Read the full case below and answer the following questions.

1 - Should Pichai be concerned that Google employees disagree with his leadership style and are exiting the workplace as a results?

2 - Describe Pichai's leadership style.

3 - Should Pichai operate and innovate at both Alphabet and Google?

4 - Should Pichai become more risk aggressive and make decisions more quickly?

GOOGLE'S CHIEF EXECUTIVE: IN NEED OF A CHANGE OF LEADERSHIP STYLE? 1 Arpita Agnihotrl and Saurabh Bhattacharya wrote this case solely to provide material for class discussion. The authors do not intend to iliustrate either effective or ineffective handing of a manageriai situation. The authors may have digulsed certain names and other identifying information to protect confidentianty. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the pemission of the copyright holder. Reproduction of thls matenial is not covered under authorization by any reproduction nights organization. To order copies or request permission to reproduce materials, contact lvey Publishing, Ivey Business School, Westem Unversity, London, Ontanio, Canada, N6G ON1; (t) 519.661.3208; (e) casesegivey.ca; www.iveycases.com. Our goal is to pubkish materials of the highest quality; submit any errata to publishcasesghey.ca. Coprright 2022 . Ivey Business School Foundation Version: 2022-02-02 In 2015, Sundar Pichai was appointed chief executive officer (CEO) of California-based Google LLC (Google), and by December 2019 he had become the CEO of Alphabet Inc. (Alphabet), Google's parent company, as well. 2 Under Pichai's leadership, Alphabet's market capitalization increased by 76 per cent between December 2019 and May 2021, crossing the trillion-dollar threshold. 3 However, by June 2021 , thirty-six vice-presidents of a total of 400 senior executives had left Alphabet, and Pichai faced criticism from the senior leadership team for his risk-averse decision-making style. 4 Industry experts considered this a significant brain drain, 5 since vice-presidents served as the leadership backbone across the company. 6A common criticism by current and former executives of the company was that Pichai liked to play it safe and often said no to new opportunities. Senior executives believed that under his leadership Google was becoming too bureaucratic. 7 According to David Baker, a former director of engineering who had worked at Google for sixteen years, "The more secure Google has become financially, the more risk-averse it has become."8 What should Pichai do? Should he respond to this criticism? Should he begin to make more riskaggressive decisions? BACKGROUND Google was co-founded in 1998 by Larry Page and Sergey Brin as an Internet search engine company with a mission to "organize the world's information and make it universally accessible and useful." The company was one of America's last great conglomerates, with more than 200,000 full-time and contract workers by June 2021. 10 In October 2015, Google was reorganized, and it became a subsidiary of a new parent company, Alphabet. Co-founder Page became Alphabet's CEO and Pichai was appointed CEO of Google. In 2019, Pichai also took over as CEO of Alphabet. 11 Before joining Google in 2004, Pichai had held positions at Applied Materials Inc., a semiconductor company, and McKinsey \& Company Inc., a consulting firm. He had earned an undergraduate degree from the Indian Institute of Technology in Kharagpur and completed his higher education at Leland Stanford Junior University (Stanford University) and the Wharton School, both on scholarship. Pichai's first plane ticket to the United States had cost his father, an electrical engineer, more than a year's salary. 12 Since taking over as Google CEO in 2015 , Pichai had doubled the workforce to approximately 140,000 staff by 2021, while its parent company, Alphabet, tripled in value. 13 Page 2 W25879 Page 3 W25879 Alphabet had two main units: Google and Other Bets. Alphabet's traditional products, such as Google have cost Google $30 billion. YouTube lacked short-form, frequently updated content, but was synonymous Chrome, the Pixel phone, Google Home, Google Play, Android, and YouTube, fell under the Google unit. with video. Twitter, on the other hand, was struggling with growth and monetization. Though, it was Google's hardware unit was formed in 2016 and had products such as Google Nest and included smart generating significant amounts of real-time content and engagement. 