Why Whitehurst is stepping away from IBM

For now, former IBM President James Whitehurst remains at IBM as a special advisor. Soon, however, he'll appear as a CEO at another business.
Written by Steven Vaughan-Nichols, Senior Contributing Editor

It was never much of a mystery why James Whitehurst stepped down as IBM's President. Whitehurst wanted to be IBM's CEO, and IBM's board went for company man Arvind Krishna instead. Now, though, Whitehurst himself has admitted that that is indeed the reason

Krishna, who's only a few years older than Whitehurst, was named IBM's CEO in January 2020. Clearly, there was no easy route forward for Whitehurst. It was assumed, however, that Krishna would only be an interim CEO. That soon proved not to be the case. 

Why then did Whitehurst stick around as long as he did? Simple. He wanted to oversee the IBM-Red Hat merger until he felt it was as good as it was going to get. As Whitehurst said, "I feel really good about the Red Hat integration."

But, at the end of the day, Whitehurst wants to be the top leader at a major company.  

Whitehurst came to Red Hat in 2007. He had served as COO of Delta Airlines, where he helped oversee Delta's painful bankruptcy restructuring. Then, as now, it was assumed Whitehurst would get the top spot. He didn't. As a result, Whitehurst left Delta to take over the reins at Red Hat. Although Red Hat was then a force in Linux, it was a small player compared to the Fortune 500.

Whitehurst knew little about Linux or open-source software when he took Red Hat's CEO job. He proved to be a quick study. Not only did Whitehurst learn about open source, but he also embraced it. He transformed his management style into what he called the Open Organization

The Open Organization worked. Under Whitehurst's open approach, Red Hat became the first billion-dollar Linux company. Not long after that, Red Hat became the first two-billion-dollar Linux company.

He also steered Red Hat's $34 billion acquisition by IBM. Then, in the emotional aftermath, Whitehurst calmed down both Red Hat's employees' and customers' fears that Red Hat would lose its identity to the IBM way of doing business. 

As a direct result, IBM's total cloud revenue of $25.1 billion went up by 20% in the fiscal year 2020. Much of this was driven by Red Hat's hybrid cloud programs. Red Hat itself saw its revenue go up by 18%.

So where will Whitehurst go next? He had been mentioned as a possible candidate in VMware's recent CEO hunt. But, in the end, VMware went inside and promoted Raghu Raghuram, its COO of products and cloud services, to the CEO slot. 

I think any company that gets Whitehurst as its CEO will be lucky. He's shown himself to be successful in three very different venues facing very different situations: Delta, a major airline recovering from near financial ruin; Red Hat, an innovative, growing open-source company; and IBM, the most old school of all technology businesses. 

However, I can't see him going to another Linux company. Not only is Red Hat close to his heart, but, honestly, there's no other Linux or open-source business at its level. Any move to another Linux company would be a step down.

So where will he land? I expect it will be a major technology company, but I wouldn't be surprised at, well, pretty much anything. 

I will note -- and keep in mind this is just speculation -- that Whitehurst is also a special advisor to the private equity firm Silver Lake. This firm, in turn, is well invested in Dell Technologies. And, the rumor mill has it that Michael Dell, its founder and CEO, may be shifting his focus away from Dell and to his recent purchase of a minority share in the NBA San Antonio Spurs and his new special purpose acquisition company (SPAC), MSD Acquisition. And, oh, by the way, Dell has a long history of supporting Linux both on the desktop and the server.

It's just a thought. 

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