Jim Whitehurst, CEO of Red Hat, was sporting his awesome red shoes as he spoke to a crowded room at All Things Open last week. During his keynote on Day 1, he talked about how open source is a key part of the open organization, but what we’re all looking to achieve has implications far beyond software.

Jim began his keynote by explaining why there is a need for the principles of open source in business. If we think of the world we come from and the world we are coming into we see that there is a long line of change. We have come from a world of mass manufacturing, where relatively uneducated people were typically doing rote tasks on assembly lines in a  static environment where there was little sharing of information. Society has based a lot of our structure of managing businesses on this model, but if we think about how we live and work today things are much different.

Today we have a more educated workforce in a world where rote tasks are automated. This is als a world where we have broadband and information in our pockets, only a smartphone or laptop away. So, we can think about how leadership and management must change in this new environment.

Jim mentions that almost every conversation he has with CIOs these days are about how they can move faster. And, many are disillusioned that moving faster is about tools, but it’s not about that anymore he says. You see companies try to buy the right tools and fall on their face. And, that’s what led Jim to write, The Open Organization.

Tools can’t keep up anymore. But, if you enable people, they can.

It’s not all chaos

When Jim started his new job at Red Hat at CEO in 2008, he thought: “This is the most crazy, ridiculous place I’ve ever seen.” It was a sharp contrast from his job at Delta, but he soon saw that the business model they were developing at Red Hat was a better way to run an organization.

Red Hat as an organization engages participative communities from both inside and out.

We come from an era where employees were considered to be a commodity, so our management structures assume that it is easy to hire people who just want a paycheck. But today what we realize is that to get people who want more than a paycheck, people who want to go above and beyond because they believe in the mission, the company and the leadership must treat those people as participants.

The next generation of leaders must think about why people are joining their company. Managers may assume that people are 100% rational and will simply work for a paycheck, but leaders must understand that people are not always rational per say, and things like inspiration and morale really do matter. In today’s business world, employees want to feel like they’re participating in something that matters and that they are helping to make the world a better place.

The Open Organization is all about how they are striving for this at Red Hat.

Tips for an open organization

1. Purpose and passion

Employee need to be able to connect what they’re doing every day to the broader purpose of the company (beyond getting a paycheck). At Red Hat, they do this by talking about open source, creating videos, giving away code, tracking and being transparent about goal, and more.

2. Engagement

One tool Red Hat uses to communicate companywide is an email list called Memo List. It is used so that employees can talk about issues that the company is facing, it allows them to agree and to disagree. This email list supports a meritocracy as well, which is a big part of maintaining an open organization, by allowing anyone to chime into conversations. Allowing the “sparks to fly” and people to speak their minds, the company will innovate faster. You will then have people fighting things out, but that’s okay because it will help you to be honest with your team.

3. Be a catalyst

Red Hat’s mission is: ‘To be the catalyst in communities of customers, contributors, and partners creating better technology the open source way.’ To maximize the innovation potential in our employees and in our organizations, we have to adopt a new business model and approach.

Jim’s final nugget of wisdom: No single organization can predict the future of technology, but a coalition of us can build it!