25 doorbells, thermostats, and other smart home devices. Finally, Google Cloud was a major source of investment for Google and included Google Meet, Google Calendar, Gmail, Google+, Google Cloud Company executives believed that Pichai could be cautious to the extreme. In late July 2020, during public Search, Machine Learning, and Google Drive. 14 testimony before the US House of Representatives, he declined to answer whether Google would deny the Other Bets comprised a secretive research and development (R\&D) unit, X, with projects that ranged from use of slave labour to develop its products, saying he would need to "discuss it further." On the contrary, the Everyday Robot Project to smart glasses and salt-based energy storage. Verily Life Sciences (Verily) focused on health care and disease-prevention research with an emphasis on diseases and improving the app-using experience for patients. 15 Sidewalk Labs focused on urban innovation to improve cities through Amazon's chief executive, Jeff Bezos, answered the same question a moment later with a "Yes.,224 technology. DeepMind focused on artificial intelligence (AI) research. Some X projects became fully fledged companies, such as Loon LLC (formerly Project Loon), whose mission was to bring web access to two-thirds of the world's population using Internet-beaming hot air balloons. 16 Waymo LLC, Alphabet's self-driving car project, aimed to develop fully autonomous vehicles. 17 Prolonged Hiring Decisions Google's primary revenue stream was advertising. Google had one-third of the US $130 billion 18 US digital According to Google executives, in 2018 Pichai took too long - almost a full year-to appoint a successor 2021 (see Exhibits 1 and 2). Between 2017 and 2020 , Alphabet's Google unit was responsible for more for Kent Walker following his promotion from general counsel to senior vice-president of Global Affairs. The candidate ultimately hired was Halimah DeLaine Prado, a long-time deputy on the company's legal 2021 (see Exhibits 1 and 2). Between 2017 and 2020, Alphabet's Google unit was responsible for more than 99.5 per cent of the company's revenue (see Exhibits 1 and 3). Alphabet's annual revenue, earnings between 2015 and 2020 (see Exhibit 3). In 2020, Alphabet had more than 135,000 full-time employees, team. Prado was at the top of a list of candidates given to Pichai and, according to executives, the decision should not have taken that long. Pichai had asked to see more candidates and had prolonged the search for so long that it allegedly became a running joke among leading industry headhunters. 25 CRITICISM OF PICHAI'S DECISION-MAKING STYLE had to respond. 26 According to executives, this indicated a growing risk-averse culture under the CEO's leadership, even though Google's revenue and profits increased. Under Pichai's leadership, investment in Pichai faced several criticisms from former Google executives and employees for his slow and conservative R\&D was also steadily increasing (see Exhibit 3), although Google was not launching any new products decision making, with more specific concerns ranging from acquisition opportunities to slow hiring decisions.. unless it had to respond to its competitors. 27 Google also retired its products quickly under a project titled Google Graveyard. Prior to Pichai taking over as CEO, Google had done this on a quarterly basis. Under Pichai's leadership, executives were asked not General Issues and Missed Acquisitions Opportunities to wait until quarter end, and instead to discard projects that showed reduced potential (see Exhibit 4). Noam Bardin, a former Google employee, said, "We start companies to build products that serve people, In 2018, more than a dozen Google vice-presidents warned Pichai in an email that the company was not to sit in meetings with lawyers." Bardin further added, "The innovation challenges .. . will only get experiencing significant growth pains. They mentioned that there were problems with the coordination of worse as the risk tolerance will go down.,228 technical decisions and that the suggestions of the vice-chairs were often ignored. Google executives were clear in their demands: they wanted a more decisive leader at the top. Executives at Google also criticized Pichai for his slow and cautious decision-making style, which they believed was slowing the company's innovation and growth. 