The Love of Linux Chapter 8: Empowerment, Lessons Learned from Open Source
As we began to understand the SCO business and take stock of the company, we felt that we had four things that even with all the problems and hassles made the transaction worth it: the loyal resellers around the world, some extremely scalable and robust technology, the install base of incredibly customers and the very talented group of employees. The employees, however, had been through some pretty rough times. Some of them had been sold four times in eight years. Others had come from being a leader in the industry to loosing money every quarter. We had had to make several cuts and they had lost good friends. They had watched previous management continue to be paid salaries even when the company was doing poorly. Some employees had grown cynical and yet, they wanted to do the right thing. They believed in the product and technologies and wanted the company to succeed. Not everyone, however, were in agreement on what the company should do. Early on, we began to hold company wide meetings and smaller site meetings with the employees. We also started a strategy process to get the company turned around and in unity going in the same direction.
Curt Porritt gave me a copy of Michael Porter’s paper “What Is Strategy?” I read the paper and immediately recognized how vital a strategy was in gaining unity and direction. We began a series of meetings in which we first educated the management team on what strategy really was. Much of what Porter said really resonated with my own experience and with what I had learned from Linux and in marketing products over the years. The key to strategy in this new world of instant information exchange is to understand who your customer is and what they need. You must then empower the organization to deliver the value or complete experience the customer is seeking or you have determined will result in the most valuable experience for the customer while allowing the company to make money. Before talking about each of the four components that empower an organization to deliver real value to its customers, it is very important to address a fundamental underlying philosophy of how management views its employees.
Simplistically, there are two basic philosophies of management control or empowerment. These two philosophies have been a war in the hearts and minds of people as long as their have been people. These conflicting and basic philosophies are riddled throughout management theory and managerial concepts and principles. They are almost unrecognizable for what they truly are having been cloaked with modern terms and acceptable, even true principles. Every manager must honesty answer what philosophy they subscribe to. Liz Wiseman and Greg Mckeown wrote a book entitled “Multipliers: How the Best Leaders Make Everyone Smarter” which addresses these two forms of management style. Liz and Greg have classified them as Multipliers and Diminishers. What is interesting about these two styles is that the actions of both a Multiplier and a Diminisher can be quite similar. They find the best people and they require a lot from their people but they do not see their people the same at all. A multiplier sees his people as smarter than they are with infinite potential to do more than could be conceived of originally while a diminisher will see his people as nothing more than pawns or a means to an end. The diminisher will feel that no one can understand the problem as well as they can or do the work better than they can. I had the experience of reading this book and sharing this with a collegue. At the time, we were working for an extremely bright manager. When my peer came back to me after reading the first several chapters and he could not wait to tell me that our manager was a diminisher. Interestingly, the book spread like wild fire around the management team. All those working for this individual arrived at the same conclusion. However, when this came to the attention of the manager, he invited Liz Wiseman to come and visit with our team. In that meeting, I watched this individual categorize himself as a multiplier in front of the whole team and the author. He could check all the boxes but everyone around the table who interacted with him, knew that in spite of his ability to check the boxes, to us, he was a diminisher. Interestingly, another book entitled “The Anatomy of Peace: Resolving the Heart of Conflict” by The Arbinger Institute may shed light on the difference between a multiplier and a diminisher. This book beautifully explains some of the core elements of human nature. It points out that when we see our fellow man as nothing more than objects, less than human or as a means to an end, we view them from within “a box.” The people they interact with automatically sense that they are being treated less than humanly and react usually confrontationally or in a passive aggressive way if they cannot react openly. Because the manager or individual is not true to his or her own original feelings or promptings, he or she begin to justify, rationalize and even amass others to think the way that we do and the conflict escalates. The primary difference between a diminisher and a multiplier is how they view their fellow man and their employees. If to the manager, the employees are competitors, pawns or objects, he or she will diminish those around them and no matter how smart or gifted they are, the people will sense their real feelings and motivations and not perform to the level they could. If they see the employees collectively more talented than themselves and with proper empowerment these employees can deliver beyond what they themselves could deliver, the employees will achieve multiplied results beyond what the manager may have imagined.
