Eric Schmidt: An Idealistic Pragmatist

By Vivian

Oct. 2010

As the world’s most innovative company, Google is unique in many ways including its management structure, a triumvirate leadership of founders Sergey Brin and Larry Page and CEO Eric Schmidt. Schmidt shares responsibility for Google’s daily operation with Brin and Page, and focuses on the company’s management and administration. He is one of the most influential leaders in the technology and economic world.

Biography

Eric Schmidt was born in 1955 in Washington, D.C. He spent most of his childhood in Blacksburg, Virginia, where his father served as the chairman of the Department of Economics in Virginia Tech. He started using computers at the age of fifteen and was soon drawn to that wonder land. In 1972, He entered Princeton University and earned a bachelor's degree in electrical engineering four years later. In 1976, Schmidt went to the graduate school in Computer Science at the University of California, Berkeley. He earned an MS in 1979 for designing and implementing a network linking the campus computer center, and a PhD in 1982 with a dissertation about the problems of managing distributed software development and tools for solving these problems.

Early in his career, Schmidt held a series of technical positions with IT companies. He was hired by Bell Lab and Xerox’s Palo Alto Research Center (PARC) as a student and joined the latter as a junior researcher after graduation from Berkeley. In 1983, he went off to Sun Microsystems, back then a startup founded in 1982, and obtained a position as a manager leading a team of 12 engineers. Over a period of 14 years at Sun, he was gradually promoted to Chief Technology Officer and earned international recognition as the mastermind behind Java, a popular platform-independent programming language.

In 1997 Schmidt made a significant career move by accepting the CEO position in Novell, a company which used to dominate the market for local area network but was betting hard against its competitor Microsoft at that time. As chairman and CEO, his was not only responsible for technology development, but also for the company’s strategic planning and management. Although joining Novell in a tough time, Schmidt turned Novell around with a deft combination of cost reductions, divestitures, and new product rollouts, and by 1998, it was back in the black. However, the internet bust of 2000 resulted in a great slowdown in demand. In 2001, Novell acquired the consulting company, Cambridge Technology Partners, to expand its business into services. Schmidt relinquished Novell’s CEO position and assumed the role of chief strategist.

Recommended by Google’s venture capitalists John Doerr and Michael Mortiz, Schmidt joined Google's board of directors as chairman in March 2001 and became the company's CEO in August 2001. Under his leadership, Google has dramatically scaled its infrastructure from a 200-employee Silicon Valley startup to a powerful corporate with 10,000 employees worldwide with steady revenue.

Role as a Leader

Schmidt is internationally famous as a role model who successfully completed the transition from a computer geek to a capable executive. However, his step-by-step career path, undramatic personal life, and low-key personality make his success story less attractive than those of other top CEOs, such as Apple’s Steve Jobs and Microsoft’s Steve Ballmer. When answering questions in interviews or giving a speech in public, Schmidt always keeps a slow, logic and mild tone of voice, which easily gives the audience the impression that he is not a charismatic leader. This might be a reason why some people question his real contribution and argue that he is just a lucky man being in the right place at the right time.

Nevertheless, I believe Schmidt does play a significant role in the rise of Google. There are three core elements that make him uniquely suited for the role of leader in Google. With strong technical background as well as extensive management and marketing experiences in IT world, Schmidt is ideally suited for the new digital economy. His endorsement of Google’s core values and great collaboration skills ensure the effectiveness of the triumvirate structure and maximize the efficiency of employees. As a visionary pragmatist, Schmidt helps Google move forward by broadening its offerings into new areas while still maintaining a culture of strong innovation.

Extensive Marketing and Management Experience

As a seasoned veteran in IT industry, Schmidt was widely seen as the pair's “adult supervision”. His vast experiences in technology development, management and marketing have been an effective complement to the weakness of impetuous young Google founders, who were tough sells and lack of experience managing big companies.

In his years at Google, Schmidt has helped strengthen the company's business and bring in financial oversight. Three years after he joined Google, a formal management system was formed in the company and Google filed for its initial public offering (IPO) of stock, which brought a $23 billion market capitalization.

