Every year, Marbles in downtown Raleigh holds their annual Big Idea Forum. The lunchtime discussion aims to highlight ways corporate and community leaders shape organizations and people through inspiration and innovation.
Jim Whitehurst, President & CEO of Red Hat, Inc., opened up to Ron Wilder, a business author and executive coach, this past Wednesday, October 3rd, to talk about his big idea.
What is the big idea?
Jim Whitehurst [JW]: Stated simply, and I’m looking forward to talking more about this, but moving forward, for leaders to be truly effective, they're going to have to operate as catalysts. When you get into the details, it's subtle but it's incredibly important.
Ron Wilder [RW]: Not just a suggestion or a possibility to consider?
JW: It's a MUST as we move into the next information age.
RW: Let's start to understand what do you mean by catalyst? Why is it a must? What are some specific ideas you can take with you to implement so you can be more effective leaders in your own organizations? When I think of catalysts, I think of the idea from chemistry. I also think about individuals who have been part of my life, like a coach or mentor, who have seized ideas and helped bring them out. The idea of a catalyst is important to Red Hat and part of your mission statement.
JW: We work with a vast network of literally tens of thousands of contributors to our software, and many of these people are incredibly bright, accomplished people in academia or companies where they work. What we talked about as a company is, "What role does Red Hat play?" We don't want to say "lead", because the people we work with don't want to be led—we don't dictate, but we just want to get direction moving in certain ways. We want to catalyze these communities. We get tens of thousands of people to do what we want them to do because they want to do it, not because we told them to do it. Our mission statement which bubbled up internal is to be the catalyst in communities of customers, contributors, and partners creating better technology the open source way.
RW: How does this fit in our reality day to day? We know Red Hat as a key part of the Raleigh community, but we don't understand how we interact with you on a day to day basis? Those in the audience, how many of you have an iPhone, Droid, Mac, PC, etc?
Part of that choice is which operating system is going to control that device. The operating system is the core piece of software that tells the computer how to work. Red Hat deals with the operating system and other technology that controls servers that are used by computers to run their business system.
JW: Stated simply, yes. Like Windows, but it never crashes.
RW: All of us, as consumers, we interact with Red Hat technology on a daily basis, and we don't even see it. What are some of these examples, Jim?
JW: We make operating systems and other technologies that are kind of in the bowels of the data systems. If you go to trade a stock, that stock is running on a stock exchange with RHEL and Middleware. If you go to buy a plane ticket, every online travel company runs our software. Anyone who works at a decent size company, your paycheck is being driven by a system that is running on our software. We’re also relatively ubiquitous in 90% of the Fortune 500 companies.
RW: You don't actually sell the software.
RW: You make money by selling the support and services?
JW: We sell free software.
RW: And here's the crazy thing, you don't actually control or own the software?
JW: No, we're a significant contributor, but in the low teens in the total percentage. There's about 10-11 billion dollars in the development of Linux. We do a small fraction of the entire code, and we get everyone else to contribute to it.
RW: Who sets the roadmap to decide which direction to take it?
JW: It's a self-organizing system. To some extent these open source communities self-organize to solve problems. People are doing their own things, and Red Hat works to catalyze that. Nobody controls it—we work to catalyze those directions that are ultimately good for our investment.
RW: It's similar to Marbles—the kids are self-directed, they do whatever they choose, and Marbles is really about catalyzing that and creating an environment where kids can play and choose their own path.
JW: To me, the big idea originally came out of what is Red Hat’s role in these self directed, large networks in open source. Networks, more broadly, are becoming more common as a way to organize human behavior within and across companies—Facebook for example—and thinking about as a leader how you get these large network groups of people to do what you want. It's not about mandating, it's about catalyzing them to march in a certain direction.
RW: Why is it a "must" that leaders operate as catalysts?
JW: Everything about our current economy is about to radically transform. I ran an airline, so believe me I’m not a big idea guy normally, but I’m sitting on the front lines and watching this thing about to happen. In 1870, our world looked very similar to 20 AD, where 90% of the population worked around agriculture. Then, the Industrial Revolution happened, and it was all about a set of technologies that came together that allowed us to make things in mass quantity. Economies of scale changed our lives, dominated the political system, and people moved from farms to cities. Fundamentally every aspect of the economy changed. Then, management as a science developed between 1870 and 1930, and we've been living it for a long time.
In the last several years though, the information revolution has changed things again. Computers have been around since 1950, and, yes, they process payroll and you can play Angry Birds, but in terms of mega-impact, we're just starting to see it.
The friction costs that make up over two-thirds of our economy—transaction costs—are melting away. When those melt away, it changes things about our economy. Many industries are nothing but transaction costs. Blockbuster—gone. Netflix. If you look at just the pace of innovation, people on average have seven times as many apps on their phone as they do on their computer. Why? Because it's easier. That's why there are 10 times as many apps written for the iPhone instead of the Mac. Jobs that are based on rote tasks are going away—robotics is replacing menial wrote tasks and IT is replacing mental rote tasks—and that dramatically changes any business.
The amount of time spent on research, document discovery, all of that is being automated, indexed, and now it's searchable. Now you actually have to build skills of people with creativity and drive. How do I get people to be generally bought into the direction I want them to go, but use their own intelligence and creativity to get there?
RW: Transaction costs are dropping dramatically.
JW: How much did you spend on publishing your last book?
RW: $500. No need to have a third party publisher. I self-published to Amazon, straight to Kindle. Self-printing. What value does the intermediary provide? It's not exactly clear anymore. Information is now available everywhere and instantaneously. What are the implications of information being available immediately?