In order to determine what underlying philosophy a manager subscribes to, it might be helpful to discuss these philosophies a little more. Ray Noorda used to say to start a business you need an engineer, to grow it you need a marketer, to manage it you need an accountant. In today’s market, I agree with all but the accountant. Do not misunderstand; I believe accounting is a vital tool to help manage a business. Accounting as a method to keep track of assets and the incomes and outgoes of a business is absolutely necessary, but when accounting becomes the methodology for managing a business, it will squeeze it dry. Accounting by its very nature is dwelling on operational efficiency. When an accounting philosophy is used to manage the entire business, strategy can go out the window and the true part of business; the people can be reduced to numbers. This can be a company’s biggest mistake if it wants to remain competitive. Everything but people can be managed. To unlock their hearts and minds, people must be lead and the leader must believe that those who follow can achieve far more than what they can accomplish themselves or they will not be multipliers.
Unfortunately, the philosophy of control seems to permeate most business ventures and transactions. The concept of “win-loose” or “win at all costs”, “the end justifies the means” are also examples of control. Many text books teach that strategy is about creating and maintaining a sustainable competitive advantage. The solution to maintain above average returns lies in finding a lucrative market and then either creating or finding barriers to entry to prevent a potential competitor or even a customer from taking your share of the business. The philosophy is based on a zero sum game. All you have is all you can take from someone else and all they have is what they can take from you. Clearly, there is much the business world and even in this book that would support someone’s view that it is a dog eat dog world and you had better eat them before they eat you, but it is not the way it has to or should be. If you view business strictly from quarter to quarter as many publicly traded companies do, trying to maximize the short term stock price, you will easily be able to justify this position. So many things that are out of your control can have a devastating impact on revenues and the bottom line. And, there are way too many companies who do operate using these dog eat dog business practices. However, the win-loose business philosophies are short term and self destructive. With this view of the world, management does not trust anyone, not even their own employees. The number of companies run under the control philosophy is almost too many to name.
Fewer, but far more interesting and exciting are the examples that are emerging of empowerment based on an abundance mentality. These shining examples provide a much better way to operate a business that will actually do more to develop and maintain a competitive advantage in this new information age. There are some wonderful examples of companies who are not only surviving hard times, but thriving in them because they have focused on unlocking the potential of their people. Nucor Corp in the steel industry is a company that continues to thrive when nearly everyone else is complaining about dumping and external excuses. Nucor did not hire people who worked in the steel industry. The hired skilled people and then rewarded them for innovation and taking risks to improve the process. They do not spend any money on research and development but the probably lead the industry in innovation. They do not even mind having their competitors tour their facilities because they know the secret to their success is still in the minds of their workers. They have never lain off workers, but rather slow production in an economic downturn. This impacts management compensation more than the average worker. Southwest Airline industry is another shinning example in the airline industry. I just read that in the wake of September 11th, every airline except SouthWest is no longer profitable. Southwest was also the only airline to have cash reserves so that they did not lay off one person as a result of 9/11. Coincidence or people centered strategies? Continental Grain and Kimball are two others that I have personally seen wonderful results by making employees a key component of their strategy.
Those who view the world from the perspective that people must be managed or controlled, will have a hard time understanding Linux and open source. Those who are trying to manage Linux through traditional zero sum strategies, will only see Linux as a failure. How can you make money on Linux? Where is the sustainable competitive advantage? Where are the barriers to entry? How do you protect yourself from your competitors, customers and suppliers? Where is the intellectual property? For years we have been asking ourselves these questions and I will address them in a subsequent chapter, but before I try to answer them, I would first like to illustrate the reality of the new world market that I think is somewhat hidden to the casual observer or even participant.