To cope with the impact of globalization on economic operations, Schmidt has made decisions to make Google better at international business. In addition to build an international sales force, Google also employs a small army of lawyers with different expertise to avoid costly run-ins with local laws. As a sober businessman, Schmidt clearly sees the necessarily of this expense. From 2008, Google international revenues have surpassed domestic revenues.

Through years, Google’s revenues and net earnings steadily increase. Till now Google, as a stock, still remains one of investors’ favorites. This financial success demonstrates Schmidt’s managing and deal-making skills.

Endorsement of Core Value and Great Collaboration Skills

In spite of a big age different, Schmidt and Google founders actually have a lot in common. They all grew up in liberal academic environment where their fathers served as university professors. All of them are computer geniuses and engineers by training. Graduated from top universities in California, they have common interests on open-source products and computer network. Most of all, they share the same view of money “You can make money without doing evil”, which, I believe, provides a solid base of the triumvirate structure. In 2010, they reached agreement to pull Google out of China, the biggest internet market in the world. For fighting censorship and promoting freedom of information, Google lost up to $600 million in sales.

Schmidt collaborates with his colleagues based on trust and respect since he believes that Google guys, as highly motivated and eminently capable people, don’t like micromanagement, bureaucracy, command, and control.

As a CEO, Schmidt is more inclined to provoke than proclaim. “Google is run by its culture and not by me”, said Schmidt in 2009. In Google, when a key executive decision is reached, all interested parties are invited to the decision making process and are encouraged to share their opinions. Schmidt’s job is to oversee the whole procedure and make timely decisions. This bottoms-up way of decision making usually leads to a better buy in and a better decision.

Google allows employees to spend 20% of time on self-directed projects. To closely connect to Google’s frontline innovators, each week Schmidt and his senior associates spend up to six hours in dialogue with team members from across Google, who believe their projects have great potential. This unique management style has hatched a series of great products like Gmail and Google News.

Forward-looking vision

With huge amounts of ideas and new startups coming out every day, Schmidt is credited for making the right decision to keep Google moving forward.

Schmidt keeps looking for new ways to organize and search for information and tries to gain revenue on most of them. Google has introduced many new and powerful products, such as Google Maps, Google Calendar and Gmail. As part of its expansion, Google has acquired other businesses, including YouTube, Blogger, and AdMob. Google has become from a search engine to an on-line services innovator.

In addition, he looks beyond simple acquisitions to global partnerships to buoy the company’s success; such as the partnership between NASA and Google to incorporate surface photos of Mars and the Moon into Google Earth and the partnership with university libraries, like at University of Michigan, to create a card catalog of every book known to exist available through Google Books.

Schmidt imagines personal devices such as mobile phones will act as true personal assistants. In 2008, Google officially entered mobile phone market by introducing Android, a free, open-source mobile operating system. As of August 4, 2010 Google is activating 200,000 new phones to the Android platform per day. Android has already surpassed Apple to become the biggest handset platform in the United States, the third-biggest worldwide, and by far the fastest growing, bringing revenues to Google

Conclusion

In my opinion, Schmidt has dual personalities: an idealist who believes in concepts like “don’t be evil”, and a pragmatist who cares about financial reports. On the one hand in his whole career life he is trying to maintain a Garden of Eden where seeds of great innovations can grow up. On the other hand, he is working hard to provide continuous supply and resources to those seeds and make sure they can be well taken care of in a fertile environment. His role is more like a protector than a supervisor, a teacher than a manager. Together with the founders of Google, he is seeking to form a unique and idealistic business model which can integrate company revenue and public benefit into one goal. However, this is a challenging task. I am actually quite disappointed to see Google stepping into internet telephone service. Once Google starts to get payments from its users directly, its freedom fighter image will collapse and there will be no difference between Google and its long-term enemy Microsoft. The questions are: will Eric Schmidt eventually abandon his idealist personality when the amount of money reaches an “evil-not evil” threshold? Will Google turn from the light side of the Force to the dark side once it beat all its competitors? Let’s see.

Acknowledgment:

Many thanks to Ms. Julie Anne McNary for her valuable comments and suggestions on this article.

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