Red Hat CEO: Why S&P 500 Companies Fail

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According to Red Hat CEO Jim Whitehurst, no one at the top is secure.

"Membership to the S&P 500 has never been more volatile," Whitehurst told the crowd at the 2015 Summit. "Big companies fail, big companies fall away now because you can no longer rest on your assets."

Whitehurst referenced a PwC report in which 61 percent of CEOs said they "expect to compete in industries that they're not even in today within the next three years."

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Whitehurst said there are three keys to thriving in this innovative environment as a company. First, embrace decentralization.

"Now that it's no longer product innovation, innovation's not going to be centralized in one organization," Whitehurst said. The CEO recommended processes and development that cuts across a company, and focusing on innovation in customer engagement.

"[Innovating] in a decentralized way is going to be critical to the success of every company," said Whitehurst.

Second, "It's going to be more open and collaborative. It won't just be within corporate boundaries," he said, and cited the peer-to-peer business market companies Uber and Air BnB.

Finally, Whitehurst said companies should embrace "modular" environments where people are encouraged to experiment and allowed to fail. Companies should be "unapologetic about trying things," he said.

PUBLISHED JUNE 26, 2015