The press made a great deal of the change in command at the top of Google (NASDAQ: GOOG). It is hardly a change at all.
The new CEO of the giant search company is Larry Page, who was the firm’s original chief executive and has acted as co-president with Google’s other founder Sergey Brin. Eric Schmidt has been Google’s CEO for a decade. He was brought in so that Google could say it had a seasoned manager at the head of the company.
The decision-making process at the top of Google has been characterized as one which involves all three men. It would appear that Page’s elevation will change that, but probably not.
Huge American businesses have often been run best when they are run by a small group of people with complimentary talents. While the Google management will get new titles and Page will supposedly take over daily operations, the change means very little from a practical standpoint.
Wall St. firms are often operated by more than one person. Goldman Sachs Group (NYSE: GS) has a tradition of co-CEOs. Goldman has been remarkably successful over the decades no matter what its current reputation may be.
Microsoft’s (NASDAQ: MSFT) management was basically a two-man operation in the years just before Bill Gates stepped down at CEO. Steve Ballmer, who took the chief executive’s role, operated at Gate’s trusted partner. Ballmer was one of the earliest employees of the world’s largest software company. His specialty was marketing. Gates was the software genius. Microsoft would not have become Microsoft without the role that each played to compliment the other.
The best example of a CEO partnership in the last few decades is probably Capital Cities/ABC which was the most successful American media company of the 1980s and 1990s. The corporation was sold to Walt Disney (NYSE: DIS) after an unprecedented run in profits and stock price. The firm was run by Dan Burke and Tom Murphy. They took turns as CEO. Each was so important to the enterprise that when Warren Buffett took a large share in the company to finance a takeover of ABC, he stipulated that management have his proxy as long as Burke or Murphy ran the company. Oddly, Burke’s son Steve has been president of Comcast (NASDAQ: CMCSA) and has been a co-equal to Brian Roberts, CEO and son of the cable company’s founder.
Schmidt will now act as an advisor to Page at Google. Page and Brin have had a certain amount of power over Schmidt all along. They are not only founders of Google but each is also a major shareholder.
The titles have changed at Google, but the management team’s role hardly has.
Douglas A. McIntyre