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Leadership

Google's Greatest Innovation May Be Its Management Practice

Eric Schmidt

The announcement of Eric Schmidt moving aside as Google CEO to let cofounder Larry Page take over is a "teaching moment" for CEOs of all kinds of companies. For a crucial decade in its growth, Google was led not by a single CEO, but by a team that gave it immense strategic and management strength. Google has taught us all a lot about search, maps, apps, and lots of other things, but it may be that the most important and overlooked lesson is in innovation management. Why? Google is a pioneer in what I call B-I Leadership—Bi-Generational, Boomer, Gen-X, Gen-Y management.

We all know by now that we live in an age of sharp technological and cultural bifurcation. There has been so much change so quickly that Boomers are immigrants to a world that Gen X and Yers are born into. The way people in their teens and 20s go about their lives—their platforms, their interactions, their values, their aspirations—are vastly different from their parents and grandparents. In addition, the acceleration and multiplicity of change is producing a world of extraordinary complexity. We know this.

Big established corporations have been struggling with these new developments for over a decade and many have made big strides in changing their business models to accommodate them. Open sourcing, social media platforms, new products and services, even new HR practices for new hires are examples. We know this too.

What has not changed, however, has been business leadership practices. Corporations still hew to the concept of a single, mature CEO leading a vast, global enterprise. It is an outdated, inefficient, and destructive mode of leadership. CEOs have simply not delivered value over the past decade to shareholders, employees, or the nation as a whole. Let's look at a few key measures of the past 10 years: the S&P 500 is no higher; middle class income has stagnated; and the trade deficit has soared as the national debt exploded. CEO compensation is the single financial variable that has boomed over the last 20 years. Clearly, this generation of CEOs needs help.

Google can provide some managerial guidance. Eric Schmidt was brought in a decade ago to provide "adult supervision" to the young cofounders Larry Page and Sergey Brin. He had long experience at Sun Microsystems and other companies in the tech space as CEO, spoke the tech language and provided the big business experience the techie-centric founders didn't have. It was a brilliant bi-generational leadership model which worked for a crucial period of scaling and evolution for the startup Google. Indeed, bi-generational management is the norm for most successful high tech startups in the U.S.

Established corporations should consider a variation on this startup model—create a bi-generational CEO team that integrates Gen Xers younger Gen Y with older Boomer managers. The benefits could be significant. They include a much deeper understanding of the values and aspirations of the youngest and largest demographic cohort in the U.S. (not to mention India, Brazil, etc.); better and quicker shifting of business practices to social media platforms; and faster evolution of internal corporate compensation, work organization, and promotion to "fit" Gen Y life. For example, the partner model of service companies doesn't work for most Gen Yers. The hierarchy that still exists in most businesses won't generate their best work. And the closed, centralized technology systems inside big corporations are anathema to the open source generation.

Bringing Gen Yers into top management teams may provide the knowledge and energy to speed up the renewal of American business leadership and American business. For startups, we already bring in "adult supervision" to complement the skills and knowledge of entrepreneurial "kid techies." For the thousands of big companies lumbering along the 21st century, it's time to bring the "little fockers" into shared power. At the moment, the world is just too complex for Boomer CEOs. We need B-Y team leadership. We need to follow Google.

Bruce Nussbaum blogs, tweets, and writes on innovation, design thinking, and creativity. The former assistant managing editor for BusinessWeek is a Professor of Innovation and Design at Parsons The New School of Design. He is founder of the Innovation & Design online channel; founder of IN: Inside Innovation, a quarterly innovation supplement.