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Is Google the Next GE?


I guess you’ve been seeing the reports that both the US and Europe are going all-out to nail Google and other tech companies for anti-trust violations. I wonder how Google will cope. That depends a lot on the character of its CEO, Sundar Pichai.

A recent article by Rob Copeland in the Wall Street Journal referred to him as a “nice guy. Is that enough?” I’ve never met the man but I’m sure the article must be on target given the celebrity of the subject of the article. I think in this context the word “nice” is a code word for high EQ, empathetic, caring. Hmmm, lets parse that a little.

I’ve written about this movie before (“Low EQ = High Business Acumen?”). The thesis is that people who make lots of money tend to have low EQs. Witness Steve Jobs as an example.

The reason is that people with high EQs don’t like to distress others, even if they have to do it a little. But the route taken by many – low EQ - founders to achieve outsized and impossible goals is to drive their people to destruction.

No More Mr. Nice Guy?

Remember General George Patton? The one who slapped the face of a GI suffering from PTSD during World War II? Definitely low EQ. But he was the one who, against all the odds, forced-marched his troops nonstop through blizzards and impossible conditions to relieve the beleaguered US troops in the Battle of the Bulge who otherwise would have been wiped out by the German Ardennes offensive.

For those of you historians, you might also remember Hannibal’s forced march over the Pyrenees in 200 BC resulting in his defeat of the slothful Romans who never expected this feat of arms. By then, centurions had rights and a union of course (kidding).

“Forced march” is probably a good term to characterize the leadership style of Steve Jobs, Elon Musk, Jeff Bezos and other noted founder-martinets (including Hannibal, as above, who clearly also didn’t have a high EQ either). We recognize them as obsessive, sometimes cruel, vindictive who meet outsize goals that the vast majority of leaders would never achieve because they are too caring about their followers.

Sundar Pichai is clearly not of that ilk. He’s someone you want as a friend. That’s more than we can say for the leaders like the ones I have just mentioned.

Full disclosure: my company has developed leadership assessments that predict whether or not people and teams will make money. Spoiler alert: the vast majority of people and teams won’t. If that wasn’t the case, we’d all be mini-Warren Buffett’s, which patently isn’t the case. Bummer.

The good news? That vast majority are usually good guys and gals, people you want to have a beer with and invite over to dinner. We know that too from our research.

Who’s the Money-Maker at Google?

So back to Sundar Pichai. Isn’t Google making oodles of money? Yep, but not because of him. He wasn’t the founder, just an executive – talented no doubt – who took over the job which, according to the WSJ article, no-one else wanted. He was a steward, not the originator, the Tim Cook of Google, chosen to keep the ship forging ahead under the same jib, mizzen mast and sails that the founders hoisted when they launched the Good Ship Google on its historic mission of “Do No Evil”.

Doesn’t it seem like the financially most successful founders are all of a muchness in having low EQs? We could go on forever naming names. Start with Bill Gates, who, to his credit, has moved his EQ north by the bootstraps since he gave up being Microsoft’s leader. Ditto for Warren Buffett.

Executives like Sundar Pichai are smart, judicious, prudent (to a fault, see the WSJ article) and not prone to doing big things or making mistakes. They are high class stewards, honorable people you could entrust to guard your close family against evildoers.

Founders versus Career Executives

Founders are almost always never career executives and career executives are almost always never founders, at least not good ones. The founders who make it are often swashbuckling risk takers who spit their employees out when they’re done with them, the Devil take the hindmost.

That’s not Sundar Pichai, or the overwhelming majority of public company CEOs and C-levels. They are upstanding, public-spirited citizens and moral leaders. Viva la difference. Founders, by contrast, are either a little bit crazy or a lot. It just goes with the territory.

So, what, gadzooks, I hear you say. What predictions can we make from this?

Once founders leave a company it’s generally all downhill from there for the company, although you get the occasional rebirth such as Microsoft under Satya Nadella, and it might take some time for their absence to have a visible impact to outsiders. The absence of the founder is a slow leak in the tires. At first you don’t see the result, but after a while, the tires begin to go soft. It looks to me like that is what is going on now in Google. Sundar Pichai is an unwitting and unaware part of the pattern of this gradual softening.

One implication is the results of the antitrust onslaught against Google. Don’t expect Pichai to have the chops to go up against the antitrust bureaucrats, at least not of his own volition. It’s not his company so why fight hard for it?

So probably Google loses, just like IBM eventually did. Even if they fight it, they will likely end up losing the war, if not the battle, like IBM when it was nailed for antitrust in the 80s. So, the outlook for the antitrust suite for Google is not good, even if they “win” the legal battle.

As the air leaks from the tires you see other impacts, not just in its earnings, but also in its general business stance and innovativeness generally. I expect Google’s earnings from its current business model to have peaked, at least proportionately, not just in absolute terms.

GE is Another World – or Not?

No doubt you noticed that the SEC has just hit GE with a notice that it will investigate it for “massive” insurance fraud. This is the same GE that just paid a fine for accounting fraud, over a number of years. This includes the earnings manipulation by GE under the hitherto talismanic Jack Welch. You know, the one who gave us the GE leadership model which for quite some time was the darling of the business press. How the mighty are fallen.

Google of course is currently top of the woodpile. But cracks are beginning to show. Expect Google’s acquisitions (hardware at least) to continue to be unsuccessful, albeit the enormous momentum of its current business model will go on for some time and disguise its many failures (e.g. currently Fitbit).

But Google’s momentum is slowing. GE managed to hide this type of slow loss of momentum over many years, but the market finally wised up, although not before hordes of stockholders lost their shirts.

Just like Pichai, Welch was a career executive, not a founder. He was preceded and succeeded by apparently talented career executives. We all know where that ended up. Is it the fate of Pichai to also act as the steward of a ship that is slowly taking on water?

Sometimes an executive can be at just the right place at just the right time. Sundar Pichai is an example. So is Tim Cook. But just remember this.

To be a founder of even an unsuccessful startup is a thousand times harder than getting hired as an executive to slot into a successful enterprise that already has a powerful and profitmaking business model. It’s one thing for a Sundar Pichai or a Tim Cook to shine in their role as steward of the family jewels. It’s totally another to start that company which they currently drive between solid yellow lines that were painted on the asphalt 50 or a hundred years beforehand. Especially if the startup invented something totally new.

Google is a self-driving car and has no real need for a human driver. Sundar Pichai, like many hired hands before him is bright and prudent. But he’s just not a Larry Page or a Sergey Brin – given the article from WSJ I suspect he might be the first to cheerfully acknowledge this. Factor that into where Google is going when you figure out where the stock will be in 10 years’ time.

This isn’t to say Google is a carbon copy or even a faint facsimile of GE. It’s just to point out that when your leadership changes from founder-led to career-executive led; the dynamics change radically. You might not notice the change on the surface, but they are churning deep in the bowels of the organization. The result is rarely good, especially in the longer-term.

Nor is this to say that you don’t want CEOs with low EQs, or high for that matter. It’s horses for courses. But don’t confuse one with the other. Otherwise you’ll get a Mr. Rogers (of Mr. Rogers’ Neighborhood) when you need a  Mr. Krabs (of SpongeBob SquarePants).

Opting for high EQs over raw passion is the well-worn path you follow to eventually become just like GE.












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