This article first appeared in the Harvard Business Review.
The Google/Alphabet metamorphosis has catapulted Sundar Pichai into one of the highest profile leadership jobs in Silicon Valley. As the new CEO of Google, he has been handed the keys to one of the world's most valuable brands, the top website to open to get to other websites, the most popular operating system for smartphones, and the most desirable employer for engineering or business graduates. A quick scan of recent company financials reveals that 90% of the revenues of the entire enterprise, all of which used to be known as Google, came selling advertising -- the core business that Pichai will now run.
Pichai now leads an all "bits" business even though he was trained, solidly, in the world of "atoms," as a metallurgical engineer. Born in Chennai, India, he came to the U.S. for graduate school, earned a Stanford degree in Engineering and Materials Science and a Wharton MBA. After stints at Applied Materials and McKinsey, he joined Google just a little over 10 years ago. He spent the early phases of his career there as a product manager, working on products such as Toolbar.
There are three traits revealed by his tenure at Google that I've found to be worth noting. First, he showed strategic foresight in anticipating that Google's crown jewel, the search engine, was vulnerable. Google search easily could be replaced as the default search engine on popular web browsers. It was the Chrome browser, led by Pichai, that helped shore up the company's place in the world of browser competition. Second, his philosophy on products includes the principle of serving the ecosystem of users and developers. And third, his belief that technology is an equalizing force. "What struck me about Google search was that you had the same access to information whether you were at Stanford ... or a young kid in India or Indonesia," he said in an interview on Indian television.
The old Google had always been a tricky leadership challenge. Industry veteran Eric Schmidt has been the face of the company in the past, while founders Larry Page and Sergey Brin were focused on growing the company. More recently, Page and Brin's interests shifted to the pursuit of a disparate array of moonshots -- and a subsequent list of failed attempts -- bankrolled by a single core business. But as the scope of the founders' experiments expanded, the vision of that core business became harder to articulate. And from a revenue perspective, it was being taxed for the benefit of those unrelated ventures.
So what should we expect from the leader of this "new" Google? Here four things I think he should focus on as he takes the helm:
Signal his commitment to serving at technology's cutting edge. To the average user, search engines feel interchangeable. Enter a query on Google or on Bing and the results look similar. What keeps people with Google is a perception that the engine behind its search is somehow better. So Pichai needs to make sure Google continues to maintain the positioning of being the most advanced search engine -- and deliver on that promise. Now that the moonshots have moved to a different business, Pichai could find his brand losing luster if its technology doesn't keep up. He will need to work harder to send signals of being at the cutting edge in a way that neither Page nor Brin had to during their 17-year run.
Personally attract and recruit talent. One of the biggest risks for Pichai's Google is that it will not be as attractive to the best and most creative talent. His new hires may have little chance of tinkering with self-driving cars, or with life itself, since those functions are part of the Alphabet group. This means Pichai will need to have a strategic talent plan that he guides personally. His promise to new hires will need to be inspirational in how it frames the opportunities for the legacy business. New Google hires will have the opportunity to shape highly-influential widely-used technologies -- and that's a compelling recruiting message. But he still needs to attract entrepreneurially minded tinkerers who may be more attracted to the moonshots part of the business. And that will require old-fashioned, in-person persuasion.
Avoid the risks of a leader tasked with playing defense. Devoid of dramatic departures from the core product, Pichai's Google will feel itself exposed for several reasons. Traditional advertising revenue will eventually decline as usage shifts to mobile, where the ability to place ads and get them noticed is more limited. In addition, consumers are already spending more time on apps or on e-commerce sites, such as Amazon.com, and a growing variety of social media platforms. Searching the web or email will decline; already, the top five search engines saw traffic declines of up to 31% in a study done over the period December 2013 - May 2014. As he considers his options, Pichai should be careful to avoid traps like incremental sustaining innovation geared toward stemming market share losses by simply adding low value features. Pichai will need to return to his core philosophy and belief in user-centered product development.
Find new growth markets - fast. Apart from the challenges of reinvigorating a legacy business, Pichai's Google faces many obstacles in the largest international markets. In China, Google search is a non-entity largely because of government censorship and it now faces tough competition there from Baidu. In Europe, there is a strong backlash against the dominance of Google. Pichai will face a global challenge in shaping both public opinion and policy. The under-tapped growth markets of South Asia and sub-Saharan Africa are, of course, regions where Pichai may see the most potential; the challenge is that these markets are still quite nascent and they will require both patience and potential new products and business models. Pichai's own brainchild, Android One, is a set of competitive specifications that allow manufacturers to produce affordable smartphones with the latest hardware. These low-cost devices will feature the Android OS and receive updates directly from Google. While this seems like a win-win, the risks are that the program is likely going to take a long time to turn a profit and there is powerful competition from low cost Chinese handsets. Finally, the market for digital advertising is still underdeveloped in India and Google has to invest heavily in products that can work well despite India's slow internet infrastructure and the low level of internet penetration.
I am excited for Pichai. He has a chance to hit the reboot button on a wildly successful technology company. In a way, it is not Larry Page or Sergey Brin who are about to launch in new directions. They are just continuing with their moonshots. Pichai's leadership challenge is to build a new Google, keep it fresh and relevant to consumers, advertisers, and talent. I think we'll find that the old Google and Pichai's Google are worlds apart.
Bhaskar Chakravorti is the Senior Associate Dean of International Business & Finance at The Fletcher School at Tufts University. He is also the founding Executive Director of Fletcher's Institute for Business in the Global Context.
