As Google switches leaders, observers ‘hold their breath'

Christopher HosfordStory posted: January 21, 2011 - 1:06 pm EDT

Mountain View, Calif.—As Google CEO Eric Schmidt steps down as top executive at the search giant, and co-founder Larry Page waits in the wings to reassume command, onlooker response has been muted and cautious.“For any number of years, Google has had a brilliant secret sauce, terrific innovation reined in by a razor-sharp focus on what will create revenue and advantages for the company,” a longtime Google business partner told BtoB.

“Not too many people will say that, with Schmidt leaving, that's shot,” said the business partner, who requested anonymity because his company does “millions of dollars in search business” with Google. “Nevertheless, while we believe that Google's DNA has filtered its way throughout the company, we're all holding our breath.”

Page and co-founder Sergey Brin recruited Schmidt to run the company in 2001 on the advise of their venture capital underwriters. When Page resumes command on April 4, Schmidt will take over the role of executive chairman.

The move is seen as a good one for a company that has grown very large very quickly.

“While it would be difficult to call Google anything but innovative, we do think its growth has slowed and that it's missing opportunities,” said Veronica Fielding, president-CEO of search marketing and social media consultancy Digital Brand Expressions.

“I think Eric did a wonderful job in bringing more structure and helping Page and Brin mature as business people,” Fielding said. “He always recognized their brilliance, and getting Larry back in that position may help return the company to that entrepreneurial spirit that was lacking.”

According to Steve Rubel, senior VP-director of insights with Edelman Digital, a return to product development may be key.

“With Page now at the helm, a product person is now in charge,” Rubel said. “That is the big change. It is critical that Page set the right tone early to unleash innovation from the bottom up, something that Google was much better at.”

The company hasn't suffered financially under Schmidt's leadership. Google reported on Thursday that fourth quarter profits had surged to $2.54 billion, up 29% from a year earlier. Revenue jumped 26% to $8.44 billon year over year.