Jim Whitehurst, 47, has been CEO of Red Hat since 2008. Since then, shares in the open source software company, based in Raleigh, NC, have shot from $19 to $70 and revenues have more than quadrupled, to a projected $2 billion in 2015. A graduate of Rice University and Harvard Business School, he started his career at Boston Consulting Group, where he became a partner, and then over six years at Delta Air Lines, he held various jobs over including chief operating officer. He recently published a book, Open Organization: Igniting Passion and Performance (Harvard Business Review Press), about his transformation from traditional leader to unconventional executive at a tech firm that runs nothing like the companies he’s managed in the past. This interview is edited and condensed.
Susan Adams: Tell me about your background. Were you a natural leader growing up?
Jim Whitehurst: I ran track and cross country, which were individual sports. I was also a techie early. I was the first kid on my block in Columbus, GA to have a computer. All through high school I had a job writing contract management software for a stock broker. But I wouldn’t call myself a natural leader.
Adams: How did you wind up at Boston Consulting Group?
Whitehurst: At Rice I got degrees in computer science and economics. I wanted to do something in tech but I didn’t know what. BCG interviewed on campus and we clicked. After I was there for three years they sent me to business school. It was an awesome deal.
Adams: What leadership lessons did you learn as a consultant?
Whitehurst: The thing I took away from BCG was that the ideas were more important than where they came from. We talked about how you drive insight. BCG was very non-hierarchical in structure. There were partners and associates but you were supposed to speak your mind. We hashed things out, even down to who got an upgrade on a flight. Back then it was less computerized. It was whoever got to the gate first. You would have partners running to get a seat.
Adams: How did you make the switch to managing operations at an airline?
Whitehurst: It was literally noon on 9/11 and Delta’s CEO, Leo Mullin, said, “I need you now as our treasurer.” I said, “I don’t know anything about being a treasurer.” It’s a very specific skill. I’d done a lot of hardcore finance work. He said, “Nobody in their right mind would lend us money right now. We need a deal person.” I think I was home once between that Tuesday and Friday. Otherwise we worked 24-hour days.
I was asked to be chief operating officer weeks before we filed for bankruptcy. I went from a staff role of having a couple hundred people reporting to me to 80,000 people reporting to me in a company that was hurtling toward bankruptcy.
Adams: What leadership principles did you develop at Delta?
Whitehurst: I found that because I was a strategy and finance person and I was pretty open, that I’d go out to the front line and explain – here’s the strategy and here’s how we’re doing this. I’d really engage the workforce in the turnaround plan and explain why we were doing it. The mechanics and airport personnel knew that on-time performance was key. We went from poor on-time performance to one of the best among the major carriers. That was an important lesson I learned on the spot: It’s important to help people understand why what they are doing is invaluable. I think that’s something big company leaders miss—how little most people know about what’s going on at the company.
Adams: What made you think you could run a software company?
Whitehurst: After Delta, I was getting a lot of calls about doing turnaround work. But laying people off was awful. Then I got a call from a recruiter about Red Hat. As I said, I’m a geek from way back. I got my degree in computer science and I knew a lot about Red Hat and Linux. Given my background and avocation, it fit perfectly.
When you’re at a big company like Delta, you’re spending 80% of your time defending your position. I wanted a chance to be able to build something. Red Hat was small but it had a fascinating model and I was very interested in their ability to create new things.
Adams: I have to ask: How do you make money on free software?
Whitehurst: It’s very hard. The source code to all our software is indeed free. We offer services and support. You can download random Linux or open source software. But if you’re running nuclear submarines, major stock exchanges, or big banks, you want to make sure they’re secure and that you have support. We’re a business-to-business company.
Adams: How does the culture at Red Hat differ from Delta and companies where you worked as a consultant?
Whitehurst: When I first got to Red Hat it seemed like utter chaos and I thought I needed to clean it up. But then I realized they had a different way to run an organization. We try to make sure the people with the strongest reputations within the company are making the decisions.
A lot of companies say they want to run a meritocracy and they want the best ideas to win. But usually the decisions are being made by the most senior person. At Red Hat we have a set of social network vehicles that allow people’s reputations to emerge. People who have built a reputation in an area are the people who make the decisions in that area. We are very focused on being inclusive and getting many people’s opinions about how we make decisions. We use the word “catalyst.” A leader is really a catalyst who doesn’t drive or make decisions himself.
Adams: You said you involved people at all levels in decision-making at Delta. Isn’t that the same idea as what you’re describing at Red Hat?
Whitehurst: At Delta we spent a lot of time communicating the strategy and people’s role in the strategy. But we did not involve the broader employee group in deciding on that strategy.
Adams: Give me an example of how decision-making works at Red Hat.
Whitehurst: Our customers want to hear our point of view on technology. But at the same time we want to make sure we stay very customer-focused. Those ideas can be in conflict. Henry Ford once famously said, “If I listened to my customers, I would have built a faster horse.”
In order to resolve the conflict between leading and listening to our customers, I started talking about that challenge at employee meetings. I said I didn’t want to lose our edge and our ability to drive great technology. But at the same time I wanted to listen to customers. I asked employees to try to build that challenge into what they did every day. Our customer support team then built a whole new system that can do proactive diagnostics. It looks at systems and sees where they have a problem. No senior manager, including me, had the idea to do that. I’d say I catalyzed the idea by saying that customer focus was important. Then our people went and did it. I didn’t have to say, “Let’s build a product or form a customer council.” The organization just did it.
Adams: You’ve written that it’s important to have straightforward, almost confrontational communication. Tell me about that.
Whitehurst: We have found that for the best ideas to win, people need to be very frank and open and most companies act too nice. Most companies don’t have the hard conversations. They’re passive aggressive. In a book called Creativity Inc., the co-founder of Pixar wrote that if there’s more honesty at the water cooler than in the conference room, you have a problem. At Red Hat, we agree with that. People feel comfortable giving constructive feedback that other people might call confrontational. Hardly a day goes by where someone doesn’t say, “That’s a bad idea. We really need to rethink that.”
One example: When I first joined Red Hat, we were discussing our technical direction in an area called virtualization. I was getting a briefing from the senior engineering team and someone much more junior completely and totally disagreed with the direction we were going and, in front of me, explained why. We ended up changing direction and acquiring a company nine months later that helped us build our position in virtualization.
Adams: You also write that it’s important to praise employees who do a great job.
Whitehurst: When I first came to Red Hat, I was amazed at how, every day, I was copied on 10 or 20 emails saying, you did a great job at that. We have an employee referral program. We publicize the people who do that and if you’ve referred more than five people, you become a “super ambassador” and you get a cape and a personal note from me. If you don’t give a lot of praise, it’s harder to give negative feedback.
Also on Forbes:
