Review: The Open Organization, by Jim Whitehurst

Whitehurst, J., & Hamel, G. (2015). The Open Organization: Igniting Passion and Performance. Harvard Business Review Press.

The second and last book that Guillermo García recommended to me, The Open Organization, is a most interesting book: a description, somewhat impressionistic, by Jim Whitehurst, CEO of RedHat. It is interesting because the author presents RedHat as a new business model, an adaptable and flexible company, with certain structures, but that these structures are conversational.

The interesting thing about the book is that it is not another recipe for how to transform the company nor is it the autobiography of an Agile evangelist. The author came, in fact, from a series of experiences that had disappointed him:

“Nearly fifty years ago, Warren Bennis, the much- missed leadership guru, predicted that we’d soon be working in “organic- adaptive structures,” organizations that feel like communities, not hierarchies. In a community, the basis for loyalty is a common purpose, not economic dependency. Control comes from shared norms and aspirations, not from policies and bosses. Rewards are mostly intrinsic rather than extrinsic. Contributions aren’t predetermined and individuals are free to contribute as they may. Examples are as diverse as a meeting of Alcoholics Anonymous or a team erecting a house for Habitat for Humanity.”

(…)

So are we stuck? On one hand, we have all those optimistic boosters for social collaboration who tell us we merely have to let the crowd have its say. That’s naive. What’s typically underestimated is the complexity and indivisibility of many large- scale coordination tasks. “Wisdom of the crowd” works when work can be easily disaggregated and individuals can work in relative isolation.”

(…)

“So no, we’re not stuck; we’re definitely not stuck. But getting unstuck— building and benefiting from communities at scale— requires us to start with “openness” as a principle, rather than with some particular set of collaborative tools or practices. Many companies have layered social technologies on top of their tradition- encrusted management practices— and most have been disappointed with the results.”

(Whitehurst & Hamel, 2015)

However, RedHat was already the opposite: a much more open company, less hierarchical, more oriented to a product than to a process or a title. The author realizes this when in an “interview” that he has, totally relaxed, the host invites him to eat, to realize that he did not actually bring money and makes him pay.

The author was left thinking “is that a test? Did I pass it? ”… Until the person tells him: no, he was simply hungry and had forgotten the money. Essentially, there is an informality that someone like the author, considering a CEO position, finds appealing.

The book is an attempt to understand and especially articulate the RedHat culture that at the time was as foreign to the author as it was to most Fortune 500 companies. Defining an Open Company, the author argues that:

“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.”

(Whitehurst & Hamel, 2015)

For this, the author takes as inspiration volunteer organizations that follow a passion, such as Open Source communities:

“These communities involve many people working toward a similar outcome. They usually involve a diverse community of people who opt in as a way to work for a common cause about which they are passionate. And they produce results: they are more responsive to fast- changing environments and better at accomplishing “big, hairy, audacious goals” than any one single firm or organization.

(…)

To do this, you must transition into thinking of people as members of a community, moving from a transactional mind- set to one built on commitment.

(…)

Perhaps more importantly, you need to apply the same principles to your employees— the folks you pay— as to people who might volunteer their efforts for free.

(…)

Red Hat’s open organization operates using unusual management principles that leverage the power of participation— both internally and externally— to generate consistent financial results.

(…)

The more people you connect, the more value they create, which in turn attracts more people, and so on. Red Hat’s management system encompasses principles such as: People join us because they want to. Contribution is critical, but it’s not a quid pro quo. The best ideas win regardless of who they come from.

(…)

We encourage and expect open, frank, and passionate debate. We welcome feedback and make changes in the spirit of “release early— release often.” In short, we’ve found that the best practices in creating open source software also translate well into managing the entire company.

(…)

Red Hat is the only company that can say it emerged out of a pure bottom- up culture— namely, the open source ethos— and learned how to execute it at scale.”

(Whitehurst & Hamel, 2015)

(on the last statement, we believe that Ubuntu is also an example of the same, fulfilling in Amazon the same function as RedHat in IBM).

We find it extremely interesting that, like Lou Gerstner, Whitehurst also identifies culture as the key:

“You can’t lead an open organization in the traditional top- down fashion— what I was used to and, frankly, quite good at. I learned this the hard way.

(…)

My job at Red Hat couldn’t be more different. Sure, I still care about numbers— we are a public company after all— but I have an impact on them indirectly by working through our people and culture. I spend the majority of my time thinking about our strategic direction and culture and talking to customers rather than worrying if things are being done precisely as I would choose.

(…)

A huge part of that means trusting other people to do the right thing— to be hands- off enough to allow the people in the organization to direct themselves and make their own decisions. That might sound a bit crazy to many, especially those who came up through conventionally run organizations as I did.

(…)

I’ve also learned that the skills required to lead a company that relies heavily on the principles of open innovation are vastly different from those needed to run a business based on the hierarchical structure of a conventional organization.

(…)

Early on, I issued what I thought was an order to create a research report. A few days later, I asked the people assigned to the task how things were going. “Oh, we decided it was a bad idea, so we scrapped it,” they told me in good cheer. That’s a difficult concept for many of my peers in other companies to embrace. Other CEOs to whom I’ve told this story have gasped, “What do you mean they didn’t do what you asked them to? That’s insubordination! You should have fired them.” At first, I felt that way, too. But, the truth is that my team was right to turn down the job— it either wasn’t a great idea or, just as importantly, I hadn’t done a good enough job selling them on why they should jump into it. A leader’s effectiveness is no longer measured by his or her ability to simply issue orders.”