21 Google executives asserted that Pichai's timid management style and fears of risking controversy resulted in the company missing out on and passing up growth opportunities, as well as fuelling internal tension and fears of stagnation. The email mentioned that the company took too long to decide on important issues and did not consider the input of its executives. In one 2017 instance, Google executives proposed acquiring the online commerce service Shopify Inc. (Shopify) to challenge Amazon.com, Inc. (Amazon). Pichai rejected the idea because he believed Shopify was too expensive. Employee Satisfaction with Pichai Decreasing Executives felt that Pichai was unnecessarily apprehensive and that "the price was a convenient and During the 2019 annual internal poll at Google (known as "Googlegeist"), questions about whether Pichai's ultimately misguided justification." Shopify's potential was reflected in the fact that its share price had vision of what the company could achieve inspired employees or not, showed a "yes" rate of 78 per cent, risen almost ten times by 2021 following Google's missed opportunity. 22 Similarly, in 2016, Google was believed to have missed the opportunity to acquire Twitter, which according to sources would have been complementary to YouTube, already owned by Google. The acquisition would Page 4 W25879 Page 5 W25879 Other Controversies Assessing Growth Opportunities In 2017, Pichai fired one of Google's engineers, James Damore, who had suggested that men were more Caesar Sengupta, a former Google vice-president, commented on Pichai's leadership style: "Would I be suited to tech jobs than women. Executives indicated that Pichai should have let the controversy subside. happier if he made decisions faster? Yes.... But am I happy that he gets nearly all of his decisions right? Damore later sued Google. 30 In the same year, when Google launched Project Maven, a project to integrate Yes." 38 Google acquired the activity tracker Fitbit LLC after a year-long discussion that ended in January AI into computer systems, some employees raised objections. More than 3,000 employees, including most 2021. Pichai grappled with certain aspects of the deal, including acquisition integration issues, and product senior engineers - signed an open letter to raise objections to Google's participation in Project Maven. 31 plans that Sameer Samat, vice-president of Product Management at Google, had not focused on. Samat This led to the forced departure of the head of Project Maven when Pichai gave in to employee criticism. 32 said, "I could see how these multiple discussions could make someone feel like we are slow to make In May 2021, Google AI ethicist Dr. Timnit Gebru was asked to resign after submitting a research paper decisions." He added, "The reality is, these are really big decisions.,"39 for a conference that scrutinized inherent bias in AI technology developed by Google. The paper had previously been rejected by Google. More than 2,000 Google employees signed a petition supporting Gebru, asking the leadership to explain why Google had rejected her paper. 33 Some executives also favoured ideas Pichai brought to the company, such as the creation of new decision-making bodies in 2019 , made so that fewer decisions needed his approval. 40 Pichai also set a very high bar for decisions on mergers and acquisitions. He said, "Really we are always evaluating opportunities." Pichai added, "To me THE POSITIVES OF PICHAI'S LEADERSHIP STYLE it's been more about us finding the right fit rather than being constrained by anything in particular.,"41 Handling Monopoly Allegations New Products and Projects Further criticism of Pichai came when Google faced significant external pressure from regulators According to one Google executive, the purpose of creating Other Betswas not to make large amounts of worldwide related to the company's monopoly on online advertising. This criticism reached new heights in money, "but because Larry or Sergey felt very passionately about something.. n2 However, experts believed 2021 , while revenue and profits rose every three months. that Other Bets projects were neither disruptive nor game-changers. Unconventional projects were also Luiz Barroso, one of the company's most senior technical executives, remarked, "I don't think anyone else turning out to be extraordinarily expensive, generating revenues of $178 million and losses of $1.1 billion. could manage these issues as well as Sundar. 334 After Pichai took over these projects, he changed this philosophy, and funding for Waymo LLC came from outside investors while Sidewalk Labs was made to abandon plans to develop a $900 million smart city in Toronto, following backlash from local residents. 