The old triumvirate: Brin, Page, and Schmidt in Sun Valley, Idaho, last summer Matthew Staver/Bloomberg
Every Monday afternoon at the Googleplex in Mountain View, Calif., more than a dozen of Google's (GOOG) top executives gather in the company's boardroom. The weekly meeting, known as Execute, was launched last summer with a specific mission: to get the near-sovereign leaders of Google's far-flung product groups into a single room and harmonize their disparate initiatives. Google co-founder Sergey Brin runs the meeting, along with new Chief Executive Officer Larry Page and soon-to-be-former CEO Eric Schmidt. The unstated goal is to save the search giant from the ossification that can paralyze large corporations. It won't be easy, because Google is a tech conglomerate, an assemblage of parts that sometimes work at cross-purposes. Among the most important barons at the meeting: Andy Rubin, who oversees the Android operating system for mobile phones; Salar Kamangar, who runs the video-sharing site YouTube; and Vic Gundotra, who heads up Google's secret project to combat the social network Facebook. "We needed to get these different product leaders together to find time to talk through all the integration points," says Page during a telephone interview with Bloomberg Businessweek minutes before a late-January Execute session. "Every time we increase the size of the company, we need to keep things going to make sure we keep our speed, pace, and passion."
The new weekly ritual—like the surprise announcement on Jan. 20 that Page will take over from Schmidt in April—marks a significant shift in strategy at the world's most famous Internet company. Welcome to Google 3.0. In the 1.0 era, which ran from 1996 to 2001, Page and Brin incubated the company at Stanford University and in a Menlo Park (Calif.) garage. In 2001 they ushered in the triumphant 2.0 era by hiring Schmidt, a tech industry grown-up who'd been CEO of Novell (NOVL). Now comes the third phase, led by Page and dedicated to rooting out bureaucracy and rediscovering the nimble moves of youth.
Although Google recently reported that fourth-quarter profits jumped 29 percent over the previous year, its stock rose only 13.7 percent over the past 12 months, disappointing investors and lagging the Standard & Poor's 500-stock index. Google is being outpaced by rivals such as Facebook in social networking. In 2010, Facebook served up more display ads than either Google or Yahoo! (YHOO)—and was visited by more U.S. Internet users. And Apple (AAPL) is setting the pace in mobile computing, with beloved products that use a proprietary operating system that can be closed off to Google's services if the company so chooses.
On top of all that, there are antitrust inquiries in Washington and Europe, the defection of some top Google executives for opportunities elsewhere, and perhaps the most serious rap against the company: that its loosely organized structure is growing unwieldy and counterproductive.
The creative chaos inside Google's halls—a decentralized jungle of innovation, as one prominent venture capitalist puts it—once empowered employees to make bold moves, such as creating Gmail, the search-based e-mail system. Other than Android, the culture has recently produced a string of flops, such as Google Buzz, a Twitter clone, and Google Wave, a wonky service that let people collaborate online.
Page doesn't explicitly blame those missteps on the company's loosely knit management or the famous troika at the top. Yet he concedes, "We do pay a price for [shared decision-making], in terms of speed and people not necessarily knowing where they go to ask questions." His elevation to CEO, he says, "is really a clarification of our roles. I think it will help with our speed."
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