(Whitehurst & Hamel, 2015)

Essentially, the role of CEO for the author is the role of who in some way inspires and on the other hand, allows the culture to grow in a way that the company and the employees benefit at the same time. It is to clarify purpose, it is to serve in keeping the main objectives, trusting and empowering everyone to allow a functioning with a non-traditional hierarchy.

Note that we have used “non-traditional hierarchy” instead of Agile organization. This is because the author considers that the way of organizing should not be democratic, but meritocratic.

“In other words, the Athenians lived in what they called “a community of citizens,” which was built upon a meritocracy.  That system, when applied within a company of citizens, would be based on this recognition: Merit means that decisions are based on the best case put forward; excellence, not position, prejudice, or privilege, is the criterion for choice. In a company of citizens, the best case for action is that which carries the day after the open, sufficient, and informed debate. Merit means that every thoughtful and knowledgeable individual, with good ideas based on real understanding, will get a hearing. The incompetent blowhard will not. The practice of merit gives lie to the idea that participatory democracy must devolve to the lowest common denominator.”

(Whitehurst & Hamel, 2015)

Por supuesto, la definición de “meritocracia” es compleja. El autor, para darle crédito, sabe perfectamente lo complejo que puede ser utilizarla y la define de la siguiente forma:

“But that raises two questions: Who is empowered to make a decision? Who decides who is empowered to make a decision?

(…)

At Red Hat, some of the seven thousand voices inside the company have far more sway than others. In most cases, decisions aren’t made by executive fiat, nor are they arrived at through consensus. Rather, those people who have earned their peers’ respect over time drive decisions. Associates who make a positive impact on the business and on the culture find that they gain more influence than those who do not. That’s why we call our culture a “meritocracy,” which, if you use Wikipedia’s definition, means: A system of government or other administration (such as business administration) wherein appointments and responsibilities are objectively assigned to individuals based upon their “merits,” namely intelligence, credentials, and education.

(…)

Within the meritocracy we have built at Red Hat, everyone has the right to speak and access the kinds of tools that will help ensure that his or her voice is heard. But to appreciate how a meritocracy works, you need to first recognize that not everyone is listened to equally.

(…)

To become a leader in a meritocracy, you need to attract followers first, not the other way around, as is typical in most conventional organization structures. Your peers actually have to select you as their leader based on how effective they think you are, not just because you have a more impressive title or résumé.”

(Whitehurst & Hamel, 2015)

That is why he considers it vital that the creation of a certain consensus is the mark of the leaders. The task of leaders, in Whitehurst’s vision, is to make persuasive and transparent decisions that can be validated and at the same time generate support.

For this, the main task of the leadership group is to catalyze decisions in a way that generates value in the direction that is most beneficial for the company. For this, the leader must have several characteristics that are not generally considered within leadership groups:

• Patience

• Understanding of the personal motivations of those who work with him

• A mindset that does not think about quid pro quo, but about building and supporting a valuable culture

• Essentially a high emotional intelligence quotient

• A degree of faith in those who work in the company

“Patience. The media rarely tell stories about how “patient” a leader is. But they should. When you are working to get the best effort and results from your team, to engage in dialogue for hours on end, and to do things again and again until they’re done right, you need to have patience. High “EQ.” Too often we tout the intellectual capabilities of leaders by focusing on their IQ, when we should really be valuing their emotional intelligence quotient or EQ score. Being the smartest person in the room is not enough if you don’t have the capacity to work with the people who are in that room with you. When you work with and through communities of contributors as Red Hat does, where you can’t order anyone to do anything for you, your ability to listen, process, and not take everything personally becomes incredibly valuable. A different mind- set. Leaders who have come up through conventional organizations have been indoctrinated in a quid pro quo mind- set— one that’s been influenced by math and hard science that says every action should receive an appropriate response. But when you take a longer- term outlook to investing in something like building a community, you need to think differently. It’s like trying to build a delicately balanced ecosystem in which any misstep you make can create imbalance and lead to long- term damage that you may not see right away. Leaders must divest themselves of the mind- set that requires them to achieve results today at all costs to one in which the big payoffs come from delaying their sense of gratification and making those investments in the future. Of course, making these kinds of changes won’t appeal to everyone. There are times when issuing a top- down edict, for instance, would be far easier than allowing the meritocracy to reach a solution on its own time. Why would you want to open yourself up to criticism from your own troops? Wouldn’t your workplace seem less chaotic and in control if you stuck with doing the things the way you always have? To make this kind of culture work requires that leaders make an enormous investment in terms of time and energy, which can seem both daunting and wasteful. It’s almost like taking a leap of faith into the unknown.”

(Whitehurst & Hamel, 2015)

Conclusion

Open Organization is an extremely interesting book: instead of a story of how a company was forged or how one person made a change, it is an attempt to articulate the culture of a successful company by someone who came from outside of it. Although it does not have specific actions or a transformation program, the insights it provides are extremely valuable, in our opinion, to understand the shock of cultural change.

Perhaps the only debatable point in our opinion is the idea of ​​meritocracy: it is complex to think that always the person who is heard is necessarily the one who is right; on the other hand, the fact of who decides the value of the argument is separate from that process makes it more complex. I also wonder how to go about globalizing this process: although RedHat is a large company, it is mainly concentrated in a global point. I wonder, do those people who live on the other side of the world have the same capacity for arrival? And if they don’t, how can we know that the best arguments are actually heard? If eloquence is a factor, how can people for whom English is not their first language do? The sophists were popular in Athens for a reason.

But beyond these points (which, we must clarify, are minor in relation to the content of the book), we have found it to be a very interesting text, which presents a different model of company and culture.