How Things Will Shake Out for the Rest of Google’s Management Team

There's been lots of speculation about who's in and who's out at Google under Larry Page. I weigh in with my views.

Read my full post at Forbes.

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Why Nikesh Arora Will Be Next to Go at Google

Now that Jonathan Rosenberg has departed Google, watch for Larry Page to change out another senior executive. Nikesh Arora is probably going to be next.

Read my full post at Forbes.

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Video: The Power Behind Google's Throne: Shona Brown

Contributor Eric Jackson says watch for Google (GOOG) SVP of Business Operations, Shona Brown, to wield some major influence now that Larry Page is taking over as CEO from Eric Schmidt. Brown co-authored the 1998 book "Competing on the Edge" about how the ideal tech companies need a balance of entrepreneurial zeal with proper organizational structure.

Wed 01/26/11 08:30 AM EST -- Eric Jackson

Stocks in this video: GOOG

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The Power Behind Google's Throne

By Eric Jackson, Senior Contributor01/26/11 - 06:00 AM EST

NEW YORK (TheStreet) - When I was a struggling Ph.D. student 10 years ago or so, my advisor was good friends with a revered professor of strategy and organization from Stanford: Kathy Eisenhardt.

Although Kathy's written countless academic articles on the subject and strategy and competing in ultra-fast industries, she's not a professor in the Business School at Stanford, but in the Department of Industrial Engineering and Engineering Management.

In 1998, she gave a talk at Columbia about a new book she co-authored with her doctoral student at the time. The book was called Competing on the Edge: Strategy as Structured Chaos. The co-author was Shona Brown. Today, Brown is the senior vice president of business operations atGoogle(GOOG_). And with last week's news that Larry Page would talk over running Google in April from Eric Schmidt, Shona Brown's importance at Google just increased significantly.

So, who is Shona Brown? Like most people at Google, she's brilliant by normal standards. The Canadian, who majored in computer science at college, was selected as a Rhodes Scholar. She decided that she wanted to work with Kathy Eisenhardt at Stanford in the mid-1990s and graduated with a Ph.D. in strategy and organization from the Engineering School.

At Stanford, with Einsenhardt who was well-known and well-regarded by tech companies in the Valley, she got involved in many interesting side consulting engagements. Instead of opting for the academic path after graduation, she decided to pursue consulting. She went on to be a management consultant at McKinsey & Company in Toronto, where she worked with Patrick Pichette, who -- like her -- was also a Rhodes Scholar and was working at McKinsey at the time Brown joined. He would later go on to become an executive at Canada's largest phonecompany, Bell Canada.

At McKinsey, Brown began working with Google and its senior executives and founders on the ideas discussed in her book. To boil the book down, the co-authors discuss how companies, especially tech companies, seem to do better when they strike the right balance between organizational structure (clear roles/processes) and entrepreneurial dynamism (e.g., reacting to some instant news in the market or environment instead of being too bureaucratic to react).

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Google's CEO Switch Raises Many Questions

By Eric Jackson
RealMoney Contributor
1/21/2011 11:30 AM EST
Click here for more stories by Eric Jackson

Last night's surprise announcement that Google (GOOG - commentary - Trade Now) Co-Founder Larry Page would take the CEO post from Eric Schmidt on April 1 caught everyone off guard.

A few years ago, Schmidt had talked about the "troika" of him, Page and Sergey Brin working together for the next 20 years. And the market seemed to like that because Google had been extremely successful up to that point. The thinking was, if it ain't broke, don't fix it.

The stock is up today because of Google's strong earnings last night, but I believe there could be trouble ahead for the company based on this move.

Google used to be thought of as unassailable in ads. It perfected AdWords, which revolutionized the media world over the last 10 years. However, it has had a hard time leveraging that success into other businesses.

There are some areas of real promise. Google is starting to fire on all cylinders in the display segment, where it used to trail Yahoo (YHOO) badly. This improvement is also helping Google to take advantage of the YouTube acquisition. YouTube still dominates the user-generated space and Google hopes to expand its uses to include professionally streamed content as well. Meantime, Android phones are helping ensure that Google will play a central role in the mobile world. Just yesterday, the company said it is now activating 300,000 Android devices a day.

