QUESTIONS:

1. What are the distinctive features of W.L Gore's organization and management? To what extent do they represent a consistent management based upon identifiable principles?
2. What are the advantages and disadvantages of W.L. Gore's approach to organization and management?
3. To what extent is the W.L. Gore's approach to organisation and management transferrable to other companies? And, if so, what types of companies?

READ THE CASE STUDY:

Malcolm Gladwell (author of The Tipping Point and Outliers) described his visit to

W. L. Gore & Associates (Gore) as follows:

When I visited a Gore associate named Bob Hen, at one of the company's plants

in Delaware, I tried, unsuccessfully, to get him to tell me what his position was. I

suspected, from the fact that he had been recommended to me, that he was one of

the top executives. But his office wasn't any bigger than anyone else's. His card just

called him an "associate." He didn't seem to have a secretary, one that I could see

anyway. He wasn't dressed any differently from anyone else, and when I kept asking

the question again and again, all he finally said, with a big grin, was, "I'm a meddler."1

The absence of job titles and the lack of the normal symbols of hierarchy are

not the only things that are different about Gore. Since its founding in 1958, Gore

has deliberately adopted a system of management that contrasts sharply with that

of other established corporations. While the styles of management of all start-up

companies reflect the personality and values of their founders, the remarkable thing

about Gore is that, as a $2.5 billion company with 8500 employees ("associates") in

facilities located in 24 countries of the world, its organizational structure and management

systems continue to defy the principles under which corporations of similar

size and complexity are managed.

The Founding of Gore

Wilbert L. (Bill) Gore left DuPont in 1958 after 17 years as a research scientist.

At DuPont, Gore had been working on a new synthetic material called

This case was prepared by Robert M. Grant. 2015 Robert M. Grant.

polytetrafluoroethylene (PTFE), which it had branded "Teflon." Gore was convinced

that DuPont's commitment to a business model based on large industrial markets

for basic chemical products had caused it to overlook a whole range of innovative

applications for PTFE. In forming a business together with his wife, Vieve, Gore was

also motivated by the desire to create the energy and passion that he had experienced

when working in small research teams at DuPont on those occasions when

they were given the freedom to pursue innovation.

Working out of their own home in Newark, Delaware, and with the help of their

son, Bob, the Gore, first product was Teflon-insulated cable (which was used for the

Apollo space program among other applications).

The company's biggest breakthrough was the result of Bob Gore's discovery of

the potential of Teflon to be stretched and laced with microscopic holes. The resulting

fabric had several desirable properties; in particular, it shed water droplets but

was also breathable. Gore-Tex received a US patent in 1976. Not only did it have a

wide range of applications for outdoor clothing, the fact that Gore-Tex was chemically

inert and resistant to infection made it an excellent material for medical applications

such as artificial arteries and intravenous bags. The potential to vary the size

of the microscopic holes in Gore-Tex made it ideal for a wide range of filtration

applications.

Origins of the Gore Management Philosophy

FundingUniverse.com describes the development of Bill Gore's management ideas

as follows:

From their basement office, the Gores expanded into a separate production facility

in their hometown of Newark, Delaware. Sales were brisk after initial product

introductions. By 1965, just seven years after the business had started, Gore &

Associates was employing about 200 people. It was about that time that Gore

began to develop and implement the unique management system and philosophy

for which his company would become recognized. Gore noticed that as his company

had grown, efficiency and productivity had started to decline. He needed a

new management structure, but he feared that the popular pyramid management

structure that was in vogue at the time suppressed the creativity and innovation

that he valued so greatly. Instead of adopting the pyramid structure, Gore decided

to create his own system.

During World War II, while on a task force at DuPont, Gore had learned of

another type of organizational structure called the lattice system, which was developed

to enhance the ingenuity and overall performance of a group working toward

a goal. It emphasized communication and cooperation rather than hierarchy of

authority. Under the system that Gore developed, any person was allowed to make

a decision as long as it was fair, encouraged others, and made a commitment to the

company. Consultation was required only for decisions that could potentially cause

serious damage to the enterprise. Furthermore, new associates joined the company

on the same effective authority level as all the other workers, including Bill and

Vieve. There were no titles or bosses, with only a few exceptions, and commands

were replaced by personal commitments. New employees started out working in an area best suited to their talents, under

the guidance of a sponsor. As the employee progressed there came more responsibility,

and workers were paid according to their individual contribution. "Team

members know who is producing," Bill explained in a February 1986 issue of the

Phoenix Business Journal. "They won't put up with poor performance. There is tremendous

peer pressure. You promote yourself by gaining knowledge and working

hard, every day. There is no competition, except with yourself." The effect of the

system was to encourage workers to be creative, take risks, and perform at their

highest level.2

Bill Gore's ideas about management were influenced by Douglas McGregor's The

Human Side of Enterprise, which was published as Gore's own company was in its

start-up phase. In it, McGregor identifies two models of management: the conventional

model of management, rooted in Taylor's scientific management, and Weber's

principles of bureaucracy, which he terms "Theory X." At its core is the assumption

that work is unpleasant, that employees are motivated only by money, and that management's

principal role is to prevent shirking. "Theory Y" is rooted in the work of

the human relations school of management, which assumes that individuals are selfmotivated,

anxious to solve problems, and capable of working harmoniously on joint

tasks.

