Red Hat CEO reveals how openness works in management
Red Hat's President and CEO Jim Whitehurst (below) had a background in turning round failing businesses like the US's Delta Air Lines. No management theorist, though with a background in management as a partner with The Boston Consulting Group, he found a different model at Red Hat, and has now written a book about it.....
In “The Open Organization“, out this month, he argues for a way of working that is different from the usual hierarchichal structure in the IT industry: “If you can create a compelling reason for people to participate, they will.” In the book (published by Harvard Business Review), he addresses how to knock down the walls of an organization in ways that allow collaboration from within as well as from customers, vendors, and partners. Based on open source principles of transparency, participation, and collaboration, “open management” challenges conventional business ideas about what companies are, how they run, and how they make money.
As he says: “I thought I knew how well-performing organizations should operate. I thought I knew what it took to manage people and get work done. But the techniques I had learned, the traditional beliefs I held for management and how people were taught to run companies and lead organisations, were to be challenged when I entered the world of Red Hat and open source.”
Red Hat’s open organisation operates using unusual management principles that leverage the power of participation—both internally and externally—to generate consistent financial results. “It uses open sourcing to tap a massive, disparate community of people, all with different skills and motivations, to make super-high-performing products capable of running some of the most secure and mission critical computer systems in the world.”
Being European, and sceptical by nature, IT Europa asked him some questions.........
IT Europa: Red Hat's success is proven through its results, which makes us wonder why so few others, even in smaller companies, have adopted this sort of management structure. The hierarchy model is so prevalent, especially in IT companies who are always racing to the next results period, or driven by share price, we're not aware of any other large companies in IT that even try to follow this model, although many pay lip-service to employee involvement. Are you aware of any other organisations trying this approach?
JW: “I think it's more prevalent in small companies because they haven't gotten to the point yet where they have tried to abstract emotion out of running a business. What I mean by that is in a small company, when a leader has everyone in a room and everyone can still fit in a room together, they're more likely to recognize people are emotional beings and therefore naturally involve them more.”
“I don't think there's any reason this can't be done at large organizations. I generally think large organizations start to get a little less personal as they grow. It's hard to know everyone and as we're all taught, the older we get the more "serious" we have to behave.”
“I don't think there is the "regular" way and a "this way" (aka open organization way). This way, the open organization way, is the way we do it here at Red Hat. I think a lot of companies are experimenting with pieces of what we're calling the "open organization". For instance, Tony Hsieh, CEO of Zappos, does a lot around building passion. I think Google has done a fair amount of work around trying to connect their people to their mission. Ed Catmull's book talks about how Pixar really focuses on having the hard conversations.”
“I think a lot of companies have done components of the "open organization". Maybe at Red Hat we've gone a little further in trying to pull it all together.”
IT Europa: “While open source carries its own message and community, how hard do you have to work on managing and keeping your eyes on the business with all the decision-making devolved?”
JW: “Just because we try to push decision-making out, that doesn't mean I'm not deeply involved in decisions. I would say I spend more time on decision-making because our process is so inclusive. Since so many people are involved in decisions at Red Hat, as a leader, my job is to foster open dialogue during that process.”
“What I spend less time doing is change management and execution. I've found that generally if people are involved from the beginning in making a decision, execution seems to happen better. That's really where the time-savings comes in. It doesn't come from the decision-making component itself, it comes from the execution component.”
IT Europa: “We certainly could not see some of the more “driven” people at the top of some other IT businesses being able to work like this. Would anyone without your background in management and turning round failing businesses be able to work in such a business?
JW: “I agree with that first point. I'm one role in an organization that has a lot of other senior leaders so I've had a great opportunity to watch people come into Red Hat. And some people are like fish to water, they love this place. They love the culture, the way we operate. They like the debate, and the openness. And then we have other people who are extremely hierarchical in their thinking and worldview, and they typically do not work out well here.
“Over time I've learned that there are relative cues around who I think is going to fit or not fit here. And I'd say that's a key part of my job at Red Hat, or really any leader's job in any open organization. Some people will fit, and some people will not. And you just have to screen for the ones that will.”
“A little anecdote. One of the best ways to tell if someone is very hierarchical in their thinking is to look at how they treat administrative assistants. Or, if you get to the point in the interviewing process where they're actually going out and looking at real estate to purchase a home in the area, go back and check with their real estate agent. How was he or she treated? See how they treat people at restaurants when you go to dinner too. All of those are great cues for are they saying "these people are beneath me" or are they engaging with people at all levels. For Red Hat, that's key because we want people who are happy to engage with everybody. Those may sound like little things but they are really very important.”
IT Europa: “We'd like to know if the culture has permeated through to the channel; we know some Red Hat channels and to us they look quite traditional in their approach; is there any internal conflict with results-motivated and rewarded sales attitudes either internally or in channels?”
JW: “Obviously we deal with a lot of partners that are quite different than us. And I don't think that's necessarily a bad thing. We are though very results-oriented. We are a for-profit company and want to make sure the company does really well.”
“In terms of working with partners, we work with all types. And we don't think everyone has to be like us. We do think organizations like us are more effective but that doesn't mean we won't work with very traditional organizations.”
IT Europa: “The level of internal communications is already a nightmare in some organisations with everyone covering themselves. Do you think there is more internal communications at Red Hat than there would be in an equivalent hierarchical firm?”
JW: “Two things. Absolutely there is more communication at Red Hat. Everyone knows the term, knowledge is power. And if you believe that, then knowledge isn't going to flow as it should. And so I definitely think there's more communication at Red Hat because we encourage information to flow freely.”
“I also believe communication flows more freely because at Red Hat, people are more open to talking about their mistakes. We have a culture that embraces failing fast. It's OK to fail. Of course, we don't want you to do it over and over again, you have to learn from your mistakes. But I think people are more willing to say "yeah, that didn't work" or "we screwed that up" because it's understood that mistakes will happen. It's about learning from them and moving on.”
“I think a lot of organizations try to hide and bury their heads because people can use knowledge of others' mistakes against them. That's something we try to completely and totally avoid here. I don't want to say we're perfect at it but I think we're certainly better than many organizations I've observed.”
Blog post about why he wrote the book http://red.ht/1JNAH9R
The website for the book: www.theopenorganizationbook.com