Entrepreneurs 9/23/2014 @ 7:00AM 1,911 views

Eric Schmidt And Jonathan Rosenberg: What We Can Learn From Google

I recently had the pleasure of speaking to two of the most prominent men in the technology world, Eric Schmidt And Jonathan Rosenberg. Their new book is called How Google Works, and it was published today by Grand Central Publishing. Schmidt served as Google’s CEO from 2001 to 2011. During that time he shepherded the company’s growth from a Silicon Valley start-up to a global technology leader that today has over $55 billion in annual revenues and offices in more than 40 countries.

Eric is now Google’s executive chairman. In 2013, Forbes ranked Schmidt as the 138th-richest person in the world, with an estimated wealth of $8.3 billion. Rosenberg joined Google in 2002 and managed the design and development of the company’s consumer, advertiser, and partner products, including Search, Ads, Gmail, Android, Apps, and Chrome. He is currently an advisor to Google CEO Larry Page.

In the following interview, they talk about how consumers have more power than ever before, how Google made them rethink how companies can be built, the importance of attracting the best people, what the attributes of a strong corporate culture are, and how to create disruption in any industry.

Dan Schawbel: How has technology shifted the balance of power away from companies and to customers? How has knowing this impacted Google and the way in which businesses operate?

Eric Schmidt: What we are seeing with technologies like mobile devices and cloud computing is that they are enabling business models that simply didn’t exist before — look at companies like WhatsApp and Uber. They are built on a mobile-only, consumer-centric model that was quite impossible just a few years ago. There will be companies like this in practically every industry. Giants everywhere are ripe for disruption by new businesses that understand how to use technology to create a brand new, never-before-possible value proposition for its customers.

Google is no different. We were born in the midst of the desktop era, long before smart phones and cloud computing and some of the other technologies we have today came to life. Now we are 15 years old and faced with the threat of new competition like any other incumbent. I think the key to managing this is to do everything you can to move quickly. Keep teams small and give them all the tools they need to do great things. Push them to think big, and make it OK for them to fail, as long as they do it well. Leadership needs to provide a compelling vision, make big bets, then get out of the way.

Jonathan Rosenberg: Consumers now have near perfect information about products and services. Information used to be controlled by companies, but now it’s controlled by the audience. This makes it impossible for a company to create a crummy product and use superior marketing to make it successful. Great marketing is more important than ever, but it needs to be in support of great products.

At Google, we decided a long time ago that we wouldn’t put a lot of marketing effort into our products until they had already proven themselves. We call it a strategy of feed the winners, starve the losers. So when we launched the Chrome browser for example, we gave it very little marketing support. We just put it out there. Over time, it gained momentum in the market based purely on its merits as a product. It was just a lot better than its competitors, and users started to talk about it and draw other users. Then, once we saw the numbers start to really ramp up, we poured some marketing fuel on the product fire.

Schawbel: What lessons did you learn as Google began to grow and what were the growth challenges that you might not have expected?

Schmidt: As we say in the book, when I came to Google I encountered a culture and management approach that was unlike anything I had seen before. We really mean it in the book when we say that so much of what we thought we knew about leading companies was wrong. I had to make big adjustments in my approach to things. And I had to do it while we were growing at a pace unlike just about any other company in history.

The biggest challenge for me was trust. I had come from an environment at Novell where the processes were all working quite well. Now I stepped into a place where there were practically no processes and chaos was the norm. The last thing you want to do in a situation like that is to start adding layers and rules — you can wreck a place when you do that. So you add just enough to keep things from flying apart, and you trust the employees to keep doing great things.

Rosenberg: The biggest challenge we faced by far was hiring. We grew the company at a furious rate — faster than anything any of us had ever been through before. It was hard enough just to get all those new employees in the door, much less to keep the hiring standards high and help bring the new folks up to speed.

We did it by creating a sort of “all-hands-on-deck” attitude, and never backing off on that. It was everyone’s job to hire. One time we were looking at the rather daunting challenge of doubling the size of the company and thought there was no way we could do it. But Larry pointed out that if everyone brought just one great person into the company, we would double in size. His math was right, of course, but what that really meant was that every single person in the company was responsible for recruiting. I had never seen that before, but it worked.

Schawbel: How do you think Google has been able to compete for talent with emerging companies like Airbnb and Uber? What strategies does Google use in order to retain talent too?

Schmidt: Great people want to work on important things, so I think the most important thing we do to attract and retain talent is to have more and more interesting things for them to work on. We used to be a search company, but now we have search, mobile, video, access, apps, and several other interesting business areas, each of which has lots of challenges — the sort of things that smart people like to work on. We still lose people to start-ups, but we keep more than our fair share because a great person at Google always has a rich set of opportunities. You shouldn’t ever get bored here.

Rosenberg: People may think that the way we keep talent is with all the great amenities they read about: the free cafes, onsite masseuses, and the like. That stuff is great and employees love it, but mostly what they love is to work with other great people. The most important thing you can do to retain talent is to surround it with talent. Great players like to be on winning teams.

Schawbel: What do you believe the attributes of a winning corporate culture are?

Schmidt: Authenticity. You have to have a core set of things you believe in, then live by those values. People can smell messaging a mile away. They may not quit, but they will lose any passion they may have had for the job. We are very fortunate at Google to have not one but two founders who have amazing vision and have always run the company based on their values and instincts. There’s a reason that Google, Apple, Netflix, and Amazon are so successful: their cultures are derived completely from their founders.

Rosenberg: I think a winning culture also has to be fun. When work is fun, people want to be there. In our book we talk about innovation, and how it comes from giving people lots of freedom and how it should come from everywhere. The same goes for fun. When you try to create it from the top down, like with company picnics, it usually falls short. But when you give people some room and let them be, fun stuff will happen.

Schawbel: How does Google handle disruption in the marketplace and what can other companies learn about dealing with disruption in theirs?

Schmidt: To create an effective strategy for disruption, you need to think five years ahead and ask yourself what the world might look like then. In another era, things didn’t change that much over five years. But today, things can change a lot. Companies tend to spend a lot of time working on annual business plans and maybe 18 month plans, but not nearly enough time looking further ahead. It’s impossible to accurately predict what will happen in five years (maybe that’s why people don’t even try) but you can look at the trends of technology and globalization and create some very rational scenarios.

Rosenberg: You also need to push yourself and leaders in the company to imagine the unimaginable. This is a phrase we learned from Vinod Khosla, and I think it is very useful. There are so many things in today’s world that were unimaginable only a few years ago. So try to imagine what thing is going to happen in your industry that you can’t imagine. This approach puts you in a mindset to adapt and potentially lead change. It’s the first step you need to take. One mistake companies make when it comes to disruption is to believe it won’t happen to them. Or, more often, that it won’t happen to them on their watch.