Eric Schmidt Reveals Google’s Secret

The organizers of last week’s Management Lab conference on "Inventing the Future of Managment" amplified the value of the event for us attendees by persuading Google CEO Eric Schmidt to speak with us over dinner on Thursday night. I’d not had the chance to hear him before, and was blown away; he was funny, direct, engaged, and razor sharp. I was particularly impressed that instead of sticking to talking points (a common tendency among senior executives, especially those leading large, heavily-scrutinized companies) he took questions, and actually answered them.

In his initial remarks I heard him stress two elements of Google’s success: hiring the smartest people they can find, and making decisions as a group after deliberation, rather than by individual fiat. Schmidt told the story of how shortly after he was hired he had a meeting with his senior colleagues about bringing on an executive he thought would be a good fit. His co-workers disagreed, and as a result the CEO of the company was not able to hire someone he favored.

As I listened to him speak I felt one of my frustrations as a teacher surface, and decided to ask him about it. I asked something like:

"Eric, like many people here I teach at a business school, and I’ve always been disappointed with the results whenever I use Google as a case study. My executive education students always say that there’s nothing for them to learn from your company because it’s just too different from theirs —  you’re very young, you’re in this strange online industry, and you’re full of people with 145 IQs. 

I’ve been trying to push back against these arguments in the classroom, but as I listen to you here tonight I’m starting to think that my students might be right! As you’ve described it, Google seems to be a completely unique organization. So what can other companies and managers really learn from you?"

His response was unequivocal, and fantastic. As best I can recall, he said:

"They can learn to listen. Listening to each other is core to our culture, and we don’t listen to each other just because we’re all so smart. We listen because everyone has good ideas, and because it’s a great way to show respect. And any company, at any point in its history, can start listening more."

Many participants in the conference voiced the belief that a move away from authoritarian and imperial corporate leadership would be a smart move, and that we need to retire the belief that intelligence, omniscience, and infallibility rise in lockstep with height on the org. chart. It was fascinating, and encouraging, for me to hear Schmidt agree so closely with that viewpoint even though he hadn’t been present during the day; he was just the man who came to dinner. 

He gave a powerful and actionable piece of advice, and one for which the technologies of Enterprise 2.0 are tailor-made. Let’s see how many businesses and business leaders have what it takes to follow it.

And if you want to learn more of Google’s secrets, check out the article "Reverse Engineering Google’s Innovation Machine" by Bala Iyer and my friend Tom Davenport in the April Harvard Business Review.