The Power of Three

9 June 2009 Bernard Girard

In an excerpt from his book The Google Way, author Bernard Girard examines the company's exceptional triumvirate management structure.

Had the leaders of Google followed the rules and undergone the typical venture capital rite of passage, they would have written a business plan that laid out a detailed financial model showing how they would make money and how long it would take to make a profit for their initial investors. They did nothing of the sort. Instead, they started by creating user demand and only then did they consider how to generate income.

Is this paradoxical? Undoubtedly. Would this model be difficult to recreate elsewhere? Certainly. In fact, their venture was made possible only because, at the outset, they found confident investors who were willing to wait and because they were brash enough to make their search engine free without first trying to earn money.

Their primary goal was to produce high-quality results first - to make Google’s search engine so much better than competing engines that it would attract hordes of visitors. And it worked. Google was undoubtedly lucky: the company was born into a favorable environment, it had patient investors, and it had a large fan club of devoted users on its side. But none of that would have been enough had Google not figured out how to do things differently, starting from the top.

Google built an original system of corporate governance based on a triumvirate that allowed the company to develop and shielded it from shareholder pressures that could have derailed it.

A triumvirate that works (against all odds)

No management authority would have advised Google to install a triumvirate as top management. When we think of corporate governance, common corporate wisdom tells us to have one leader at the top: a CEO to direct the company and take the fall if things don’t go as planned. Triangular relationships have a bad reputation, dating back to the failed triumvirates of ancient Rome.*

Strangely enough though, things went well after Page and Brin recruited Eric Schmidt in 2001 from Novell, Inc, where he led strategic planning, management, and technology development as chairman and CEO. Whereas a typical startup would have divided areas of authority, with Schmidt in charge of the company’s management and the co-founders in charge of vision and technology, Page and Brin created a three-headed, power-sharing directorate instead.

* The Roman Senate engineered two restructurings that created triumvirates to resolve personality conflicts among pretenders to the throne. The first was Julius Caesar, Pompey, and Crassus, and then many years later, Octavian, Mark Antony, and Lepidus. Both attempts were utter failures that led to war.

"Google built an original system of corporate governance based on a triumvirate that allowed the company to develop and shielded it from shareholder pressures that could have derailed it."

By all accounts (and against conventional wisdom), this structure has played a critical and positive role on several occasions. The triumvirate approach is so far out of the ordinary that many experts are taken aback—yet it works. Why does the Google triumvirate work when so many others have failed? Its success is probably due in large part to the ability it gives the others to apply the brakes when success inflates the ego of any one of the leaders.

Anyone who has followed leaders in the technology field knows of narcissistic leaders like Bill Gates, Steve Jobs, and Larry Ellison. Certainly these leaders have had tremendous success, but they can also cause tremendous shifts in organisational performance, with their companies experiencing higher highs and lower lows. And they’re notoriously difficult to work for.

According to their 2007 study titled It’s All About Me, Chatterjee and Hambrick conclude that narcissism is particularly prevalent among CEOs in the field of new technology. Among Google’s three leaders, however, anyone who is tempted to play God is quickly held to account by the checks and balances of the other two leaders.

Google’s triumvirate structure also makes reversing errors more quickly possible. A manager alone at the head of a company may be reluctant to correct his or her decisions, even when those decisions are clearly incorrect, due to hubris or a fear of losing his or her position. The triumvirate is less likely to suffer from this problem.

Because a triumvirate shares responsibility, when the triumvirate makes decisions, you can never quite pin down who really made that bad decision, and the likelihood of any one person taking the blame is significantly reduced.

Note: of course, the triumvirate always runs the risk of two leaders turning against the third one, but when the structure works, it offers significant advantages.

A triumvirate structure supplies multiple viewpoints, perspectives, and expertise which can help to reassure investors and customers that someone at the top of the company understands and shares their concerns. For example, Google shareholders may assume that Schmidt will defend their economic interests, whereas users place confidence in Page and Brin to resist market pressures and to focus the company’s direction on producing a quality product.

Finally, a triumvirate can change the balance of power at the top: three managers can better resist pressure from shareholders and investors than can one person alone.

By adopting this mutual scheme of governance, with oversight by their peers, Google’s leaders are freed from outside influences on corporate policies. The pull that middle management, the technocracy, and outside consultants generally exert on large companies, where all decision making is preceded by lengthy discussion and deliberation, is avoided.

As puzzling as this may seem, by agreeing to work under a system of mutual monitoring, Page, Brin, and Schmidt are actually freer. They’ve loosened constraints that, under the guise of reducing risk and forcing rational decisions, put leaders of most large companies under the control of investors, associates, and advisors. At the same time, they maximise the freedom needed to build a company that doesn’t hesitate to break traditional management rules.

As a prerequisite for improving company performance, most treatises on corporate governance emphasise putting strict controls on leaders to limit their room to maneuver. The leaders of Google, however, have been able to find a formula that both preserves broad margins of autonomy for them as a trio and allows them to avoid some of the faults frequently found in leaders who are surrounded by compliant underlings. And, perhaps not least of all, the triumvirate structure guarantees continuity in case one leader should unexpectedly step aside.

How can Google’s triumvirate continue to succeed?

Historically, triumvirates have failed because they were formed to avoid wars of succession, with each player retaining the ambition to become Numero Uno. Most triumvirates set up in modern companies as a result of mergers or acquisitions have suffered the same fate. Google’s triumvirate management structure has succeeded so far for the following reasons.

Qualified leadership

All three leaders at Google are qualified to act as top executives. Page and Brin are the company’s founders; Schmidt has directed other large companies.

Mutual respect

Eric Schmidt never misses a chance to say how impressed he is by the intelligence of his two younger colleagues.

Shared values

All three leaders of Google are engineers by training. All appreciate the rigor of mathematical reasoning, have confidence in technology, and share the same view of money: they have no problem with making a lot of it, but doing so is not an obsession.

Different perspectives

Each leader has a different perspective. Schmidt is focused on administration; Page pays close attention to the company’s social structure; and Brin is in charge of ethical matters. Schmidt is the one who generally speaks to financial analysts, whereas Brin was the spokesperson when it came time to rethink the conditions of entry into the Chinese market. Only time will tell, of course, but few would argue that Google is off to an inauspicious start.

The Google Way is published by No Starch Press, 2009.