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Monday, June 09, 2008

Schmidt a Winner Because He's a Technologist: ZDNet

Continuing the recent thread of ad hominem CEO assessments, can't disagree with Larry Dignan's take on Carl Icahn's latest letter. Eric Schmidt was a perfect helmsman for Google because Google is an engineering company and Schmidt can handle the troops from strength based on his former role as a CTO... not because he's an "operations" expert.

As for who Yahoo should choose when Yang steps aside is less clear. Yahoo is not a pure engineering company as Google is, although it has spearheaded many soft innovations in alternative web technologies.

People-wise, what is the breakdown, anyway? You could find just as many mid level product managers and MBA's at Google as you could at Yahoo, so in my view the best characterization comes from the org-theory world (Perrow) -- what is the "dominant coalition" at either company. Google's dominant coalition of engineers, programmers, Ph'D's, etc. is solidly backed by a dual class shareholder structure that puts great power in the hands of Page and Brin.

At this stage, Yahoo can't seem to decide what its identity is (the peanut butter thing). Peanut butter syndrome is not helped by the distributed share ownership (70% institutional holders). Holding company would be a bad identity to adopt - IAC is an "OK" player online but can't win on a large scale, it seems. Marchex is a quietly successful holding company, but not on any scale.

Yahoo's brand is well supported by Jerry Yang in the role of Chief Yahoo - but there isn't any clear path towards choosing a new CEO. Icahn has a point, but I sure hope he wouldn't be directly involved in the final decision, because he only has a point in a very general sense.

Likely, Yahoo's next CEO should be one who has worked in solidly progressive roles in technology and new media at larger companies who excels at drawing out the strengths of those who build and manage key Yahoo products and channels.

In Jim Collins' Good to Great, the #1 no-no for companies historically - from a shareholder return perspective - has been to place too much stock in "rock star" CEO's. CEO's who understand a company's economic engine, who play hedgehog, who get the right people on the bus - tend to outperform. And they do that over the long haul not by being favorites in the media (or by being already billionaire rich when they take the job), but by gaining respect internally. This is why Schmidt was an apt choice for Google. Whoever runs Yahoo should be not only liked internally, but respected enough to bring out the best in its people and nerdy enough to care about the details of product development and user experiences. And unlike one previous CEO, they should use the Internet enough to know the difference between a browser and a widget.

Posted by Andrew Goodman




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