But Google faces a huge challenge from Apple (AAPL - commentary - Trade Now) in the mobile market. Steve Jobs recently said that users interact with ads very differently on mobile devices than on computers. If true, this could greatly hurt the cash cow AdWords business.

Facebook has also made Google's attempts to build up a social networking business (remember Wave?) look silly.

Despite the Google troika's valiant efforts yesterday to make it sound like this transition is the culmination of years of planning, I don't buy it. Schmidt admitted yesterday that internal decision-making issues at Google have hindered the company's ability to respond to competitive threats in recent years.

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Globe & Mail: An innovative balancing act

Karim Bardeesy

From Thursday's Globe and Mail Last updated on Thursday, Aug. 27, 2009 07:05AM EDT

Tapping on a white cellphone, Patrick Pichette shows off Google's latest marvel.

"There's my wife," he says as a Google map scrolls. A tiny image pinpoints his vacationing spouse, down to the neighbourhood block in suburban Montreal. "And there's my daughter." He flicks the phone's mini-trackball. "Isn't that cool?"

A year ago, the 45-year-old Montreal native moved his family to Silicon Valley to become chief financial officer of Google Inc. But the company's Latitude software application, which allows users to track each other's location, isn't simply a useful tool. It's a window into Mr. Pichette's appetite for the kind of innovation that defines Google, and illustrates one of his strongest features as the man who minds the books at the world's largest Internet company.

Google Latitude may be cool, but it isn't a money maker. Nor are most of the new online applications launched by the Mountain View, Calif.-based company, which nevertheless continues to wring huge profits - $2.9-billion (U.S.) in the first six months of 2009 - from its core business of selling advertising around the Web's most popular search engine.

For the first time, Google is grappling with a slowdown: Its revenue grew only 3 per cent in the second quarter. So it falls to Mr. Pichette, the chief financial officer, to keep an eye on the till - still bursting with $19.3-billion in cash - to ensure spending is in line with the new economic environment without smothering its culture of experimentation that could yield the next online sensation.

Observers say his strategic sense and disciplined management have helped cut costs, guiding Google to even better operating margins in a recession and a tough advertising marketplace.

Mr. Pichette plays down his role, repeating the Google mantra that the user experience is what matters, and that company's goal is to organize the world's information. The Google approach, and the team of "hypersmart" colleagues he found there, excites him after seven-year tenure at Bell Canada, which he left as president of operations.

"[I joined] Bell during the Enron time. [There was] a lot of scrutiny around financial matters. So nothing frazzles me," said Mr. Pichette in an interview at Google's Toronto office.

"But I also bring the same innovation that fuels Google. It's a mindset, it's about seeing the world for its possibilities."

Mr. Pichette wasn't the obvious choice to fill the CFO's post, which he took up last August. He was a relative unknown and, perhaps more importantly, didn't fit the image that Google had been projecting to the markets, which put innovation above cost control.

"This whole suggestion that they were bringing in an operating-focused CFO and driving efficiencies made people think, 'Yeah, sure,' " recalled Jeff Rath, an analyst at Canaccord Adams Inc. "It wasn't consistent with the founding mission of the company."

Mr. Pichette's arrival at the Googleplex coincided with some cost-cutting measures. While free massages are still on offer, other perks, such as Tuesday afternoon teas, have been cut. Google went through a round of layoffs, mostly in the sales, recruitment, and marketing departments, and headcount at the end of the second quarter was 19,786, down about 430 from the end of 2008. Google reduced its general and administrative costs to $364-million in the quarter, down from $474-million in the fourth quarter of 2008.

"The company's actions immediately after his hiring suggest he immediately put the screws to what he saw as needless spending," said Eric Jackson, founder of the hedge fund Ironfire Capital LLC. "He saved the company money before there was really investor sentiment calling for that."

