Have we inadvertently become trend-setters?
Our previous post summarised the story of Apple in three acts. Act One: visionary but young founder of successful high-tech company feels obliged to bring in experienced CEO to manage growing business. Act Two: successful high-tech business loses its vision in new corporatist culture. Act Three: visionary but now not-quite-so-young founder returns and takes over as CEO.
It was no sooner posted than exactly the same thing happened at Google.
In 2001, Google co-founder Larry Page, then aged 27, head hunted the experienced Eric Schmidt from outside the company to serve as CEO. Schmidt was brought in to provide – in his own words – “day-to-day adult supervision”.
This he did – but at a price. Although Google increased its market share under Schmidt, so that the verb “to google” has practically replaced the verb “to search” when applied to the internet, this success is built on sand. Customer dissatisfaction leaves room for a strong competitor and the company faces the danger of anti-trust litigation of the sort that brought an end to Microsoft’s drive for world domination. At the same time, poor decision-making over the controversial Street View and censorship in China has undermined public goodwill.
So it is no surprise that Schmidt has now been eased out as CEO – although he remains Chairman of the Board. What is interesting is that his replacement as CEO is none other than that same Larry Page who hired him.
Like Apple’s Steve Jobs, Page has developed wider business experience during the intervening period – most notably, in Page’s case, through his work on alternative energy. Unlike Jobs, Page has remained closely involved with his original company.
Perhaps we are seeing the beginning of a new law of business succession. The classic paradigm is that a visionary entrepreneur founds a company and then hands it on to more experienced professional managers who take it to the next level.
The new model may be that the experienced professional managers are not the heirs to the visionary entrepreneur but the trustees or guardians of his estate. In a manner somewhat similar to the way a child is treated if he inherits something under a will, the young entrepreneur is not in full control of the successful business he established until he has built up the experience to manage it himself. Then the “day-to-day adult supervision” becomes unnecessary.