One of the challenges of the new information age, is the rate of innovation is increasing at an almost unbelievable rate. The traditionally process to develop a proprietary product internally with innovative technology and possibly patent your efforts to protect the company from competitors is a slow and tedious process. By the time a product gets to market or before a company can show a return on the investment made in innovation, packaging and marketing, someone has created an alternative solution. Because of the global economy, it is not sufficient to protect Intellectual Property (IP) in one country; you must register the name and patents around the world. This is a time consuming and expensive proposition. Once the legal process is complete, a company could then spend tremendous time trying to protect its IP in a court of law by enforcing its patents, but the outcome of a court of law is totally unpredictable. It is a total gamble to go to court. Right does not always prevail. Even when “justice is done” often it is not administered, as in the case of Microsoft. Microsoft was finally convicted of antitrust violations but suffered little or not penalty.
Spending precious resources trying to protect obsolete patents and developing patentable IP is a time consuming and almost impossible task given the global economy. Unless you are a very large company with tremendous resources, the legal route becomes almost impossible to pursue successfully. Every country around the world has different patent laws. While information is accessible instantaneously, the processes to patent and protect information are virtually impossible to do. Just protecting a company name in all the major markets is very expensive and time consuming and the world continues to move at an unprecedented rate. Within months or weeks, the key features of the product you have developed has been introduced somewhere else so the traditional product life cycle is cut short and a return on investment cannot be achieved.
The Linux model of open source and free access and use of intellectual property removes many of the illusions of control that many still have. Some feel that this is Linux’s greatest weakness, that open sources licenses prevent any company from making money. Many are coming to realize that the Internet, with its ability to provide information instantaneously coupled with open source break down barriers that have artificially protected inefficient business models. This combination has in fact created a completely new business environment. This combination has created an environment that enables a company to truly focus on the important elements of business, innovation and meeting peoples needs, its employees and its customers. The Linux model allows you to focus on the part of strategy that is the most important, constant innovation that solves a customers needs, the way you motivate people to continue to innovate and contribute, and most importantly delivering real value to the customer. The only real sustainable competitive advantage any company has is its people and to deliver real value to their chosen customer. If companies can figure out a way to empower their people and encourage them to continually improve the processes and products of a company and understand the changing needs of their customers, the company will have a competitive strategy that will survive because it can evolve with the market and its customers. An example of this type of empowerment is Toyota. As I mentioned before, when we visited Toyota City, their managers mentioned that they had had over 2003 suggestions from their employees and had implemented all be three. Their competitors were trying a top down motivation strategy to try to compete with them and Toyota was using a bottom up strategy to remain number one. Also, Google has also proven this model in recent years which Chris Andreson covers well in his book “Free”. The empowerment provided by open source is an important model to discuss, so important that the title of this book and an entire chapter is dedicated to it, The Love of Linux. As mentioned, at the core of the conflict between control and empowerment is how one truly views people. Are people and their infinite ability to create the essence of the organization or just a needed expense, a means to the corporate end or the hands to implement the bright ideas of someone more talented then the average employee?
So one critical key is how to motivate and empower your employees. So how do you empower your organization? From Linux you learn that to truly empower the organization requires at least four things: 1) a compelling vision or strategy of who you are going to target and what experience you want to provide 2) an environment encourages personal empowerment and responsibility 3) an organizational structure that removes the informal and formal obstacles and barriers and rewards proper execution of the strategy; and 4) Innovative use of collaborative tools.