Operating profit margins were 29 per cent in the second quarter of 2008, but have averaged 34 per cent in the last two quarters, a performance that has pleased analysts.

It's hard to credit one man with such results, especially given Google's decision-making apparatus: CEO Eric Schmidt and co-founders Mr. Page and Sergey Brin serve as the ruling triumvirate, guided by the powerful operating committee, on which Mr. Pichette sits.

Mr. Pichette won't take credit for any specific cost-cutting achievement. "You just manage responsibly. What we did during the last six to 12 months since I arrived, through dialogue at the operating committee, was to say, 'Let's just be prudent.' But we'll continue to fully fund everything we do."

Google has cut programs such as microblogging project (Jaiku) and product lines such as a radio-ad placement service. At the same time, Mr. Pichette is part of a strategy that is looking diversify Google from text-based advertising driven by search on its own sites, and advertising provided to partner sites. It hopes for growth, and revenue, from mobile (such as its Android software for mobile phones) and applications (including the free word processing and spreadsheet programs Google hopes will draw users away from Microsoft).

Meanwhile, investors are still waiting for results from the last series of investments, including YouTube, which has generated disappointment revenue so far.

Mr. Pichette argues that continued spending on projects and acquisitions without an immediate payoff is worthwhile. "If something came around that was a good fit, we'd buy it," he said. "When you look at Google, it's been about acquiring technologies and teams of smart people."

When it comes to e-commerce, he would like to see Canadian companies embrace Canadians' high rate of Internet usage and move more of their business online. "The average Canadian probably spends 50 hours a month online," he said. "Yet Canadian companies have not matched and followed their arguments, by advertising more online, using search advertising, or e-commerce."

Investment in a downturn is especially important, he argues: "You need to be prepared that when [the economy] picks up, you are already taking off. That's how you win."

And you have to be ready for surprises. Google Latitude, the project that let him find his wife with his phone, grew out of an earlier, cancelled project. As Mr. Pichette begins his second year as CFO, he'll have to decide which new projects that could be good for the Net will also be good for Google's bottom line.

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Google's Shareholders Should Thank Patrick Pichette (and Shona Brown)

Google's (GOOG) investors quickly cheered yesterday's earnings out of the gate in the after-hours, bidding the shares up to $410 -- they've since fallen back to $385. We'll see what they do today in the broader session.

The reason for the fall back in share price? After initial investor euphoria over a top and bottom line beat and increase over a year ago, some cautious macro comments from Eric Schmidt and perhaps the announcement of the moving on of one-time sales rock star, Omid Kordestani, gave investors pause. Still, the results are impressive.

What GOOG shareholders should be thankful for is the hatchet the company took to expenses and cost rationalization. Trimming jobs and other expenses -- previously not a GOOG strength -- helped profit climb almost 9% from a year ago to $1.42B. $110MM here, $110MM there: it starts to add up over time.

Shareholders should directly thank Patrick Pichette, the new CFO who came over last summer after cooly and calmly driving costs out of Bell Canada in his previous stint. Pichette was clearly brought in with a mandate -- and he's delivering.

And if you want to thank the person for bringing in Pichette, thank Shona Brown, GOOG's SVP of Business Ops. Brown -- a Canadian like Pichette -- also was a McKinsey consultant in her former life, just like him.

Originally published in RealMoney.com on 4/17/2009 8:04 AM EDT

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Google, YouTube, Shona Brown, and Galaxy

What does the Google acquisition of YouTube have to do with the Galaxy? If you thought it’s going to be a way that a new feature from Google Earth will be integrated into Google Video post-YouTube, you’re wrong. The YouTube acquisition is Google's Second Act; the first product that, although similar and adjacent to Search, will be a category-killer for Google within a second distinct realm from Search. It also is Google's and Shona Brown's answer to how the company can avoid becoming another 'Galaxy.'