43 Waymo LLC's spinning off from Alphabet was also discussed, since the project was not paying off. 44 Chennapragada credited Pichai for cutting down on Keeping a Low Profile "vanity projects" that did not add much value to the company 45 Lorraine Twohill, Google's chief marketing According to some Google employees, Pichai was a thoughtful and organized leader who focused on his officer, said, "People forget how big a risk Sundar took in launching Chrome, and even Chromebooks, as management team instead of his ego. Pichai, compared to rivals such as Meta Platforms Inc.'s Mark well as the early bets he made on AI and Cloud." Twohill added, "He [Pichai] is five years ahead of Zuckerberg, Twitter's Jack Dorsey, and Tesla Inc.'s Elon Musk, kept a much lower profile. 35 Aparna everyone else when it comes to the bigger picture.,46 Pichai committed the necessary resources to Chennapragada, former vice-president of Google, mentioned that Pichai did not act like a larger-than-life autocratic boss who might be idealized in the tech industry, but that he could still create a toxic culture. In response, other Google executives mentioned that his deputies could make decisions without his approval. developing hardware and the Cloud, markets where Google was leveraging AI to catch up to its competitors. Concern for employees CEO DYNAMICS IN GENERAL Studies found that between 1991 and 2021, 30 per cent of Fortune 500 company CEOs were in the post for fewer than three years. 47 Several studies reported top executive failure rates as high as 75 per cent, and Pichai showed his concern for employees' health and. During the COVID-19 pandemic, Google became rarely less than 30 per cent. 48 In 2021 , on average, chief executives specifically lasted for 7.6 years, globally, one of the first companies in the United States to ask employees to work from home. 36 whereas in 1995, this figure was 9.5 years. 49 In fact, two out of five new CEOs failed in their first eighteen months on the job. Reasons for this failure had less to do with competence, knowledge, or experience, and more to do with leadership style, where hubris and ego were general concerns. Long-lasting iconic leaders Avoiding Confrontation were increasingly becoming the exception rather than the rule. Research also suggested that people gravitated toward charismatic personalities, usually with big egos, who inspired them with their Pichai had largely avoided any outright conflict at Google, which was a common practice in the company. "megalomaniac vision.." 50 Individuals preferred a confident rather than a competent leader who otherwise He remained quiet in most meetings, frequently answering questions indirectly, or asking for more time to make decisions in private. Pichai also avoided any direct conflict with his senior management team. One former executive mentioned that when he disagreed with Pichai in a meeting with Page, Pichai did not show any reaction at the time but later told the executive, "We should never disagree in front of Larry.. 137 PICHAI'S CLIMB TO CEO PREVIOUS GOOGLE CEOS VERSUS PICHAI In his first job at Google, Pichai joined a small team that worked on Google's search toolbar. 51 This Before Pichai, Page and Schmidt had held the CEO position at Google. Both were famously strong happened at a time when Microsoft Corporation's Internet Explorer dominated the web world. Pichai suggested that Google should build its own browser, which then CEO, Eric Schmidt, objected to. 52 personalities, and their era at Google was marked by scandals ranging from user privacy violations to sexual However, Page and Brin were in favour of the project. Chrome turned out to be a huge success, with a harassment within the organization. 66 Schmidt was Google's longest-serving CEO - he was in the post reported worldwide market share of 45 per cent by 2015 and 70 per cent by 2020.53 between 2001 and 2011 - and oversaw acquisitions that experts believed formed the backbone of modern Google, including YouTube, Android, and the advertising powerhouse DoubleClick Inc. In 2011, Page succeeded Schmidt, which experts believed would speed up decision-making at Google. Page bluntly Next, Pichai helped develop the Chrome operating system for laptops that stored data in the Cloud rather dismissed ideas he did not like. He also expanded the company's so-called moonshot bets and debated bold than locally on a device. By 2014, his promotion to head of products elevated him to Page's second-inideas such as acquiring Tesla Inc. 67 Page was also more prone to outbursts and often ordered entire projects command. Pichai oversaw day-to-day operations of all Google's big products, including Google Maps, to be halted when he did not like the smallest details, such as promotional email content or appearance. 68 Google Search, and advertising, in addition to new endeavours like Google Photos. 