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The Google/Alphabet metamorphosis has catapulted Sundar Pichai into one of the highest profile leadership jobs in Silicon Valley. As the new CEO of Google, he has been handed the keys to one of the world's most valuable brands, the top website to open to get to other websites, the most popular operating system for smartphones, and the most desirable employer for engineering or business graduates. A quick scan of recent company financials reveals that 90% of the revenues of the entire enterprise, all of which used to be known as Google, came selling advertising -- the core business that Pichai will now run.
Pichai now leads an all "bits" business even though he was trained, solidly, in the world of "atoms," as a metallurgical engineer. Born in Chennai, India, he came to the U.S. for graduate school, earned a Stanford degree in Engineering and Materials Science and a Wharton MBA. After stints at Applied Materials and McKinsey, he joined Google just a little over 10 years ago. He spent the early phases of his career there as a product manager, working on products such as Toolbar.
There are three traits revealed by his tenure at Google that I've found to be worth noting. First, he showed strategic foresight in anticipating that Google's crown jewel, the search engine, was vulnerable. Google search easily could be replaced as the default search engine on popular web browsers. It was the Chrome browser, led by Pichai, that helped shore up the company's place in the world of browser competition. Second, his philosophy on products includes the principle of serving the ecosystem of users and developers. And third, his belief that technology is an equalizing force. "What struck me about Google search was that you had the same access to information whether you were at Stanford ... or a young kid in India or Indonesia," he said in an interview on Indian television.
The old Google had always been a tricky leadership challenge. Industry veteran Eric Schmidt has been the face of the company in the past, while founders Larry Page and Sergey Brin were focused on growing the company. More recently, Page and Brin's interests shifted to the pursuit of a disparate array of moonshots -- and a subsequent list of failed attempts -- bankrolled by a single core business. But as the scope of the founders' experiments expanded, the vision of that core business became harder to articulate. And from a revenue perspective, it was being taxed for the benefit of those unrelated ventures.
So what should we expect from the leader of this "new" Google? Here four things I think he should focus on as he takes the helm:
Signal his commitment to serving at technology's cutting edge. To the average user, search engines feel interchangeable. Enter a query on Google or on Bing and the results look similar. What keeps people with Google is a perception that the engine behind its search is somehow better. So Pichai needs to make sure Google continues to maintain the positioning of being the most advanced search engine -- and deliver on that promise. Now that the moonshots have moved to a different business, Pichai could find his brand losing luster if its technology doesn't keep up. He will need to work harder to send signals of being at the cutting edge in a way that neither Page nor Brin had to during their 17-year run.
Personally attract and recruit talent. One of the biggest risks for Pichai's Google is that it will not be as attractive to the best and most creative talent. His new hires may have little chance of tinkering with self-driving cars, or with life itself, since those functions are part of the Alphabet group. This means Pichai will need to have a strategic talent plan that he guides personally. His promise to new hires will need to be inspirational in how it frames the opportunities for the legacy business. New Google hires will have the opportunity to shape highly-influential widely-used technologies -- and that's a compelling recruiting message. But he still needs to attract entrepreneurially minded tinkerers who may be more attracted to the moonshots part of the business. And that will require old-fashioned, in-person persuasion.
Avoid the risks of a leader tasked with playing defense. Devoid of dramatic departures from the core product, Pichai's Google will feel itself exposed for several reasons. Traditional advertising revenue will eventually decline as usage shifts to mobile, where the ability to place ads and get them noticed is more limited. In addition, consumers are already spending more time on apps or on e-commerce sites, such as Amazon.com, and a growing variety of social media platforms. Searching the web or email will decline; already, the top five search engines saw traffic declines of up to 31% in a study done over the period December 2013 - May 2014. As he considers his options, Pichai should be careful to avoid traps like incremental sustaining innovation geared toward stemming market share losses by simply adding low value features. Pichai will need to return to his core philosophy and belief in user-centered product development.
Find new growth markets - fast. Apart from the challenges of reinvigorating a legacy business, Pichai's Google faces many obstacles in the largest international markets. In China, Google search is a non-entity largely because of government censorship and it now faces tough competition there from Baidu. In Europe, there is a strong backlash against the dominance of Google. Pichai will face a global challenge in shaping both public opinion and policy. The under-tapped growth markets of South Asia and sub-Saharan Africa are, of course, regions where Pichai may see the most potential; the challenge is that these markets are still quite nascent and they will require both patience and potential new products and business models. Pichai's own brainchild, Android One, is a set of competitive specifications that allow manufacturers to produce affordable smartphones with the latest hardware. These low-cost devices will feature the Android OS and receive updates directly from Google. While this seems like a win-win, the risks are that the program is likely going to take a long time to turn a profit and there is powerful competition from low cost Chinese handsets. Finally, the market for digital advertising is still underdeveloped in India and Google has to invest heavily in products that can work well despite India's slow internet infrastructure and the low level of internet penetration.
I am excited for Pichai. He has a chance to hit the reboot button on a wildly successful technology company. In a way, it is not Larry Page or Sergey Brin who are about to launch in new directions. They are just continuing with their moonshots. Pichai's leadership challenge is to build a new Google, keep it fresh and relevant to consumers, advertisers, and talent. I think we'll find that the old Google and Pichai's Google are worlds apart.
Bhaskar Chakravorti is the Senior Associate Dean of International Business & Finance at The Fletcher School at Tufts University. He is also the founding Executive Director of Fletcher's Institute for Business in the Global Context.
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