Shona Brown is Google's SVP of Business Operations (and some call her GOOG’s ‘chief chaos officer'). I had intended to write this blog posting profiling Shona as one of the top unsung heroes in business today. Then, Adam Lashinsky of Fortune beat me to the punch with a fantastic profile last week. (Nice to see that one of the off-shoots of the recent GOOG – AOL advertising deal is that the Fortune reporters are able to get some great access to Google execs.)

When you think of Google, you think of the Brin-Page-Schmidt triumvirate. Then, you probably think of Omid Kordestani (head of sales); then, coming on strong – especially in the pages of Valleywag – Marissa Mayer. Left out of the discussion, until Adam’s piece, was Shona Brown.

Shona is someone who it’s easy to feel intellectually inferior to, once you understand her background: Rhodes Scholar, Ph.D. in Strategic Management from Stanford under one of the best management scholars in the world today (Kathy Eisenhardt – who has been studying fast-growth Silicon Valley firms for over 20 years), McKinsey partner, Business Best-Selling Co-Author, and pre-IPO member of Google’s management team. In other words, just another brilliant Google employee; they pride themselves on their intellect. However, she’s also someone who is very down-to-earth and helpful.

At Google, she’s responsible for optimizing Google’s internal structure. She decided to take her main findings of her dissertation, which led to the book “Competing on the Edge,” and apply them to Google. (Who says consultants can't practice what they preach.) She found that the optimal organizational design is not too much formality/structure and not too fast-and-loose. (There is new research my firm has done that has found further empirical proof for this assumption. Some details are contained here.) The process by which she does this is partly described in the Fortune article. However, there’s another aspect to Brown’s job described in the article. And, not to put too strong a point on it, it is to solve the greatest challenge facing Google today: how to avoid the fate of being a one-trick-pony.

Google does Search. And it does it better than anyone else on the planet. Remember all the talk around the IPO and even up until about a year ago about how Microsoft was going to come after them? You don’t hear that talk any longer. Google’s won Search. Their multi-billion dollar empire is paid for by search advertisements. Though this preeminent position has given them the ability to develop a cadre of new products (and some, even within Google, think they created too many products), none has been a category-killer in the way that Search has. Much has been written about Google using its Search position to decouple users from the desktop and MFST’s control; yet, this is all still talk today. They have been a very successful one-trick-pony.

That’s where Shona Brown comes in. In her qualitative, case-study approach dissertation, she studied – over 10 years ago – a curious Silicon Valley company that experienced explosive growth and lots of bright young college kids, but had difficulty moving beyond their initial hit product to a 2nd product of similar success. In the end, their core product faced competitive pressures and they were not able to continue. She doesn’t name the company, but calls it “Galaxy.” As Lashinsky points out in his article from Fortune, Google and Galaxy share several interesting common traits. The question you are left to ponder is will Google find a Second Act?

The other night, I was ironically on YouTube and watched the now somewhat dated 60 Minutes glowing segment on their success. Lesly Stahl gushes about how she can text-message Google on her mobile phone to find the nearest pharmacy on the Upper-West Side. Although this is a “nice to have,” along with other Google products like Froogle, Google Earth, and Google Talk, none is yet a “must have.”

There’s always going to be another competitor coming along to challenge Google in search (for the current darling of Silicon Valley in this category, read this TechCrunch posting), even though their lead seems insurmountable today. So, they do need a Second Act. What will it be? Shona Brown and others at Google have been working hard to solve that question and yesterday we got the answer: YouTube.

The YouTube acquisition will be the transformative for Google. They immediately vault to the lead of controlling the search for video on the web. However, more than search alone, they control content in the format that will be increasingly be the preferred way for viewing. But this deal gives Google the first global brand beyond Google. It also allows Google users to interact in a way that hasn't been possible to date.

It's breath-taking to see how quickly YouTube has grown to dominate a space that was not a space more than 5 months ago. It is a wonderful day for their founders and backers, but this is a landmark day for Google and Shona Brown. She wasn't part of the conference call announcing the deal. But her hands are all over this. The analysts can discuss the synergies and do their projections. Shona can simply turn to her colleagues and say that "Google will be no Galaxy; this is our Second Act."

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