The Power of the ‘Open’ Organization

For Jim Whitehurst, one of the defining moments of his career came back in 2005 when, as COO of Delta Air Lines, he had to explain the airline’s strategy for re-emerging from its just-declared bankruptcy to a roomful of airplane mechanics who — as part of the company’s cost-cutting moves — would most likely be losing their jobs soon.

“I started off by telling them I was sorry,” said Whitehurst, who’s now CEO of Red Hat, the software company that makes the open-source Linux operating system, during the closing keynote at this year’s HR Tech conference in Las Vegas today. “Then I explained to them Delta’s strategy for how it would emerge from bankruptcy and what it would take for us to get there. It was the same speech I’d been giving to bankers in New York during the previous four weeks in trying to secure loans for us. But I’d never given it to any of our employees.”

At first, the mechanics sat in stunned silence. Then, they began peppering Whitehurst with questions: How could we get planes ready faster? How could we balance schedules to make this happen?

“These were really detailed, intelligent questions they were asking,” said Whitehurst. “So I went back to my hotel and the next morning I’m getting calls from people asking, ‘What did you do? People can’t stop talking about this.'”

He went and gave similar speeches to other groups of Delta employees, explaining the company’s turnaround plan and what needed to be done to realize it. Then an interesting thing happened: Despite the cutbacks and deferred equipment upgrades necessitated by the bankruptcy, Delta’s performance began to surge. It went from last place to first in on-time performance, and remained there for the next two years.

“All I did was tell people the context of what they needed to do,” said Whitehurst. “I tied the work they were doing to the overall strategy of the company and let them do what they needed to do to get the job done. This can be done in any organization.”

Whitehurst explains his philosophy in his new book, The Open Organization, which recounts his experiences at Delta and Red Hat. He believes the management structure of most organizations today is outmoded — it comes from a time when efficiency, not speed and innovation, was the top priority. But today’s managers must also be leaders, he said, and this can be enabled by technology. Most employees these days have much more education than did the workers of yesteryear, when the management science most companies still abide by was formulated. The top-down organizational structure is obsolete, he said.

So what should replace it? At Red Hat, a “bottom up” model is in place, where employees feel free to share their thoughts and disagreements with managers. “Red Hat can actually be a harsh place to work because of this, but constructive conflict is far preferable to a ‘terminally nice’ organization, where people simply avoid confronting the problems facing a company until it ultimately dies,” said Whitehurst.

Passion rules the day at Red Hat, where many employees have tattoos of the company’s logo, he said. Managers there are expected to be leaders, helping employees understand how their everyday work supports the strategy. “At Red Hat, we always start with ‘why are we doing this?'” said Whitehurst. “It enables managers to do much greater things.”

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