Red Hat CEO Jim Whitehurst opens Summit

“Disrupt or be disrupted.”

That’s the message Jim Whitehurst, Red Hat’s President and CEO, delivered to the opening keynote crowd at the 2015 Red Hat Summit in Boston at the Hynes Convention Center. Whitehurst discussed the fundamental changes in our economy, how organizations need to rethink the very foundations of how they operate in the Information Age, and what Red Hat is doing to lead the way.

“There’s rock, paper, scissors—and then there’s information.” — Andrew Birmingham

Whitehurst began by putting today into context. At the dawn of the Industrial Revolution, we made value by getting bigger and bigger—because scaling factories reduced costs—and that’s been the dominant model of how companies operate for a century. The auto industry, with Henry Ford at the helm, is the defining example. The Model T and the assembly line were built for efficiency, and companies patterned their organizational and management models after his success. Make things. Now make things faster and cheaper.

But now, Whitehurst described, we’re built around information. “Value is moving from the owners of physical assets to the people who can build, augment, and combine information,” he said.

To drive this point home, Whitehurst pulled from TechCrunch’s Tom Goodwin. Uber, the world’s largest taxi company, owns no cars. Facebook, the world’s largest media platform, creates no content. Airbnb, the world’s largest accommodations provider, owns no real estate. (See where this is going?) We’ve moved from a system built for efficiency to a system built for innovation. In this new economy and model, which companies are going to win? Who’s going to lose?

“The car is becoming the ultimate technology product and we are becoming more of an information company.” — Mark Fields, CEO, Ford

Whitehurst said that the average car now has 10 million lines of code—more than a Boeing 787—so if automobile companies just focus on cars now, then they’re relegated to a mere hardware provider. And that’s not enough, because the company itself has to change its process, mindset, and culture. He pointed to Starbucks as an excellent example of a company that gets it. Now, its one of the largest food companies in the world because “They recognized early on that the coffee shop wasn’t just about coffee—it’s about the customer experience,” he said. But how is coffee a high-tech product? Because Starbucks is experimenting with technologies that fundamentally understand not just what its customers want, but what they might want in the future, from automated, intelligent brewing machines and mobile payments to wireless charging and iBeacon sensors.

Most companies think failure is bad, but Whitehurst stressed that experimentation and small failures are part of the process. Citing a PWC survey, Whitehurst told the crowd that over the next 3 years, 61% of CEOs plan to compete in industries they’re not in today. Value chains are colliding, and companies need to develop the systemic ability to be agile or they’re going to get left behind.

“Big companies fail. Big companies fall away now, because you can no longer just rest on your assets.” 

So what does 21st century innovation look like? How do you build an organization that’s truly equipped for change? DevOps, or rather, the characteristics of DevOps, are extensible beyond coding. Drawing on open source as a model, Whitehurst identified 4 primary ways that companies can thrive today by being:

  1. Decentralized. Ideas are going to bubble up, so capturing them requires a flexible structure.
  2. Open and collaborative. The Ubers and Airbnbs of the world have to work with new partners and in a very different, collaborative way.
  3. Modular and face-paced. When you open up and let others get involved, experimentation happens, and the “release early release often” mentality carries over
  4. User-driven. Openness encourages co-creation of users, and open source has gone from commoditizing software to leading innovation because technically advanced users are close to the problems they need to solve.

But why don’t we see this change happening faster, Whitehurst asked? “Simply put: It’s hard. Hard to cede control, hard to accept failure, hard to change culture. But it’s vital, because cultures that are built for efficiency aren’t built for agility,” he said. He cited examples of innovative companies that are getting this right, like Ford, GE, and Walmart—notably, none of which are strictly in IT.

“It’s not about the license; it’s about the participation.”

Whitehurst wrapped up his keynote by talking about what we’re all trying to accomplish at Red Hat Summit 2015 and what Red Hat is doing beyond this week. There will be a lot of talk about products, to be sure, because “It starts with delivering stable versions of community and enterprise editions. But our value proposition goes beyond the product. We’re opinionated. We’re out front shaping the direction of technologies not based on what we want to sell to our customers, but based on how we can solve the problems our customers are facing,” he said.

As open source is becoming more popular and mainstream, he continued, a lot of people and companies are jumping on board. But he cautioned to beware of the “Potemkin villages of open source,” or efforts that are just posing as open source. Because, as he said, “We believe, passionately, that the power of open source is in the power of participation. And no single organization can predict the future of technology—but a coalition of us can build it.”

 

Event: Red Hat Summit 2015
Date: Tue, June 23, 2015
Type: Keynote
Title: Disrupt or be disrupted
Speaker: Jim Whitehurst, CEO and President, Red Hat