What Boards Can Learn from Alphabet’s Leadership Change

Alphabet's board realized that it might be lacking in an area of knowledge essential to company growth, and quickly recruited a stellar candidate to fill that gap—a kind of self-evaluation critical for success.

 

 

This month, Alphabet, parent company of Google, provided a great example of some of the positive things a board can do during as a company transitions to a new CEO.

After what appears to be very careful thought and planning, Alphabet co-founders Larry Page and Sergey Brin stepped down from their roles as CEO and president of the company and named Sundar Pichai, who has led Google for the last four years, as the new Alphabet CEO. In letters posted on the company blog, the co-founders seemed to make the point that they were stepping down as part of their fiduciary responsibilities—putting the well-being of company stakeholders above any personal interests in continuing to head the company. As board members, they recognized that for the company to reach its greatest potential it needed a new CEO and a new board to compliment the many new directions the company would be pursuing for future growth.

So what are some positive things the Alphabet board did during this CEO transition?

The board selected a candidate who was groomed over a period of years. Alphabet’s succession plan was quite successful. It makes sense that the person who was heading the parent company’s main asset would be first choice to lead the company into the future, but the board must make sure that the grooming process is rigorous enough and the candidate excels in the right areas so that the succession planning works and all stakeholders are happy. One of the founders’ letters stated:

“Sundar brings humility and a deep passion for technology to our users, partners and our employees every day. He’s worked closely with us for 15 years, through the formation of Alphabet, as CEO of Google, and a member of the Alphabet Board of Directors. He shares our confidence in the value of the Alphabet structure, and the ability it provides us to tackle big challenges through technology. There is no one that we have relied on more since Alphabet was founded, and no better person to lead Google and Alphabet into the future.”

The board added expertise to support the future direction of the company. Alphabet’s board has been expanding the company’s interests into several different markets, including the renewable energy and health sectors. Soon after announcing the CEO leadership change, the company announced that it would add a board seat for Frances Arnold, the winner of the 2018 Nobel Prize in Chemistry and an elected member of all three U.S. Academies of Science, Medicine and Engineering.

It’s important to note that the Alphabet board didn’t just examine the fitness of its new CEO to tackle the challenges of leading the company in the new directions the company is expanding into, but it evaluated its own fitness as well. The board realized that it might be lacking in an area of knowledge essential to company growth, and quickly recruited a stellar candidate to fill that gap. This type of self-evaluation is critical for successful boards. Don’t be surprised if more board changes are on the way.

The board showed its commitment to diversity by bringing on another female board member. With all the heat technology companies have faced regarding their willingness to place women on their boards, it was a positive sign to see Alphabet add a highly-qualified female director. They took the extra step of adding a board seat to do it—showing other companies that they can bring qualified women onto their boards if the commitment is strong enough.

Adding Arnold might also help Alphabet deal with some of the cultural issues around sexual harassment and toxic workplace environment allegations that have surfaced at the company recently.