Leadership & Management

Eric Schmidt: "Change Happens when Things are Hard"

The Google chairman and CEO explains why, even though the job market is ugly, 2009 is an excellent year to be a new graduate.

March 01, 2009

| by Dave Murphy

Google Chairman and CEO Eric Schmidt knows full well that the economy is staggering, that the job market is downright ugly, and a recovery is unlikely before 2010. But he also believes 2009 is a great year when it comes to one thing: potential.

“Change happens when things are hard,” Schmidt said March 10 at the student-sponsored “View From The Top” speaker series at Stanford GSB. “The economy and the situation that we’re in now will create phenomenal opportunities that are before each and every one of you. If you think about it, this is literally the best time to graduate in 50 years. Assets are cheap, and expectations are set realistically.”

“The genius of the American system is that it corrects,” said Schmidt, who advises the Obama administration on technology policy and the economy, and is a lecturer in strategic management at the Business School. “Whatever you think of the previous structure, it’s just being corrected big time. And I mean big time. In one month, enormous aspects of our government are being redone.”

He said technological changes should include making the processes of government, medicine, finance, and other critical areas of society more transparent. The changes should also include increasing the use of cloud computing, which employs the internet to allow computer systems to share applications, letting businesses reduce in-house information technology systems.

Assumptions have changed since many technology companies were founded, Schmidt explained. For example, Larry Page and Sergey Brin created Google on personal computers at a time when networks were less reliable than computers — unlike now — and smart phones and other internet-accessing devices were far less ubiquitous.

“Why did Larry and Sergey use PCs?” Schmidt said. “Because they were cheap.”

Now internet access is cheap and widespread, and businesses rely on it far more, he said. “With cloud computing it’s now possible to have the same apps at home and at work and still have the same level of security.”

But cloud computing needs to evolve, Schmidt said. “When television first came out, the first shows were radio shows on television,” which didn’t take advantage of the visual medium, he said, adding that people are just learning how to take advantage of cloud computing’s potential. If users allow companies to amass data on queries without invading privacy, for example, trends can be seen about everything from food preferences to pandemics.

“In Google, we can actually detect anonymously rises in queries because we centralize the servers,” Schmidt said, “and then we can alert the health care professionals that we think that there is an outbreak of flu in their area and get them [involved]. The cycle is about six months earlier. This saves somewhere between 10,000 and 30,000 lives a year because we use that information to get people ahead of the cycle.”

Instead of reading from textbooks, students could be assigned a set of queries, he said. Some would find information that would enthuse them, and they would become experts for their classmates. “You have all the information in one place and you have access.”

Schmidt said transparency could also lead to a Wikipedia-like site for doctors to share information about which treatments worked and which didn’t.

“Can you imagine if you had the same thing about the financial world? And we had been able to use that to monitor the things that happened over the past five years in the broad-based global financial industry? Think about how different we would be in terms of knowing where we are and what we have to do.”

Congress would be more effective if the public could see changes to bills online, Schmidt said, adding that every public room could have a camera that streamed video live on the internet.

“The new idea,” he said, “is that transparency is the best defense against bad decisions.”

Having so much information so accessible leads to exciting applications, Schmidt said. He said Google’s Android operating system in cell phones, for example, can take pictures of the buildings around you and use GPS to tell you a lot about each of them — and what goes on inside.

“All of a sudden, you’ve got a GPS and a camera and a supercomputer in your hand, backed up by all the world’s data.”

Another of his favorites: A product lets you scan the bar code of an item in a store, then tells you if it’s cheaper online.

He talked about venture capitalist Bill Joy, who finds an area of interest, then looks up research papers about it. “He figures out who the two or three best authors are, and he calls them. And, by the way, these are people who no one ever calls, so they call him back. He talks to them and says: “What’s the most interesting thing in your field?”

Amid his enthusiasm, Schmidt also realizes there are always people resistant to change, particularly companies afraid of competition. That resistance weakens during a recession, however, which is why he expects changes soon.

“Literally in the next year,” Schmidt said. “That’s how quickly.”

The “View From The Top” Speaker Series is organized by students with the cooperation of the School’s Center for Leadership Development and Research.

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