A key element in Bill Gore's management thinking related to the limits of organizational

size. He believed that the need for interpersonal trust would result in organizations

declining in effectiveness once they reached about 200 members. Hence,

in 1967, rather than expand their Delaware facility, Bill and Vieve decided to build a

second manufacturing facility in Flagstaff, Arizona. From then on, Gore built a new

facility each time an existing unit reached 200 associates.

According to Malcolm Gladwell, Gore's insistence upon small organizational

units is an application of a principle developed by anthropologist Robin Dunbar.

According to Dunbar, social groups are limited by individuals' capacity to manage

complex social relationships. Among primates, the size of the typical social group

for a species is correlated with the size of the neocortex of that species' brain. For

humans, Dunbar estimates that 148 is the maximum number of individuals that a

person can comfortably have social relations with. Across a range of different societies,

Dunbar found that 150 was the typical maximum size of tribes, religious groups,

and army units.3

Organization Structure and Management Principles

The Gore organization does include elements of hierarchy. For example, as a corporation,

it is legally required to have a board of directorsthis is chaired by Bob

Gore. There is also a CEO, Terri Kelly. The company is organized into four divisions

(fabrics, medical, industrial, and electronic products) each with a recognized

"leader." Within these divisions there are specific business units, each based upon

a group of products. There are also specialized, company-wide functions such as

human resources and information technology.

What is lacking is a codified set of ranks and positions. Gore associates are

expected to adapt their roles to match their skills and aptitudes. The basic organizational

units are small, self-managing teams.

Relationships within teams and between teams are based upon the concept of

a lattice rather than a conventional hierarchy. The idea of a lattice is that every

organizational member is connected to every other organizational member within

the particular facility. In the lattice, communication is peer to peer, not superior to

subordinate. For Bill Gore, this was a more natural way to organize. He observed

that in most formal organizations it was through informal connections that things

actually got done: "Most of us delight in going around the formal procedures and

doing things the straightforward and easy way."4

New associates are assigned to a "sponsor" whose job is to introduce the new hire to

the company and guide him or her through the lattice. The new hire is likely to spend

time with several teams during the first few months of employment. It is up to the new

associate and a team to find a good match. An associate is free to find a new sponsor

if desired. Typically, each associate works on two or three different project teams.

Annual reviews are peer based. Information is collected from at least 20 other

associates. Each associate is then ranked against every other associate within the

unit in terms of overall contribution. This ranking determines compensation.

The company's beliefs, management principles, and work culture are articulated

on its website (Exhibit 1).

Leadership

Leadership is important at Gore, but the basic principle is that of natural leadership:

"If you call a meeting and people show upyou're a leader."5 Teams can appoint

team leaders; they can also replace their team leaders. As a result, every team

leader's accountability is to the team. "Someone who is accustomed to snapping

their fingers and having people respond will be frustrated," says John McMillan, a

Gore associate. "I snap my fingers and nobody will do anything. My job is to acquire

followership, articulate a goal and get there ... and hope the rest of the people think

that makes sense."6

CEO Terri Kelly compares the conventional approach to leadership with Gore's

"distributed leadership model":

The model of the single powerful leader who operates through command and

control is attractive in its simplicity ... In reality, it is impractical to expect the single

leader to have all the answers, and history has shown that relying upon rigid control

mechanisms will not prevent catastrophic outcomes. It's far better to rely upon

a broad base of individuals and leaders who share a common set of values and feel

personal ownership for the overall success of the organization. And as organizations

grow in size and complexity, it becomes even more critical to distribute the

leadership load . . . The capacity of the organization increases when it distributes

the leadership load to competent leaders on the ground who can make the best

knowledge-based decisions.7

She argues that talented newcomers to the workforce adapt much more easily to

the distributed leadership than to traditional modes of management. Young people

recognize they have choices, are not wedded to a single organization, and will move

to where they perceive the best opportunities. As a result companies that persevere

with traditional management models will find it difficult to retain the best talent. At

the same time, warns Kelly, making the shift to a distributed leadership model is a challenge to top management that requires a fundamental change in the values,

attitudes, and reward systems that are deeply embedded in most organizations:

It will require a shift within the organization from valuing a key few to valuing the

unique contributions of many. Individuals will need to feel they have a voice and

can be heard. Leaders will need to recognize that their primary role is to empower

others versus build their own power. They will no longer stand behind a title with

assumed authority to tell people what to do.

Leaders' focus will shift to creating the right environment and instilling the right

values that can enable capable leaders to emerge. They will recognize that they are

only leaders if they have willing followers, and that this needs to be earned every

day. Ultimately their contributions will be judged by the people they lead.

Most rewards systems depend upon higher-level management to assess the effectiveness

of the leader. This view can be somewhat limited and biased by the fact

the managers were often the ones who put the leader in the role in the first place.Those who know their leaders best are typically the individuals they lead. If you

want individuals to have a voice in the organization, they must also have a voice

in selecting and evaluating their leaders.

In our company, we have found it very useful to adopt a peer ranking system.

All associates get the opportunity to rank members of their team, including their

leaders. They are asked to create a contribution list in rank order based on who

they believe is making the greatest contribution to the success of the enterprise.

This approach serves as an excellent form of "checks and balances" when it

comes to who is truly recognized for their contributions as well as for overall

leadership.