A Compelling Vision
The Bible states that without vision, the people perish. Without leadership, people become disenchanted, disgruntled, unmotivated and put their energy into things that will bring them satisfaction and fulfillment. Many argue that this is precisely why people must be controlled. People want leadership with empowerment to then accomplish the mission, strategy or objective. Linux provides a great example of a compelling vision which is discussed in the next chapter, The Love of Linux. The vision is so compelling that the people give their time, talents and energy to the effort without compensation. If every business could find such a vision, how could they be stopped? The core of a business strategy must be about delivering real value to a customer at a price that makes the company providing the value a profit. Providing something of real worth is highly motivating. The first question to answer is who is the customer the company chooses to service? It may not be the current customer base. At Caldera, we determined that the customer we going to target were the companies who managed replicated small businesses. These were the McDonalds, KFCs, CVS and KMarts of the world. They also included vertical application and value added resellers who sold their applications to and managed them for small businesses such as the dentist and doctor’s offices. SCO has one of the largest install bases of these customers. We were beginning to get more information about them and what they needed. Once you know who your customer is, you must truly learn all you can about them. Spend time understanding their business and listening to their issues. You can then determine the value you intend to deliver to them and if that experience will be compelling enough for them to modify their behavior and buy more products and services. The vision we had was to provide a platform for the replicated site providers and the value added resellers that supplied key applications and services to this customer a low cost alternative on Intel a turn-key solution for these business.
It is not about providing technology; it is about truly understanding a customer and their needs and then providing the experience they desire or will truly benefit them while delivering a profit for the business. I spend a little more time on this in the chapter on Business Models.
An Environment that Encourages Personal Empowerment and Responsibility
Once a vision or strategy is decided upon, you must begin to honestly look at the environment and determine if the culture is there to support the strategic direction. One lesson that I would often repeat at company meetings was just do the right thing at the right time for the right reason. Again, one might ask what is right for one may not be right for another. Unfortunately, many use that to justify situation ethics, in other words they believe that the end justifies the means. The right thing however, may change given the circumstances. Each person in the business must make decisions daily on how to treat customers, fellow employees and partners. How they conduct themselves will determine whether or not the company will be successful. There are two main things that can help each person be empowered to make this choice. First, every person must understand what the strategic goals of the organization are and then how what they do fits into the whole. The responsibility of management is to determine and communicate this vision but each individual has the responsibility to own that vision. Make it their own by seeking to understand it and give input to its evolution. The second thing that helps each person understand what is right is their own intuition. Each person does know instinctively what he or she should do in a given situation. However, if the individual acts on the original impressions at the time they are given, they will not only will the company be successful, but also they will be personally fulfilled. Hence they must do the right thing at the right time. The right time, is usually when the impression comes. The company with its formal and informal processes must not get in the way of the individual being able to make these important decisions. One of the key reasons that Linux is so successful at attracting and keeping very talented people who continue to put time in for free is that it empowers. The construct of business do not get in the way of people suggesting and implementing “the right thing at the right time.” I will address this more in the next chapter. The company must reward and not penalize the risk each individual may need to take. Sometimes, the right time may be to wait. Again, this principle can be used improperly. Following one’s conscience is the key. Waiting to do something out of fear or political gain will not result in the right thing happening. This leads to the next point.
The way you can determine if you are doing “the right thing at the right time” is if you are doing it for the “right reason.” If the individual or management is acting selfishly or for the wrong reasons, both they and the company will fail. So many decisions are made out of fear, or selfishness, rather than out of what is morally right. Some rationalize and say how can you know what is right? What is right for one is not right for another? I fundamentally disagree. Each human being is born with the ability to discern right from wrong. We are all given a light in our souls. When we are true or honest to the light or impressions that come to us, we remain true to ourselves and to humanity. When we fail to respond to those impressions, we begin to rationalize and horriblize the behavior of those we have been prompted to help simply to justify our lack of action. Most often they are the ones closest to us in business or our personal lives. Over time, we can become dark inside. The pursuit of the things of this world, money, power, and fame, are among the quickest ways to go dark because they allow us to be selfish and self serving. When we focus on ourselves, at the exclusion of others, we grow dark.