54 Wesley Chan, who in One former executive who had worked with both Pichai and the co-founders said, "After the craziness of 2004 handed over the Google Toolbar product to Pichai, commented on Pichai's abilities, saying, "He has the Eric Schmidts and the Larry Pages, there was suddenly this sense of humble normality." The executive this amazing, almost twelve-year track record of being this guy that always launched things that people added, "Sundar brought a more balanced point of view." Pichai was believed to be more of a "product wanted." .55 Pichai led a project where companies like Dell Inc. required convincing to pre-install Google's guy," 9 having the capability to manage the Google search engine. Page had been expected to give complete search engine on computers worldwide. 56 Industry experts viewed Pichai as a rare talent - partly fearless attention to the big-picture bets that could help Google remain committed to its unconventional mission. 70 dreamer, partly "nuts-and-bolts product person." Pichai believed in incremental advancements and in expanding Google's in-house products. In 2012, when THE ROAD AHEAD Google was ready to launch its social platform Google+ on Apple Inc., Pichai opposed it, saying that it should be launched on Google devices, and that if Google technology was not ready then the launch of the platform should wait. 58 Android, the mobile software platform, was also launched under Pichai's supervision. 59 When Pichai took over the Android team in 2013, he restructured the product to enable Google executives who criticized Pichai's leadership also recognized and appreciated his more caring style. They acknowledged that Google had become more disciplined and organized-a bigger and more collaboration with Google Assistant. This virtual assistant became the central feature of Android phones, professional company than it had been prior to Pichai's appointment as CEO. The executives mentioned but before Pichai the Android team had resisted any close collaboration. 60 that although it was not uncommon for a company that had grown big to slow down decision-making or make more risk-averse decisions in order to retain what had made the company successful in the first place, Pichai's success at Google made him famous in the tech sector. Twitter had even tried to poach Pichai as they were not happy with Google's culture of slowness. Although in 2019 Pichai introduced more decisionvice-president of products, and his name was also floated as a candidate to fill the CEO role at Microsoft making bodies, executives felt Google's best days were still behind them. Executives at other tech Corporation after Steve Ballmer exited. FBR Capital analyst William Bird suggested that Page and Brin companies in Silicon Valley also believed that it had never been easier than it was under Pichai's leadership promoted Pichai as a tactic to keep him on staff. Bird said, "The new structure offers an important way to to persuade Google executives to forgo their stable seven-figure salaries for an opportunity elsewhere. 71 promote and retain Sundar Pichai.,'i. Given the exit of Google's workforce, should Pichai change his leadership style? Should he be concerned with the criticism of his style of leadership? PICHAI'S CHALLENGES Though its peers in Silicon Valley appreciated Google for its creativity and innovation, by 2020 industry experts were concerned about Google's innovation stasis. 62 Google's growth primarily came from online advertising; most of its innovation projects had yet to show results. Also, the company had not had any big consumer product success in a decade (2011-2020). During the COVID-19 pandemic, Google posted for the first time in its history a lower quarterly revenue (i.e., the second quarter of 2020) while other tech giants showed more robust results. 63 In 2021, when US state attomeys tried to break up Google's global empire, employees were pressuring the company to chart a new growth path and not rely only on leveraging digital advertising. According to industry experts, this growing pressure implied that Pichai needed to begin making swift and risky decisions, which he had avoided until then. However, for Pichai, the ultimate ambitious project was still Google Search. He said that while Google Search had been very successful in the previous twenty years, limitations and scope for improvement still existed. Pichai said, "Even today, when people type in a complex query, we're looking at keywords, trying to match it." 364 He added, "We still have a long way to go to actually understand what the user's intent is, the context, where they are coming from, and [give] the best