Red Hat CEO: Here's how to create an 'Open Organization'

In a brand-new book, Red Hat CEO Jim Whitehurst explains what he's learned from leading the largest open source company and how the lessons can be applied

Red Hat may be the only open source billion-dollar unicorn, but CEO Jim Whitehurst believes the principles that make the company thrive are broadly applicable -- that is, openness, meritocracy, and furious, ad nauseum debate.

While that last attribute may not sound like a winner, it can be, as Whitehurst explains in a new book, "The Open Organization."

It’s possible, as Peter Levine has argued, that “there will never be another Red Hat” -- or, as I have insisted, Red Hat is a one-off. But this doesn’t mean we're incapable of learning to be a bit more like Red Hat and profit thereby.

To that end, I sat down with Whitehurst to discuss "The Open Organization" and how non-open-source companies can follow Red Hat’s lead.

Opening up the “open organization”

Whitehurst hasn’t always worked for Red Hat. Eight years ago, Whitehurst dumped a high-powered COO role at Delta Air Lines for Red Hat, causing some in the industry (including me) to shake our collective heads ... and fists.

But approaching 10 years on the job, Whitehurst has clearly been good for Red Hat. Despite a rocky, recession-hit first year, Red Hat’s stock price has climbed consistently ever since.

Red Hat has also been good to Whitehurst, forcing him to accentuate positive leadership qualities honed at Delta and Boston Consulting Group, as well as learn new ones. These new ones, it turns out, are what differentiate the open organization. As he writes:

An “open organization” -- which I define as an organization that engages participative communities both inside and out -- responds to opportunities more quickly, has access to resources and talent outside the organization, and inspires, motivates, and empowers people at all levels to act with accountability. The beauty of an open organization is that it is not about pedaling harder, but about tapping into new sources of power both inside and outside to keep pace with all the fast-moving changes in your environment.

All of this sounds great, but how do you achieve this in practice? Whitehurst notes that it requires companies to “transition into thinking of people as members of a community, moving from a transactional mindset to one built on commitment.” It is this commitment, perhaps more than anything else, that “inspires [employees] to truly opt in and bring their passion and energy to their work every day.”

Commitment, in Whitehurst’s open organization, is reciprocal. Employees aren’t treated like mindless sheep. Rather, they are engaged as equals.

Build what you like

Rather than management dictating what the peons must do, open organizations largely self-organize. As he writes, “Projects of all kinds, beyond just software, naturally emerge throughout Red Hat until it’s obvious to everyone that someone needs to work on it full-time.”

Sound impossible? As Whitehurst went on to tell me, “You allow people to experiment, but you make projects small enough that they’re not bet-the-company sort of endeavors. They’re iterative with a lot of checkpoints along the way. I don’t know how you would truly allow your people to have a lot of latitude if you didn’t also have the incremental development process.”

Those who've earned trust get the chance to build more. Others follow. “There’s a mix of top-down and bottom-up,” he stresses.

But even when directions come top-down, Whitehurst and other executives aren’t allowed to always be right in an open organization. In fact, both in the book and in our conversation, it sounds like leadership within an open organization involves taking lots of criticism. Importantly, such criticism is founded in open discussion, not backbiting.

Listening to Whitehurst talk about the process -- filled with endless email threads, phone fights, and other forms of confrontation, it sounded like a lot of work merely getting to a decision. That’s the point, he told me. “You have to believe you really will ultimately get to a better decision. We do it in the decision-making process, not after the decision and in the implementation phase.”

Through discussion and performance, good decisions -- and good employees -- rise to the top.

Enabling the “thermostats”

In a more traditional company, all sorts of bureaucratic nonsense gets in the way of recognizing merit. Yet even in old-school enterprises, “thermostats” arise.

These thermostats are recognized leaders within an organization, even if they don’t carry a VP title. But “the problem with a traditional company is that actually a lot of the thermostats won’t get promoted because they’re often the naysayers,” Whitehurst tells me. “They see the problems that are never addressed. They see all this dysfunctional stuff, they complain, and others gravitate to them, but they’re never promoted because they’re the troublemakers.”

But at Red Hat, Whitehurst says, thermostats get the opposite treatment.

“You’ve got to engage those people and listen to them. You can then make them really productive.” In fact, he continues, whereas thermostats can be perceived as negative elsewhere, in an open organization like Red Hat “the thermostats tend to be positive.” Why? Because they’re heard. Someone that is simply negative “tends to get shouted down.”

Significantly, Red Hat has found ways to promote these thermostats without having to give them titles they may not want or may be ill-suited for their abilities. Red Hat distinguishes between “careers of achievement” and “careers of advancement,” with the former involving “pay scales that continue to go up, even without a title advancement.”

This sort of thinking makes sense in a company that emerged from open source communities and continues to hew closely to them. But can it work at your company?

You, too, can be open

When I asked Whitehurst if all this openness chatter was pie-in-the-sky theory that works for Red Hat but may not translate to a bank or a retailer, he disagreed.

At Delta I didn’t really have a good sense of how to interact with the front line. I remember early on I was talking to employees and told them the number one thing they could do was to get the planes out on time. That was how to turn around the company. We went from dead last to number one. All I did was tell people the context of the turnaround strategy, and they did it.
Delta  is a big, traditional company, with a traditional workforce. But it worked.
You give the people the context for how they fit into the strategy, and people will rise up and deliver. The simple mindset tweak -- my role is to engage employees and get them to want to do it -- can make a fundamental change in any company.

Perhaps this -- more than the argumentative decision-making, the careers of achievement, or anything else -- truly defines Red Hat and the open organization. It’s so simple, but so rarely observed. Employees are shielded from the very data that could help them to be more successful and blocked from speaking up because their titles don’t carry enough weight.

But at Red Hat, an open organization, community is all, and community is ultimately about individuals. By celebrating the latent greatness within its community members, Red Hat fosters rabid employee devotion. This is a lesson any company can apply.

Copyright © 2015 IDG Communications, Inc.

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