An Organizational Structure that Removes the Informal and Formal Obstacles and Barriers and Rewards Proper Execution of Strategy
When it comes to empowerment, there is much business can learn from Linux that it is not about IP and protecting that IP, it is about empowering their people and removing the obstacles that prevent them from being able to innovate and meet those customer needs. Every company has formal and informal systems that determine how decisions are made and how people interact with each other. But the formal and informal systems of the company may compel them to do something else. Again, it is the responsibility of management to understand when these informal and formal systems get in the way of people being able to make the right choices. The key for management is to remove the formal and informal obstacles that would influence individuals to not follow their intuition. A very wise leader stated:
“A prudent leader will not complain at the weakness or the inefficiency or the lack of interest of those with whom he works until he is certain that he has presented the program fully, concisely, thoroughly, and understandably, and that he has followed through to keep the matter fresh in their minds, being sure that they understand the program and go forward. He should evaluate his performance before he criticizes other in theirs. His success will be measured not by his brilliance, nor by how much he knows about the program, but by how well he can transmit the knowledge and enthusiasm to others. When one person speaks the people say, “How eloquent,” but when another finishes speaking, they say, “Come, let us march.” (Teachings of Spencer W. Kimball p. 486).
If management will follow this counsel, they will often find many of the both formal and informal obstacles that exist in every culture that will prevent full implementation of strategy. Some lessons we learned at Caldera were the formal hierarchical structure sometimes keeps some from reaching their true potential. The financial and power rewards for management force key contributors to seek management positions. No matter how high up in a company or organization a person climbs, the real truth is that you only really have control over one individual, yourself. Some feel that you must have a title to have the authority. There is no question that some people do respond to titles. But competence is true authority. Some feel that all you have to do is have a title and then you can tell people what to do. They are like the traditional sheepherder who, with a dog goes around yapping at the heels of their workers. This method is quick and does not require but little investment, but the results are temporary. To lead like a shepherd, requires the sheep to know and trust you. It is not that you are perfect, but they must believe in you. Thus, real control is self-control. Shakespeare states, “To thine own self be true and it follows thou cannot be false to another.”
Being true to oneself is being truly honest or doing things for the “right reason.” But being true to oneself also means not trying to be something you are not. I find that many people feel they must be something they are not in order to be successful. Our society and traditional business structure makes individuals feel they have to be in management or climb the corporate ladder to be successful. I have found that many individuals find out that they are very unhappy in positions they felt they wanted. They are like fish out of water. Those who know themselves and know what they are good at and are not good at and are truly honest can have far more influence in their respective positions then in management. The old saying “bloom where you are planted” has significance. This should not be used as an excuse to not improve our talents and strive to become the best we can. We must be true to ourselves by becoming the best selves we can, not be trying to be someone else nor doing something someone wants us to do. The organization, however, must not force people into positions just to reap financial rewards when it is to the organizations benefit to keep them right where they are. Similarly, systems of rewards must be developed that allow for key contributors to remain where they are in the organization while allowing them to have greater influence in the organization.
I have learned that there is a leadership dilemma at the executive level of a company that may the cause of some of the challenges facing business. Each individual career path that leads to an executive level rewards operational efficiencies. For example, a good VP of Finance is one who really understands how to budget and minimize risks. They must put constraints on how finances are to be conserved and waste eliminated in the organization. There is a huge gulf between the necessary personality traits needed in a good CFO and a good VP of Finance. A good CFO must be an entrepreneur. They must know how to spend money to make money and take good calculated risks. This is true about every major discipline. The transition from functional head to the executive level is a chasm. Their focus must be more toward the strategic than operational efficiencies. That is not to say they should neglect operational focus. But, strategy is the unknown, uncharted space that many highly efficient operational managers feel very uncomfortable in. Many, many individuals cannot jump that chasm. It is a similar chasm that exists between individual contributors and management. Some feel compelled to go into management to receive the benefits. They should stay on the functional or operational side rather than move across. The challenge from a management side is that our hierarchical management infrastructure does not reward key participants based on contribution, but where they are on the corporate ladder. This problem must be solved. People of at all levels in an organization, can give invaluable input to the strategy and operation of the company and important management training. This is particularly true of those who are closer to the customer. Good talent should be utilized where they can flourish and be given the opportunity to influence the company in their areas of greatest competency not be forced into management or to a level of management that they are not suited for and will be miserable in just to be compensated appropriately, either monetarily or by influence. This is one of the dynamics that must change in the new world of the Internet and information exchange.
