Are Google's best days behind it?

Slowing product development, legal woes, and rising bureaucracy may signal trying times ahead for Silicon Valley's favorite company

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Google insists that the death of Google Labs won't mean the end of 20 Percent Time. Yet a neutered, ineffectual 20 Percent program may be the worst of both worlds. On the one hand, Google has burdened itself with an engineering staff that operates at just 80 percent efficiency, given its growing reluctance to experiment. On the other, engineers whose personal projects go nowhere may resent that their entrepreneurial instincts are wasted at Google. Combine that resentment with inefficiency, micromanagement, overwork, underutilization, and a rising corporate bureaucracy, and they may ultimately seek work elsewhere.

Wars of attrition

Former CEO Eric Schmidt flatly denies any brain drain at Google, insisting the company's attrition rate remained constant throughout his tenure. But that stability is hard won; in recent years Google has offered hefty raises and six-figure bonuses to stave off its competitors' overtures. In November 2010, it increased its entire pay scale by 10 percent.

Where Googlers go when they leave is no surprise. Many of them turn up at its closest competitors. Microsoft is reportedly engaged in an all-out hiring war with the search giant, as is Facebook, which has poached at least 142 Google staffers, including its top chef. Still others find new homes at startups.

Curiously, throughout it all Google has persisted with some of the most arduous hiring practices in the industry. While lots of tech companies claim to want the best and brightest, Google has refined its screening process to such a degree that some critics feel it may actually be sabotaging its own recruitment efforts. Although Google says it's on a "hiring high," not everyone need apply.

Hiring at Google typically involves multiple meetings with teams of Google staffers, over weeks or even months. Academic achievement is particularly stressed. Even administrative and HR positions are likely to be staffed by graduates of top schools. Interviews focus on brain teasers and mental gymnastics rather than on-the-job experience. Commenters on the career community site describe being asked to show their college and even high school GPAs, despite decades of professional experience. Little effort is made to sell seasoned candidates on a job at Google; often, prospects won't even be told what actual work they're being interviewed for.

A new Page for Google?

All this is in keeping with Google's origins as a Stanford University project, as well as the tone Larry Page has set for the company. Page's predecessor as CEO, Eric Schmidt, liked to joke that he was brought in to provide "adult supervision" for Page and Brin. He was only half kidding.

In meetings, the co-founders have been known to pace the room, climb on furniture, play with Lego, or simply sit silently. During his own first tenure as CEO, the retiring Page reportedly told his PR staff that he would only give them eight hours of his time for appearances and speaking engagements for an entire year. He's also not known for his practicality; once, when told that Microsoft employed about 25,000 engineers, he announced, "We should have a million."

Such eccentricities might be endearing in the founder of a startup, but in the CEO of a multi-billion-dollar public company they inspire little confidence. If ever there was a time that Google needed grown-up leadership, it is now.

Google director of research Peter Norvig describes the search giant's culture as "a cross between a startup and grad school," where employees get the perks of both. But in reality Google is neither. It is a large and growing corporation, with obligations to its shareholders, its customers, and its staff. Among those obligations are to use its resources wisely, to compete vigorously, and to protect the interests of its customers, including their privacy. But perhaps above all else, it must also learn to assess itself honestly and recognize that its days as an arcadia for hacker savants may be coming to an end. It's time for Google to graduate.

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Copyright © 2011 IDG Communications, Inc.

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