January 21, 2011 7:38 pm

Triple reshuffle at heart of Silicon Valley

Among Silicon Valley’s top concerns, where founders loom large and success is often closely tied to personal vision, change at the top can be wrenching.

Tech shake-up

Tech shake-up
Tech shake-up

So it has been this week. Three of the world’s most conspicuously successful technology companies of recent years – Apple, Google and Hewlett-Packard – have been grappling with senior management and boardroom issues that have not all been entirely of their own making.

Illness, boardroom scandal and personal chemistry have each played a part.

At Apple, Steve Jobs still holds the title of chief executive, but he was forced this week to hand over day-to-day control while he steps back to deal with illness – the third such occasion since 2003. The change may prove to be only temporary but many investors and Apple observers have already started to look ahead to a possible leadership change that would mark a seminal moment in Silicon Valley: an Apple without its co-founder and driving force at the helm.

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Meanwhile, at Hewlett-Packard, the reverberations from the boardroom scandal that led to the departure last August of highly regarded chief executive Mark Hurd continued to be felt this week.

New chairman Ray Lane pushed through a board overhaul on Thursday, with four directors due to step down at the company’s next annual meeting and five new faces in the boardroom. With the changes, the majority of the directors will not have been on the scene at the time of Mr Hurd’s ouster, giving HP the chance to put the scandal behind it and leave new chief executive Léo Apotheker with a fresh start.

Only Google has been through anything approaching a normal management transition – though this being Google, nothing happens quite the way it would at most companies.

Eric Schmidt, brought in 10 years ago to provide a more experienced management hand to complement founders Larry Page and Sergey Brin, is to hand over the chief executive title to Mr Page in April, the company said on Thursday. With Mr Schmidt, as chairman, planning to spend his time on the company’s relationships with regulators and business partners, and with Mr Brin stepping back from day-to-day management to focus on longer term projects at the company, the transition puts Mr Page firmly in the driving seat.

The transition left some observers questioning precisely why it was taking place, and what it would mean for the management of Google at a transitional moment in its history.

To the outside world, Google presented the shake-up at the top as part of an effort to speed up decision-making at a company that has grown harder to manage as it has extended its reach into many new markets.

“I want the company to run more like a start-up,” Mr Page said in an interview with the FT.

Fending off the suggestion that the pressure it was feeling from the rise of Facebook had forced the change, Mr Schmidt added: “This is definitely not because of any one competitor. It’s about the rate at which we operate.”

Debate about whether Google has lost its edge has been rife in Silicon Valley tech circles in recent months. Its failure to counter Facebook in social networking has prompted a wider questioning of its ability to extend its disruptive impact beyond the core search business.

Others says those doubts have been overdone. Recent evidence shows that it has carved out big new markets in display advertising, mobile and business applications, said Sandeep Aggarwal, an analyst at Caris & Co.

Ultimately, however, the reshuffle at Google reflects the shifting relationship between its three top executives. “It’s like a divorce – most people don’t know what’s going on behind closed doors,” said Jeffrey Pfeffer, a professor at Stanford business school.

The chemistry among the three has until now proved far more successful than many management traditionalists had expected – as even a senior executive at one big rival conceded this week. The only issue known to have divided them was the company’s decision to end its censored domestic search service in China last year, with Mr Schmidt – like many investors – keen not to back out of the world’s most promising internet market.

In recent years, there have also been repeated questions about whether Mr Schmidt was preparing for a new career in politics – a suggestion that he sought again to scotch this week: “The impact I can have at Google trumps any impact I can have in a political role and frankly will be a lot more fun.” Yet the news that he plans to sell part of his personal stake in the company has only added to questions about his long-term presence there.

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