The open organization: igniting passion and performance

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ORGANIZATION

IGNITING PASSION AND PERFORMANCE

JIM WHITEHURST

CEO, RED HAT

WITH A FOREWORD BY GARY HAMEL

HARVARD BUSINESS REVIEW PRESS

“We live in an increasingly open world, and in The Open

Organization: Igniting Passion and Performance, Jim W hitehurst

uses his experience in open source technology as a blueprint for

leadership. Jim clearly dem onstrates how building avidly engaged

communities of employees, partners, and customers can ignite

the kind of passion and innovation that drive outsized results

for businesses and for society as a whole. I bis is a great read for

anyone hoping to lead and succeed in a society being redefined

by expectations o f transparency, authenticity, access— and yes, in a

word, openness.”

— MICHAEL DELL, Chairm an and CKO, Dell

“In a wired world, everyone knows that management needs to

change from command and control’ to leadership based on trans￾parency, collaboration, and participation. But the question is, how

do you actually lead that way? How does a leader give up so much

power for something that looks like chaos? How do you get the leap

in perform ance that comes from unleashing people’s passion and

creativity? Jim W hitehurst’s interesting tale of his own reinvention

as a leader, with lessons from other leaders in companies such as

Whole Foods, Pixar, Zappos, and others, finally provides the blue￾print that leaders have been seeking.”

— CHRIS ANDERSON, cotounder and C h i), 3L> Robotics; former

Editor in Chief, Wired magazine

“Many people are wary of change. If it’s out o f one’s control, highly

visible, and potentially volatile, it has the makings o f a nightmare.

For executives who worry about Millennial employees and the power

of the internet, it is scary indeed. Yet those same employees could

offer valuable new' perspectives, ideas, and passion. T he question is.

how do today’s managers capture those desirable attributes without

setting off the perfect storm? The answers are in Jim Whitehurst’s

book The Open Organization: Igniting Passion and Performance."

— JEANIE DANIEL DUCK, former Senior Partner and Managing

Director, T h e Boston Consulting Group; author. The Change

Monster

“In today’s disruptive economy, only the leaders—and their

organizations— who are open and learn to adapt to the fast-changing

needs of customers and employees will survive. Whitehurst speaks

from personal experience about what works— and what doesn’t— to

foster openness and speed. If you have even an inkling of a desire

to lead an innovative, fast-moving, and engaged organization, this

book is for you.”

— CHARLENE LI, founder and CEO, Altimeter Group; author,

The Engaged Leader and Open Leadership

“Drawing from the lessons he’s learned leading an organization

born directly from the principles of open source, Jim Whitehurst

offers us an invaluable guide to success for the modern organization

based on true openness, collaboration, and shared commitment.

With The Open Organization, Whitehurst takes us where all leaders

need to be if we want to succeed in the future— outside of our tra￾ditional comfort zones.”

— JOHN CHAMBERS, Chairman and CEO, Cisco

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HARVARD

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All rights reserved

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No part o f this publication may be reproduced, stored in or introduced into a

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book’s publication but may be subject to change.

Library o f Congress Cataloging-in-Publication Data

W h it e h u r it , J im

T h e open organization : igniting passion and perform an ce/ Jim W hitehurst.

pages cm

ISBN 978-1-62527-527-1 (hardback)

1. Organizational effectiveness. 2. Organizational behavior. 3. Organizational change.

4. Employee motivation. 5. Management— Employee participation. 6. Decentralization

in management. I. Title.

H D 58.9.W 526 2015

658.3'152— dc23

2 014045002

T h e paper used in this publication meets the requirem ents o f the A m erican National

Standard for Perm anence o f Paper for Publications and Documents in Libraries and

Archives Z 39.48-1992.

This book is dedicated to the millions of

open source contributors and users out there

who m ake w hat we do possible.

Foreword

1. Why Opening Up Your Organization Matters

PART ONE

WHY

Motivating and Inspiring

2. Igniting Passion

3. Building Engagement

PART TWO

HOW

Getting Things Done

4. Choosing Meritocracy, Not Democracy

5. Letting the Sparks Fly

C O N TEN TS

PART THREE

WHAT

Setting Direction

6. Making Inclusive Decisions 135

7. Catalyzing Direction 163

Epilogue: it's a Journey 183

Appendix 195

Notes 203

Bibliography 2 09

Index 211

Acknowledgments 221

About the Author 225

vlli

Here’s a conundrum. T h e human capabilities that are most critical

to success— the ones that can help your organization become more

resilient, more creative, and more, well, awesome— are precisely

the ones that can’t be “m anaged.” W hile you can compel financially

dependent employees to be obedient and diligent, and can recruit

the most intellectually capable, you can’t command initiative, cre￾ativity, or passion. T hese human capabilities are, quite literally, gifts.

