Larry Page's First Blunder

Eric Schmidt is out at Google. Larry Page is in. I miss Eric already.

Page, who started as CEO on Monday, wasted no time changing the company's focus and direction. He implemented a major reorganization in his first week, installing smart loyalists to head various product groups. They'll have more autonomy and report directly to Page. Great idea, Larry!

Google's new king screwed up royally, however, when he sent a companywide memo tying 25% of every employee's bonus to Google's success in social. As one commenter put it, Page tied all Google bonuses to "Facebook envy."

Why the social incentive was a mistake

Only a small fraction of Google's employees are involved in social services. So why is Page incentivizing everybody?

Page wants employees to advocate Google's social networking features to family and friends. "When we release products, try them and encourage your family and friends to do the same," he wrote in the memo. Allegedly.

Call it the "Spam Grandma for Cash" program.

Page also wants, no doubt, to apply internal peer pressure to employees directly involved in social features to get off their butts and beat Facebook. Imagine the Google social teams huddled together in the cafeteria trying to ignore icy stares from all directions -- including the kitchen staff.

I appreciate the new chief's aggressiveness, but Page's bonus incentive on social success is a lousy idea. Here's why:

It doesn't get at the root of the problem. The reason Google fails in social networking is not because Ed from the mailroom isn't pushing Google Profiles on his uncle. It's because Google has a blind spot about the "human element" in usability.

Google doesn't seem to understand that Facebook is a party.

Imagine Larry Page sitting alone in his apartment while Mark Zuckerberg is having the time of his life next door. The music is loud. There's food and cocktails. Fashionably dressed hipsters are laughing on the balcony.

So Larry gets jealous and decides he's going to invent something even better than a party. He uses his massive brain to deconstruct all the elements of a party and bring those elements to other aspects of people's lives.

He invents a way to serve nachos to people while they're in bed at night. Cocktails for breakfast. Booming house music in the bathroom. Drunken small-talk during religious services. Party stuff everywhere.

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