An employee can be truer to him or herself and be of much greater service to the company and their coworkers if they learn to blossom where they are planted rather than always pursuing a higher management position. The challenge is that most company’s compensation and reward systems are base on hierarchy. This must change. The responsibility increases with some management positions and consequently the compensation should be commensurate with that additional responsibility and risks, but we must begin to explore other ways to enable people to influence the direction of the company without being in management and truly compensate them for their contribution. I have learned that there is a leadership dilemma at the executive level of a company that may the cause of some of the challenges facing business. Each individual career path that leads to an executive level rewards operational efficiencies. For example, a good VP of Finance is one who really understands how to budget and minimize risks. They must put constraints on how finances are to be conserved and waste eliminated in the organization. There is a huge gulf between the necessary personality traits needed in a good CFO and a good VP of Finance. A good CFO must be an entrepreneur. They must know how to spend money to make money and take good calculated risks. This is true about every major discipline. The transition from functional head to the executive level is a chasm. Their focus must be more toward the strategic than operational efficiencies. That is not to say they should neglect operational focus. But, strategy is the unknown, uncharted space that many highly efficient operational managers feel very uncomfortable in. Many, many individuals cannot jump that chasm. It is a similar chasm that exists between individual contributors and management. Some feel compelled to go into management to receive the benefits. They should stay on the functional or operational side rather than move across. The challenge from a management side is that our hierarchical management infrastructure does not reward key participants based on contribution, but where they are on the corporate ladder. This problem must be solved. People of at all levels in an organization, can give invaluable input to the strategy and operation of the company and important management training. This is particularly true of those who are closer to the customer. Good talent should be utilized where they can flourish and be given the opportunity to influence the company in their areas of greatest competency not be forced into management or to a level of management that they are not suited for and will be miserable in just to be compensated appropriately, either monetarily or by influence. This is one of the dynamics that must change in the new world of the Internet and information exchange.
Again, open source working group model provides a powerful tool to empower people to greatly contribute and unify people. This concept of working together in groups that are not committees, but have a designated or even self appointed leader is a way to engage peoples hearts and minds. It requires a very different management skill than what is taught in most management texts. And most importantly, it requires the heart of the manager. They must truly believe that working together as a group will result in a better solution than they could on their own. Clearly, the manager or council leader must always have the option to make a decision with or without discussion, but the preferred method would be to utilize a council. I will talk more about councils in the chapter on The Open Company — Using Councils to Manage, but it is important to note that it is a powerful tool for the organization to break down both formal and informal barriers.
In this rapidly changing, highly competitive world, they only way to succeed is to empower the individual and the organization. Management must provide the vision. That vision must come from understanding who their customer is and what that customer needs. Strategy and vision is not about coming up with the greatest technology and then trying to protect it legally. It is about understanding and satisfying customer needs and satisfying those needs by unlocking the innovative power of its employees. Management must provide develop and communicate that vision to its employees and management so that they can truly do the right thing, at the right time, for the right reason. Management must discover the obstacles both formal and informal and provide incentives based contributions and not position.
Innovative Use of Collaborative Tools
Since the early days of Linux, many new collaborative tools have been developed that have fostered collaboration throughout the industry. Wikis, blogs, and social networking software are enabling interaction around the world. The tools are classified as Web 2.0. Many of these tools are now being used within the organization. This effort has been called Enterprise 2.0. It is reported that Jonathan Schwartz the former CEO of Sun, was using blogs to communicate to employees. Jonathan can communicate to all employees and can clearly see the direction of where he wants to take the company and they in turn can communicate with him. Much can be done in this area to experiment with how these tools of can not only break down formal and informal barriers within the company, but also traditional walls between the company and its suppliers, partners, affiliates and consumers.