More importantly, that's why those companies won't last. That's right; you heard me. I said they won't last. And not because their executives aren't smart, either. Believe me; they're smart. They won't last because they're effectively isolated from their customers.
But if their executives are so smart, then why let that happen? Two reasons:
- They don't necessarily agree with my hypothesis, and more importantly;
- They don't have a choice. They simply can't afford to connect with their customers because, well, they have too many of them.
Look, this is a serious problem. If they don't figure out a way to stay close to their customers, they won't survive. I don't care how many users they have or how big their brands are today.
What, not buying it? Just give me a couple of minutes to make my argument, okay?
What first got me thinking about this was Saturday's Wall Street Journal article about how co-founder and soon-to-be CEO Larry Page aims to fix Google's growing bureaucracy and get the 24,000-person company to operate more like a start-up. Good luck with that.
According to the article, Page, who doesn't officially take over as CEO until April 4, has already begun taking action to:
- Help streamline what he calls "sluggish decision-making" in the executive ranks;
- Help the company diversify from its core search advertising business; and
- Compete more effectively with the likes of Apple and Facebook.
- Ask product and engineering managers to "pitch" him on their projects in 60 words or less. Based on this email request, Page is expected to cut down the number of projects Google is focused on.
- Facilitate communications by mandating a daily "bullpen" session for all executive officers to meet in an open area to make them more directly approachable to employees.
- Ask heads of YouTube, Google Apps, and other divisions how to improve company performance and to identify barriers to innovation so projects can operate more like startups.
- Ask managers about the problems they face and ask employees to develop new meeting practices like designating a decision-maker and shutting off their notebooks during meetings.
I mean, that's sort of CEO 101, at least in every company I've ever worked with. After all, Google's continued growth and success depends on providing customers with a unique value proposition. It certainly wouldn't be the first company to lose its way because its executives lost their connection to the only people who really matter.
And don't forget, while 38-year-old Page was the company's founding CEO, that lasted for about a nanosecond before Eric Schmidt took over. So, from a management and leadership standpoint, that pretty much makes Page a novice. Sure, he has lots of great qualities I'm sure, but he's still never run a multibillion dollar company before.
It sort of reminds me of when Yahoo's board gave the chief executive reins to Jerry Yang:. Here's what I wrote then, back in 2007:
"With [Yahoo] confronting the most daunting of competitive challenges in a mind-bogglingly fast-paced industry; with $35 billion of market cap and thousands of employees at stake; with half a billion users and an entire ecosystem on the line; is it prudent to bring in someone who has never run a company before?"Don't get me wrong; Google's got one helluva business model. The same goes for Facebook and Twitter. But just look at what's happened at Yahoo. Sooner or later some amazing startup with better technology or a business model nobody thought of comes along and, just like that, you're yesterday's news.
The answer, of course, was no.
What in the world makes anyone think that won't happen to Google or Facebook?
Without an intimate and ongoing relationship with its customers, what competitive barriers does an Internet company really have? A brand? Brands erode in time. Think Sony, for example. It once stood for innovation and quality. Now? Getting closer to mediocre every day.
Intellectual property? Frankly, I don't think the current search algorithms are all that innovative. Search is in its infancy. And the big money-maker, search advertising, isn't really protected. That's why Google's so hot on diversifying.
So, if it's too expensive to open its doors to customers, what's an Internet company supposed to do, rely on analytics? It's actually a tough problem, but you know what? Maybe Page can use some of those bullpen sessions with his executive team to solve it. Or better yet, they can all get out of the building and meet with some customers.
That is, if they want their company to last.
On the same subject:
- 10 Ways to Think Different - Inside Apple's Cult-Like Culture
- Do Founders Make Good CEOs?
- 10 Secrets to Trader Joe's Success
Image: Ivan Walsh via Flickr