JW: The concept of how people have lead with hierarchy, it was developed to deal with information constraints. The amount you could get was limited, and the latency was long. With hierarchy, someone had to be in control of the components beneath them. Management 1.0—how we budget to how we lead, even just characteristics of leaders—we have the reverse problem now.
How and when do you make decisions in the context of how much information is provided now. A lot of people can be involved in making those decisions—open source isn't all about consensus. It's much more about how networks form to solve problems, and as a leader, how do you get those networks to move in the direction you want them to move.
RW: The rate of changes in the economy are forcing us to adapt to a new way of leading. What are some specifics we can learn from? What are some ways you approach your leadership as a catalyst?
JW: How many hours do we have? None of the things I'm saying are my ideas. I've had the privilege of being able to go from an incredibly hierarchical association, an airline, to Red Hat.
Allow decision-making to take a long time, and execution happens quickly. If you involve people upfront in the decision process, we don't have change management issues. Even if the decision is ultimately unpopular, people will still follow because they know they had a say in the decision-making process. A meritocracy is different than a democracy. Long decisions, short execution.
RW: What about personal qualities you look for in yourself or you look for in Red Hat leaders? What are some of the qualities that represent the concept of being a catalyst?
JW: A lot of executives are scared to get input because they think they'll get obnoxious answers. The bigger problem is actually to get people to contribute. Most people are shy or don't want to say something negative, or they just don't believe that people want to listen to their ideas. Being authentic, being really open. Look for ways to bring up places where you made a mistake—you've got to get people to open up and want to contribute. Most people are nice, and they'll say everything is going well even if it’s really not.
Whether it's being authentic, being open, really just working to try to engage, this is the only way you can get the ideas out. If you throw out a suggestion box, you'll get a few things, but mostly just the loudmouths.
Questions from the audience
How do you get feedback and conversation going?
JW: You've got to get it started at the top. At Delta, I remember distinctly walking through one of the hangars and this guy stopped me—he said he had a suggestion but never heard anything back. I gave him my email address, and then I started publishing my email address. My commitment was, it might take me a while, but I'll get back to you. You get to a scalability issue on that, but most important is to build a culture in your organization where all suggestions get feedback. The worst is silence. You can start it at the top, and that's what I did at Delta. And as soon as people knew they could do it, they would go to their bosses and ask.
How does leading as a catalyst impact how you measure results?
JW: You augment existing systems. We’re in a business where we have metrics around commercial and operational measures—a set of measures around engagement. Engagement is very different than morale. You want to measure engagement: "I know the company strategy and what I can do to help make it successful".
We've watched that score and focused to make it move up—everyone wants to be part of a successful team. You'd be shocked how low that number is when some companies do surveys. If you don't tell people and tell people and tell people, you have no idea how many won't know.
In NC, we've seen traditional industries be decimated and you say things are just getting started. What does this mean for the IT revolution and job creation, and in particular, what happens if some of these traditional industries are eliminated?
JW: Not eradicated, just radically transformed. Now, biotech corn seeds, Monsanto, really a lot of intellectual property associated with that. The jobs don't go away, they just move. The jobs themselves doing that specific task go away, but instead of more people on the land, it's people doing the technology to launch the satellites. What's scary is that it requires a massive change in the skill level of people in the country, which is a public policy issue we've got to address.
How do we inspire these qualities in our kids?
JW: I’m halfway pessimistic and halfway very optimistic. We're competing against India and China that's pumping out tens of millions of really bright college graduates. In general, we just need to double down on what we're investing in education. Not just money, but how we focus on it, how we perceive it in society.
I’m most excited about the fact that in a world with ubiquitous information, knowing facts is irrelevant. It's how you take those facts, apply critical thinking, and be creative. That's a place we can really excel—we need to invest more around education and change the focus. We're not trying to crank out factory workers, but up basic skills to critical reasoning skills. Run a CNC machine, or service it, or make the biotech corn seeds. It's not knowing things, but knowing how to find the answers. It does mean a change fundamentally to how we educate our population.
What are lessons from your own leadership journey for being an effective catalyst?
JW: One example of what it means to be a catalyst is when I first came to Red Hat, we had this thing called "memo-list" that everyone is subscribed to. As we got bigger, people were posting things that were kind of funny, and sometimes people would say things that were relatively obnoxious. So, people were saying they didn't want to read it because it was irrelevant. I thought we should just set up a set of rules for "memo-list", but you can't have a vehicle where people contribute if they want to if "the man" says what you can and can't post. So, we gathered the top ten contributors, told them the problem, and to fix it.
They said we're going to set up another list called "Friday-list" for the funnies and we will self-police people who are saying things that are getting out of line. And in one or two weeks the problem was solved. It was solved not because I said there was a set of rules, but by catalyzing a solution by getting the right group of people together. Whenever you tell somebody what to do, you destroy a little bit of motivation.
Best advice: The bottom lowest possible rung of a leader’s role is getting people to do what you want them to do. Then, getting them to think what you want them to think. If you say "go that way", they'll walk around the wall if it's in the way. But if people believe what you want them to, they'll buy into the mission and you don't have to direct them. They will walk around and through walls.
Most people are not motivated solely by money. Management 1.0 did the same simplifying assumptions to human behavior as micro/behavioral economics did for human economics. People are emotional creatures, we don't always do exactly what we're told, and we don't always value just dollars and cents.
Each of you as leaders need to develop your own style for working with and getting the best out of people who work for you. You create no value if you just tell somebody what do to. Get people to believe what you want them to believe and buy into the fact that they're doing something that is bigger than just their job.