Here’s a conundrum. The 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 “managed.” While you can compel financially dependent employees to be obedient and diligent, and can recruit the most intellectually capable, you can’t command initiative, creativity, or passion. These 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 of true collaboration or apply their energies elsewhere. As a leader, how do you create an environment that inspires people to volunteer those “gifts”?
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.
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 hundred 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 computers 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 iMessage, WhatsApp, Snapchat, Kakao Talk, Google Hangout, WeChat, and Grasshopper. On Skype alone, users spend more than 2 billion minutes communicating each day.
The web has also spawned thousands of special interest groups, like wrongplanet.net, a site dedicated to improving the lives of individuals 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 community of communities.
Unlike your organization, the web’s architecture is end-to-end rather than center-to-end. That’s what makes it adaptable, captivating, 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 product launch. A “smart mob” can oust a dictator, but it can’t organize itself to collect the garbage and keep the trains running. The 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, 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. That’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 crowdsourcing and open innovation have relegated them to the margins of most organizations.
What about the other hand? There you’ll find thousands of executives 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 they’ve learned and have succeeded at, they hold on to top-down, rule-driven structures that empower the few while disempowering the many. And it’s because they’ve never seen something like General Electric’s jet engine plant in Durham, North Carolina, where four hundred skilled technicians work in self-organizing teams with but a single plant manager to supervise them. They’ve never been inside a company like Morning Star, the world’s largest tomato processor, where hundreds of colleagues coordinate their activities via peer-to-peer agreements, with nary a boss in sight. Neither have they been up close with CEMEX, the Mexico-based cement company that uses hundreds of online, user-defined communities to build brands, share best practices, and create strategy.
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. Such superficial gestures can never change an organization. To fully exploit the power of openness, we have to go much, much deeper. We have to get at the ethos of openness, and then see how it applies, in practice, in hiring employees, making decisions, running operations, allocating resources, and all of the other things that, surprisingly enough, communities can do better than bureaucrats.
And that’s exactly what Jim Whitehurst, CEO of Red Hat, does in this practical and compelling book. Red Hat, with its seven thousand associates, is one of a small but growing number of companies that have transcended the old trade-offs between scale and agility, efficiency and innovation, and discipline and empowerment. In the pages that follow, Jim shows you how to operationalize the ideas of transparency, collegiality, and meritocracy in your organization. More importantly, he challenges you to rethink your most fundamental assumptions about how you get things done—not little, marginal things, but big, complicated, mission-critical things.
I have long believed that tomorrow’s most successful organizations will be distinguished by a set of traits that are still remarkably uncommon. In organizations that are fit for the future . . .
- Leaders will be chosen by the led.
- Contribution will matter more than credentials.
- Influence will come from your value added, not your title.
- Individuals will compete to make a difference, not to climb a pyramid.
- Compensation will be set by peers, not bosses.
- Every idea will compete on an equal footing.
- Resources will be allocated with market-like mechanisms.
- Experimentation and fast prototyping will be core competencies.
- Communities of passion will be the basic organizational building blocks.
- Coordination will occur through collaboration, not centralization.
- Lateral communication will be more important than vertical communication.
- Structure will emerge only where it creates value and disappear everywhere else.
- Strategy making will be a dynamic, companywide conversation.
- Change will start in unexpected places and get rolled up, not out.
- Control will be achieved through transparency and peer feedback.
- Organizational boundaries will be porous.
- Everyone will think like a business owner, and be just as accountable.
- Decisions will be made as close to the coal face as possible.
- Commitments will be voluntary.
- “Why” will matter more than “what.”
What makes Jim’s book so timely is that Red Hat already embodies many of these postbureaucratic traits, so there is a ton you can learn here—not only from Red Hat, but from the other organizations Jim draws on in building his case for the “open organization.”
Let me finish where I started. Today, most organizations waste more human capacity than they use. How much longer do you think your organization will be able to afford that, given that more and more companies are embracing the principles that power Red Hat? My answer? Not as long as you think. So what are you waiting for? Dig in.
Gary Hamel
Visiting Professor, London Business School