• Fortune, Wednesday, May 21, 2008 11:32 AM

Google CEO Eric Schmidt waxes philosophical about the challenges of running a global enterprise. Don't believe everything you read in the press: Schmidt said that Google is not immune to the problems facing other global companies. "In fact, Google faces them faster because of our growth," he said, before taking a stab at Microsoft: "And a poorly run company will either deny those challenges exist, which is just stupidity, but people do it, or they will fail to address them. They won't have a forum. In other words, they'll keep doing their old thing."

Leadership is always the most important challenge, Schmidt said, adding that high level executives almost always fall off their pedestal by their own actions and not the actions of others. "If you look at the press coverage it's all focused on external threats but the biggest threat is internal, and it's not just true of Google, by the way," he said.

For Google, one such threat is distraction from Google's core business: search. If the company's leaders suddenly decided to devote 90% of the company's energy to Google Apps, then Google would fall behind in its core business. "We don't allow that because we're disciplined about spending a lot of time on our core businesses," Schmidt said. "We hope at some point Google Apps will become a core business, but today it's not, so (that's) a threat of distraction."

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