When Google CEO Eric Schmidt announced Thursday that he’d soon be replaced by co-founder and friend Larry Page, analysts on the earnings call were first to grill him on what the move was really all about. The first question jumped right at the issue: Can you speak about the company’s investments in New York real estate? Then another question dove into Google’s role in social. Then another humdinger asked how advertising results were driving revenue.
Are we on the same earnings call? Didn’t they just hear that Page will be succeeding Schmidt as chief executive officer? What’s the reason for this change?
To most, it seems, the shakeup is far from jarring. Schmidt will remain at Google as executive chairman. Along with Page and Sergey Brin, the three have handled decision-making at Google for the past decade. And, heck, Page has already been CEO of Google, during the company’s earliest years.
The replacement is more about streamlining operations at Google. “Larry, Sergey, and I spent a lot of time talking about how to run everything,” Schmidt said during the call. “After a long series of conversations, we decided to make some changes in the way we are structured and the way we operate things. Historically, we’ve always been running the decisions together, and ultimately, it adds delay.”
This is exactly the opposite of how Page described their respective roles in a 2004 SEC filing, when such collaboration helped “facilitate timely decisions” rather than cause “delay”:
We run Google as a triumvirate. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way. To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious. For important decisions, we discuss the issue with a larger team appropriate to the task. Differences are resolved through discussion and analysis and by reaching consensus. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making responsibility to one of us.
So will these changes end up changing Google? Not beyond how it operates: With all the discussion and analysis and consensus-reaching and healthy debate and decision-delegation, it’s no surprise the “triumvirate” needed streamlining. Page will now focus on internal issues, freeing up Schmidt to focus on external issues like “government communication,” as he said, from the ITA acquisition to search neutrality.
This announcement certainly made headlines–but it’s not cause for concern. Or, in other words, this CEO shakeup is a far cry from being the equivalent of Tim Cook replacing Steve Jobs.