titles on their business cards.

Considering that nobody is actually going away—Google is not, like rival Apple, losing its visionary leader to an indefinite medical leave of absence—scribes have been spilling a surprising amount of digital ink today about the meaning of the reorganization. The New York Times sees it as an effort to counter competition from younger, nimbler startups like Facebook and get Google “back to its startup roots.” GigaOm, meanwhile, speculates that the company is trying to free up Schmidt to deal full-time with regulatory hassles like a Department of Justice investigation into Google’s proposed acquisition of travel search company ITA and Congressional examination of the company’s privacy practices.

Certainly, nobody’s complaining about Google’s financial performance under Schmidt. The company announced stellar quarterly results today, reporting sales of $6.37 billion in the final three months of 2010, up 28 percent from the 2009 figures and handily beating Wall Street’s expectations. PaidContent published a short-and-sweet post that tells you everything you really need to know about Schmidt’s tenure, contrasting the key figures at the beginning and ending of his term as CEO. Sales then: $86.4 million. Now: $29.3 billion. Income then: $6.99 million. Now: $8.5 billion. Stock price then (at Google’s 2004 IPO): $85. Now: $626. Employees then: 284. Now: More than 24,000.

Schmidt has already shared handsomely in Google’s bounty—his Google stock holdings make him a billionaire about six times over—and he will continue to do so. The LA Times, which sifted through a regulatory document filed alongside today’s quarterly earnings report, picked up on the fact that Schmidt plans to sell 534,000 of his Google shares over the next year, a cash-out that would total $335 million at today’s closing price.

Personally, I think Salon’s Dan Gillmor came closest to the truth today, writing that the meaning of the management changes is “unclear” and that there’s likely an “as-yet-untold back story to today’s moves.” Silicon Valley companies have a mixed record when it comes to welcoming back old CEOs, Gillmor points out. Steve Jobs’ return to Apple’s leadership in 1997 was the key turning point in the company’s fortunes, but Jerry Yang’s return to the CEO slot at Yahoo in 2007 didn’t do much to arrest the company’s downward slide.

But to me, Page’s return as Google CEO seems less momentous and less fraught with peril, since the Page-Brin-Schmidt triumverate remains intact. As Schmidt wrote today, “we will continue to discuss the big decisions among the three of us.”  Those aren’t the signs of a shakeup.

Update, 1/21/11: Ken Auletta, writing for the New Yorker’s News Desk blog presents a different view. Schmidt “lost some energy” after failing to win over Page and Brin on Google’s change in censorship policies in China, Auletta says, and couldn’t get it back.

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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4 responses to “Searching for Meaning in Google’s Leadership Changes”

  1. I think it is better Google’s financial performance under Schmidt, than on Google’s Leadership Changes Wade Roush 1/20/11.