Every day employees choose whether to bring them to work or leave

them at home. Suppliers and customers make similar decisions— to

engage with your enterprise in a spirit o f true collaboration or apply

their energies elsewhere. As a leader, how do you create an environ￾ment that inspires people to volunteer those “gifts”?

Nearly fifty years ago, W arren Bennis, the much-missed leader￾ship guru, predicted that we’d soon be working in “organic-adaptive

structures,” organizations that feel like communities, not hierar￾chies. 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 intrin￾sic rather than extrinsic. Contributions aren’t predetermined and

individuals are free to contribute as they may. Examples are as

diverse as a meeting o f Alcoholics Anonymous or a team erecting a

house for Habitat for Humanity.

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THE OPEN ORGANIZATION

Bennis had a compelling vision, but until recently it was hard

to believe that community-centric structures could ever scale. Then

came the internet. The defining characteristic of the internet is its

openness. Online, human beings are free to connect, contribute,

and create as never before, and billions of them have exploited that

opportunity. Consider YouTube. Every minute, more than a hun￾dred hours of content are posted to YouTube, and each month, more

than 6 billion hours of video are consumed by viewers from around

the world. YouTube is open; anyone can contribute, and at present,

more than a million contributors make money from content they’ve

uploaded to the site.

I’m old enough to remember when networks were closed.

Thirty years ago, if you wanted to add another telephone to your

home, you leased it from the network operator— be it AT&T,

BT, Bell Canada, or any other telco. Moreover, your phone was

a dumb device. All the intelligence resided in the giant comput￾ers that routed your calls. To add a new service, like call-waiting,

the operator had to reprogram the central switch, an expensive

and risky endeavor. Screw it up and you could bring down the

whole network. Not surprisingly, innovation proceeded at a snail’s

pace. Today, the web hosts hundreds of web-based communication

services including Apple’s ¡Message, WhatsApp, Snapchat, Kakao

Talk, Google Hangout, WeChat, and Grasshopper. On Skype

alone, users spend more than 2 billion minutes communicating

each day.

T he web has also spawned thousands of special interest groups,

like wrongplanet.net, a site dedicated to improving the lives of indi￾viduals with autism. The community’s eighty thousand members

have posted more than 1.2 million comments on the site’s general

discussion board. In many important respects, the web is a commu￾nity of communities.

x

Foreword

Unlike your organization, the web’s architecture is end-to-end

rather than center-to-end. T h at’s what makes it adaptable, captivat￾ing, and a platform for innovation. Not surprisingly, many have been

bullish about the opportunity to replace bureaucracy with web-style

collaboration. Thus far, though, the reality hasn’t matched the hype.

A wiki can surface new options, but it can't manage a global prod￾uct launch. A “smart mob” can oust a dictator, but it can’t organize

itself to collect the garbage and keep the trains running. T he wisdom

of the crowd can predict elections, but it can’t run the back office of

a bank. YouTube may be a mind-boggling jumble of content, but

operationally it’s run by Google— the same company that delivers

your search results in a nanosecond. Bureaucracy was invented to

maximize control, coordination, and consistency— things that are

essential to reliability and efficiency but aren’t the hallmarks of

online communities and open innovation projects.

So are we stuck? On one hand, w'e have all those optimistic boost￾ers for social collaboration who tell us we merely have to let the

crowd have its say. T h at’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 disag￾gregated and individuals can work in relative isolation. T h at’s why

it’s been so well suited to software development. But it’s not easy

to see how you’d use it to run a Toyota automotive plant or Delta’s

Atlanta maintenance facility. Despite the buzz, the limits of crowd￾sourcing and open innovation have relegated them to the margins

of most organizations.

What about the other hand? There you’ll find thousands o f exec￾utives who can scarcely imagine an alternative to the organizational

status quo, even if they believe that their bureaucratic organizations

are gunking up the wheels of progress and diminishing their ability

to play against faster, more nimble competitors. Because it’s what

xi