Gary Hamel: Is open leadership about a set of technologies, which are clearly enablers, or is it about a set of principles.

Charlene Li: Great question. I think, in the end, it's about principles. It is a mindset that you feel very comfortable and very confident, that if you give up control good things will come from that. And I talk about it as an optimistic mindset. That you believe in the goodness of giving up control, versus a pessimistic, born of past experiences when you gave up control and bad things happened. So it's a lot easier to be open if you have that optimistic mindset. And so the question becomes, how do you create that culture and that mindset so that when good things happen, that's great. But if bad things happen, it's okay, we can recover from that. My favorite chapter in the book is chapter nine, which is about the imperative of failure. How are you at dealing with failure and mistakes? And people talk about it in the frame of risk-taking today. How do you stand up there and say to your organization, we need to take risks, we need to be innovative. If you don't celebrate the failures as much as you celebrate the successes.

So you have to celebrate the point when they're taking that risk, and then if nothing else, celebrate the failures even more than the successes. How often do we talk about our failures? We don't. And yet, unless we make it okay for people to fail, it's never gonna be okay for them to try. They will never take that risk.

Gary Hamel: You talk, Charlene, about having an optimistic point of view about human beings. And I think this goes all the way back to [Douglas] McGregor and Theory X and Theory Y and so on. And leaders that I know that are in organizations, I think are very open and transparent and meritocratic. They do have that kind of fundamental belief that people want to do a good job and they want to tell the truth and so on. Having said that, organizations still need to be focused and disciplined, and you need compliance around certain things.

Charlene Li: Absolutely.

Gary Hamel: So, if control is not coming from kind of a tyrant boss and a lot of close oversight and a lot of check-ins, what keeps things from flying apart? Because at most companies the moment you say, we really need to give our employees more freedom, they'll say, yes, but we still have to deliver five 9's reliability, flawless customer service, make the quarterly numbers. So as we relax the leadership constraints or the control constraints, where does that lead us?

Charlene Li: I actually believe you have to be more disciplined, you have to have more processes to be open -- which seems like a contradiction because I don't believe anybody can be completely open. So the trick is defining what openness means for your organization.

I define ten different ways you can be more open around information sharing and decision making. And you have to create what I call a sandbox, the sandbox covenant. You define very clearly for everybody what are the parameters for being open. What you can and can't do.

Gary Hamel: So give me a couple of examples of what would be good parameters.

Charlene Li: Well, it depends on the organization. So if you're starting off and being completely closed, then your sandbox is going to be really small. And my favorite example of this is Citibank. When they started their Twitter account, they said, okay, great. The legal department said you can have a Twitter account, they understand why it's really important to do it. But we have to approve every single tweet. And that sounds ridiculous, doesn't it? So I like to say their sandbox had a grain of sand in it.

Gary Hamel: You know IT is probably the most centralized and controlling function in most companies anyway, so I'm hardly shocked.

Charlene Li: So the legal department said, we have to approve it. So three times a day they'd do it, they moved it to e-mail, and did that for four months. And then finally they said, okay, let's make that sandbox a little bigger because now we know what's going on. All those tweets that say "Thank you for opening an account," we don't have to approve those anymore.

So they're slowly opening up that sandbox as they understand what the parameters are that comes with responsibility. I like to quote Spiderman's Uncle Ben: "With great power comes great responsibility."

And so if you give people the power, you have to define what that responsibility is. And also what the rules are inside that sandbox, and also what the consequences are if you step outside of that sandbox. So that discipline, I think, has been missing from a lot of the dialogue about being open because people will just say, be open, be real, be transparent. Well, the question becomes, how transparent? How authentic? How real? And that's a very valid question. So you have to define that as a leader.