Could Red Hat Leader Jim Whitehurst’s Sudden Exit From IBM Backfire in the Long Run?

Nearly three years after Red Hat’s acquisition by IBM, and less than two years after his appointment as the IBM president, Jim Whitehurst has decided to call it a day. The former Red Hat CEO will continue as a senior advisor to IBM. Are Whitehurst and SVP for global sales Bridget van Kralingen the victims of IBM’s way of business?

Right at the onset of the 4th of July weekend, IBM CEO Arvind Krishna announced a slew of leadership changes including that of Jim WhitehurstOpens a new window , the company’s (former) president. Whitehurst was a tall personality at the Armonk, NY-headquartered company, so it seems the weekend announcement was a deliberate move to allay market speculation and industry recoil from the news.

In the IBM press release, Krishna said Whitehurst is stepping down from his role, fourteen months after he joined the company, and will serve as a ‘senior advisor’ to IBM. Whitehurst was widely touted as the inheritor to the vast IBM establishment going back just over 110 years. So the announcement comes as a surprise to several industry professionals, one of whom is a CEO of a top IBM partner. They described the news as “a shocker.”

“This is a shocker. I can’t believe Whitehurst is leaving. This came out of nowhere. He was the heir apparent to Arvind. The big question now is who is going to make sure the IBM-Red Hat integration does not go off track? IBM really needs to make sure that the integration remains a top priority,” said the partner company CEO, who chose to remain unidentified, to CRNOpens a new window .

See Also: IBM’s Revamped Future Strategy Has No Place for $1B Watson Health Division

Why Jim Whitehurst Stepping Down is Significant

The unnamed executive is referring to the influence Whitehurst wielded over Red Hat while steering it from the helm, before as well as after the open source company was taken over by IBM. In his more than a 12-year stint as the Red Hat president and CEO, the company for the first time posted over a billion USD in revenues became a unicorn, and then the first one with open source roots to be valued a $2 billion, before being acquired in one of the biggest tech deals for $34 billion in July 2019Opens a new window .

Back then, the employees of Red Hat were concerned about what Big Blue’s acquisition would mean for the technology they had painstakingly built over the years under Whitehurst. Red Hat was one of the early pioneers of open source hybrid cloud infrastructure, and cloud-native app platforms.

Krishna was then serving as IBM’s SVP for cloud and cognitive software and was counted on by the company to chart its cloud growth strategy, which included the Red Hat acquisition. The match was an odd one since the unique culture that Red Hat came to be known for contrasted with IBM’s rigid, out-of-date enterprise approach.

Red Hat’s agility stems from a modern, ready-to-adapt approach while IBM is rooted in its age-old bureaucracy-esque practices. For instance, decisions in Red Hat are taken by the teams themselves — a hallmark of the bottom-up approach — as opposed to IBM’s top-down approach for decision-making.

So when the two companies joined hands to augment the multinational’s hybrid cloud strategy, Whitehurst assured employees of upholding their way of working. Back in October 2018, when IBM announced their intention to acquire Red Hat, Whitehurst saidOpens a new window , “Red Hat is still Red Hat. When the transaction closes, as I noted above, we will be a distinct unit within IBM and I will report directly to Ginni (Rometty, then CEO at IBM). Our unwavering commitment to open source innovation remains unchanged.”

He adds, “The independence IBM has committed to will allow Red Hat to continue building the broad ecosystem that enables customer choice and has been integral to open source’s success in the enterprise. IBM is acquiring Red Hat for our amazing people and our incredibly special culture and approach to making better software. They understand and value how and why we are different and they are committed to allowing us to remain Red Hat while scaling and accelerating all that makes us great with their resources.”

Red Hat is thus so unfettered in its operations that its current CEO Paul Cormier told Data Center KnowledgeOpens a new window last year that Intel, which competes with IBM in the chip sector, provides its secret roadmaps to Red Hat. Cormier said, “When we first did the merger, we had to prove to Intel that we, Red Hat, could put that wall up.”

Post the closing of the deal in mid-2019, Whitehurst also architected the integration of IBM and Red Hat services and aligned the two companies, which boosted IBM’s revenue for Q1 2021 by as much as 20%Opens a new window and perked up the profitability. At 17%Opens a new window , Red Hat also continued to post steady double-digit revenue growth numbers for the same period.

“Jim Whitehurst has played a pivotal role in the IBM and Red Hat integration,” saidOpens a new window Krishna. “In the almost three years since the acquisition was announced, Jim has been instrumental in articulating IBM’s strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients.”

So Why Did Whitehurst Step Down?

Well, no one [on the outside] really knows. It certainly is baffling that a person who literally built the company and its values would decide to suddenly leave. Even before taking the reins of Red Hat in 2008, when he was the Chief Operating Officer of Delta Airlines, Whitehurst was a known proponent of open source.

At some point after Red Hat’s acquisition by Big Blue, Whitehurst was even expected by some to replace CEO Rometty instead of the IBM veteran Krishna, to bring about a change in the company’s functioning.

Whitehurst also posted a video on LinkedInOpens a new window just a day before IBM’s announcement. The caption reads, “One of the hardest parts of innovation is having the courage to act, decide, and prioritize quickly.”

Naturally, speculations are rife that Whitehurst’s departure has something to do with the clash of cultures, between new-age agility and the bureaucracy of the past.

But more than that, IBM may want to break down the wall Cormier was talking about.

See Also: IBM Is Bringing AIOps for Enterprises, Grabs Turbonomic Along the Way

Implications

From a market standpoint, the news wasn’t well-received by the investors. The multinational’s share price dropped a maximum of 4.98% before recovering just a tad and closing at a 4.68% loss in value. This plunge, the biggest in five months, wiped away almost $6 billion in IBM’s total market capitalization and is now currently sitting at $125.11 billionOpens a new window .

Internally, however, the move also sparked a major restructuring that saw Bridget van KralingenOpens a new window , SVP for global markets leave her role and now serve as the SVP for special projects at IBM for a year. Upon completion of the year-long tenure in her new role, van Kralingen will retire from IBM.

Rob ThomasOpens a new window , the current SVP for software, cloud, and data platform at IBM will replace van Kralingen as the SVP for global markets. Tom RosamiliaOpens a new window , the current SVP for systems at IBM and board member of Rockwell Automation will fill in Krishna’s former role as SVP of cloud and cognitive software, while Ric LewisOpens a new window is being brought in to fill in Rosamilia’s systems SVP role.

Lewis was the senior VP/GM for the software defined & cloud group at Hewlett Packard Enterprises.

Additionally, Kelly ChamblissOpens a new window , formerly an Americas managing partner for global business services at IBM is promoted as the new SVP for Americas and strategic sales and global business services. Roger PremoOpens a new window will head the new corporate strategy and business development initiative.

Closing Thoughts

Rometty is gone. Now, so is Whitehurst. So it’ll be interesting to see if IBM takes over completely, provided the legalities that may arise from IBM’s competitors are taken care of.

“I think someone once said that more companies die of indigestion than starvation,” Whitehurst said in his video message. “Companies try to do much and not necessarily focus.”

It is unclear whether the executive referred to IBM but the whole situation is indicative of the rift that exists between two polar-opposite companies. And letting go of not just Whitehurst but the open source credibility associated with him, that he built up over the years, could possibly hurt IBM in the long run.

Let us know if you enjoyed reading this news on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!