Yesterday Google announced that the current CEO, Eric Schmidt, who ran the company for more than 10 years will step down. The co-founder of Google, Larry Page will take over from him. It is interesting to see a giant like Google shaking it’s leadership even after consistent stellar performance on the balance sheet. At the face of it, it might look as if all this was uncalled for, especially when the company is doing so well on the stock market, on its revenues as well as net profits.
That’s where new age technology companies like Google differ. Balance sheets are the last thing to worry for them.
Google is at a stage where Microsoft was at one point in time. It had demonstrated phenomenal growth and leadership in technology innovation and a mass reach that seemed to be unparalleled in the history of computing. The king of Desktop software (Windows and Office) was on a dream run for almost decade with more than 90% share of whatever market it entered. However, things changed with the fast changing winds of early 2000s and it could not keep pace with the rapid innovation driven by the internet. In spite of an early advantage that it had with the acquisition of Hotmail, Microsoft has been by and large a laggard in bringing in internet based innovations. A small start-up from California like Google went on to become giant and has already started challenging Microsoft on its own turf of Operating Systems and Office Applications. While MS still continues to enjoy market leadership position in Desktop software, it is no more perceived as a Technology Innovation Leader.
Google has potentially similar problem in-front of it.
The way MS missed the internet innovation bus, Google is threatened by the Social Media trend. While the Social Media has reached billions across the world, Google has been rather unsuccessful in creating a space for itself here. Orkut was once popular in India and Brazil, but failed to have a global reach. Buzz was a disaster. Google Wave started with much fan fare but had to be shut down within 18 months for very low adoption. On the other hand, the world saw the rise and rise of Twitter and Facebook. Facebook, with an estimated revenue of 1 Billion USD last year, already has a valuation of 50 Billion USD. With a user base of more than 500 million and growing, it is the most popular internet app in the world. Two months back the overall time spent on Facebook surpassed the total time spent on all Google properties put together. It has already become a household name, just like Google.
Google can not just sit and watch this happen.
With the size and complexity of its business, Google has somewhere hit the Big Company Syndrome, making it slow and less friendly to innovation. The change at the top, is precisely to address this problem. Under Page’s leadership, Google hopes to bring back the pace, speed and nimbleness of the young companies like Facebook while still being a large financial giant.
The Adult Supervision that Eric Schmidt brought to the then young and budding Google, seems to have become a bottleneck, just 10 yrs down the line. Google has been proactive to fix this. Unlike Microsoft.