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.

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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.

The problem is that you can't improve upon a party. And you can't improve everyday life by making everything more like a party. People want to isolate social from nonsocial aspects of their lives. It's human nature.

People prefer Facebook to Google's many socially enabled services because Facebook is a place they can go to be social. With Google's far-flung social services, there is no "place." There is no party. Google's approach to social isn't fun.

Google's strategy of baking social into everything will never, ever beat Facebook. Google needs a social networking site. (But not Orkut.)

It's not forward-thinking. Big Ideas like blogging, Web 2.0, social bookmarking and social networking rise, crest, then fall, becoming just part of the background noise while the crowds go chasing the Next Big Thing. Social has already crested as an exciting cultural phenomenon. Yes, it will always be with us, but social will soon lose its status as Flavor of the Month. Google should be focused more on inventing what comes after social.

It focuses Google on Facebook's mission. Google's mission is to "organize the world's information." Facebook's mission is to "give people the power to share and make the world more open and connected." In a way, Page's edict tells employees: "Stop working on Google's mission and start working on Facebook's."

It will incentivize employees to force social features in places where they don't belong. A team tasked with some online service should focus on making that service awesome, not wrecking it with contrived social features.

Google has already lost at least one user because of misplaced social enthusiasm. I used to be a devoted Google Reader fan. Then Buzz came along. Google made the error of tying Buzz sharing to Reader sharing. The result was that all my "friends" on Buzz also became "friends" on Reader. My tightly controlled list of RSS subscriptions became flooded with everything shared by my Buzz community. It forced me to choose between Buzz and Reader, so I dropped Reader in favor of a competing product.

Google tried so hard to make Reader social that it ruined it, at least for me. We can expect more errors like this as Googlers chase social bonus bucks.

The incentive rewards promoting something, not building something. It all smells like Microsoft's denial around Windows Vista, when that company believed user antipathy toward Vista was a marketing issue -- just a big misunderstanding.

Instead of dangling thousands of dollars in front of employees who can't do anything except spam family and friends, dangle millions in front of the developers, designers and others who can build rather than merely promote.

The company is using big bucks to think small -- telling cousin Jeb about +1 isn't a strategy for beating Facebook.

It will make public what Google executives think of Google's own products. Here's what's going to happen next year. Google will probably be in more or less the same social boat it's in right now. Facebook will still dominate the social scene, and Google will still be trying too hard to compete. Executives will want to emphasize the positive to the press, investors and users. What are they going to do?

If they pay out big bucks for success, investors will say: "Really? That's your idea of success?" If they dock workers for failure, critics like me will say things like, "Even Google hates their own social services."

Page's edict sets Google up for a public relations black eye one way or the other. I'm not sure they've thought this through.

Here's what Larry should do

Google has a real chance to beat Facebook at social networking. No, I'm serious! The company is actually much closer than people realize.

Google already has all or most of the pieces needed to dominate: Profiles, Buzz, +1, Contacts, Calendar, Gmail, Search, Picasa, Talk, AdSense, Checkout, Jaiku, Latitude and others.

Google already has a gazillion "members." The only problems are that they don't know they're members and they have nowhere to go.

If Page is going to mandate success in social, he'll need a three-pronged strategy:

1. Build a dedicated site where it all comes together like Facebook. The dedicated site would not be instead of social features everywhere, but in addition to them. Imagine Facebook, but where your existing Talk account is the "Chat" feature. Your Gmail account is the "Messaging" feature. Latitude is "Places." Buzz is your "Wall." Profiles is your "Profile." And so on.

2. Make social features outside the social networking site a choice that can be easily turned on or off. Stop jamming social down our throats. Make it passively optional for those who want it but invisible to those who don't. Don't fix what isn't broken with the "social" solution.

3. Hammer away at Facebook's vulnerabilities, which are privacy, transparency and spam. If Google's social network was extremely good at letting you know and control what you're sharing and what you're not sharing, new users would come flooding in. And don't let anyone spam your Wall with invitations, promotions and other junk.

Page is only one week into his new job, and already he's made a huge mistake. It's still not too late for Google to dominate social networking. But first it need to understand it.

Mike Elgan writes about technology and tech culture. Contact and learn more about Mike at Elgan.com, or subscribe to his free e-mail newsletter, Mike's List.