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CLASSIC CASE 6
W. L. GORE & ASSOCIATES, INC. ...
W. L. Gore
On July 26, 1976, Jack Dougherty, a newly minted MBA from the College of William and Mary, dressed in a dark blue suit and bursting with resolve, reported for his first day at W. L. Gore & Associates. He presented himself to Bill Gore, shook hands firmly, looked him in the eye, and said he was ready for anything. ... Gore replied, “That’s fine, Jack, fine. ... ” Three frustrating weeks later he found that something, dressed in jeans, loading fabric into the mouth of a machine that laminated the company’s patented Gore-Tex membrane to fabric. ... This story was part of the folklore that was heard over and over about W. L. Gore. ... Among other things, he or she might learn how Gore-Tex fabric was made, what it could and could not do, how Gore handled customer complaints, and how it made investment decisions.
Anita McBride related her early experience at W. L. Gore & Associates this way:
Before I cam to Gore, I had worked for a structured organization. I came here, and for the first month it was fairly structured because I was going through training and this is what we do and this is how Gore is and all of that, and I went to Flagstaff for that training. ... ”
Background
W. L. Gore & Associates evolved from the late Wilbert L. Gore’s experiences personally, organizationally, and technically. ... On this team, Wilbert Gore, called Bill by everyone, felt a sense of excited commitment, personal fulfillment, and self-direction. ...
Bill Gore remained in his basement lab and proceeded to try what everyone knew would not work. ...
For the next four months, Bill Gore tried to persuade Du Pont to make a new product—PTFE-coated ribbon cable. By this time in his career, Bill Gore knew some of the decision makers at Du Pont. ... On January 1, 1958, their wedding anniversary, they founded W. L. Gore & Associates, which they viewed as another partnership. ... ”
Bill Gore was 45 years old with five children to support when he left Du Pont. ... In lieu of salary, some of their employees accepted room and board in the Gore home. ...
W. L. Gore & Associates continued to grow and develop new products primarily derived from PTFE, including its best-known product, Gore-Tex. In 1986, Bill Gore died while backpacking in the Wind River Mountains of Wyoming. ...
The Operating Company
W. L. Gore & Associates was a company without titles, hierarchy, or any of the conventional structures associated with enterprises of its size. ... In addition, Gore did not have a corporate-wide mission or code of ethics statement, neither did Gore require nor prohibit business units from developing such statements for themselves. ... The majority of business units within Gore did not have such statements. ... ” Gore’s management style was often referred to as unmanagement. ...
For example, in 1965, W. L. Gore & Associates was a thriving and growing company with a facility on Paper Mill Road in Newark, Delaware, with about 200 employees. One warm Monday morning in the summer, Bill Gore was taking his usual walk through the plant. ...
By 1991, W. L. Gore & Associates consisted of 44 plants worldwide with over 5,300 associates. ... Gore’s overseas plants were located in Scotland, Germany, France, Japan, and India.
Products
The products that W. L. Gore made were organized into eight divisions—electronic, medical, waterproofing fabrics, fibers, industrial filtration, industrial seals, coatings, and microfiltration. ... For example, Gore wire and cable assemblies were used in the space shuttle Columbia because they would stand the heat of ignition and the cold of space. Gore wire was used in the moon vehicle shuttle that scooped up samples of moon rocks, and Gore’s microwave coaxial assemblies opened new horizons in microwave technology. ... Because of the physical properties of the Gore-Tex material used in their construction, the electronic products were used extensively in defense systems, electronic switching for telephone systems, scientific and industrial instrumentation, microwave communications, and industrial robotics. Reliability was a watchword for all Gore products. ... Gore-Tex expanded PTFE was an ideal material used to combat cardiovascular disease. When human arteries were seriously damaged or plugged with deposits that interrupt the flow of blood, the diseased portions could often be replaced with Gore-Tex artificial arteries. Gore-Tex arteries and patches were not rejected by the body because the patient’s own tissues grew into the grafts’ open porous spaces. Gore-Tex vascular grafts came in many sizes to restore circulation to all areas of the body. ... Gore-Tex was also used to help people with kidney disease. Associates were developing a variety of surgical reinforcing membranes, known as Gore-Tex cardiovascular patches, which could literally mend broken hearts, by patching holes and repairing aneurysms.
Through the waterproof fabrics division, Gore technology had traveled to the top of the world on the backs of renowned mountaineers. Gore-Tex fabric was waterproof and windproof, yet breathable. Those features had qualified Gore-Tex fabric as essential gear for mountaineers and adventurers facing extremely harsh environments. ... That made Gore-Tex fabric ideal for anyone who worked or played hard in foul weather. Backpackers had discovered that a single lightweight Gore-Tex fabric shell would replace a poplin jacket and a rain suit and dramatically outperform both. Skiers, sailors, runners, bicyclists, hunters, fishermen, and other outdoor enthusiasts had also become big customers of garments made of Gore-Tex fabric. General sportswear and women’s fashion footwear and handwear of Gore-Tex fabric were as functional as they were beautiful. Boots and gloves, both for work and recreation, were waterproof thanks to Gore-Tex liners. Gore-Tex was even becoming government issue for many military personnel. ... Other demanding jobs also required the protection of Gore-Tex fabric because of its unique combination of chemical and physical properties.
The Gore-Tex fibers products, like the fabrics, ended up in some tough places. The outer protective layer of NASA’s spacesuit was woven from Gore-Tex fibers. Gore-Tex fibers were in many ways the ultimate in synthetic fibers. ...
Industrial filtration products, such as Gore-Tex filter bags, reduced air pollution and recovered valuable solids from gases and liquids more completely than alternatives; they also did it more economically. ... Steam valves packed with Gore-Tex valve stempacking never leaked and never needed to be repacked. ...
Gore-Tex microfiltration products were used in medical devices, pharmaceutical manufacturing, and chemical processing. ...
Financial Information
W. L. Gore was a closely held private corporation. ... Eighty percent of the stock was held by the Gore family and veteran associates, 10 percent by current associates, and 10 percent by others.
According to Shanti Mehta, an associate, Gore’s return on assets and equity ranked it among the top 5 percent of major companies. According to another source, W. L. Gore & Associates was working just fine by any financial measure. ... The compounded growth rate for revenues at W. L. Gore over the past 20 years had been over 18 percent discounted for inflation. ...
Organizational Structure
Bill Gore wanted to avoid smothering the company in thick layers of formal “management. ... W. L. Gore & Associates developed what it called the “sponsor” program to meet these needs. When people applied to W. L. Gore, they were initially screened by personnel specialists as in most companies. ... Bill Gore proudly told the story of “a very young man” of 84 who walked in, applied, and spent five very good years with the company. The individual had 30 years of experience in the industry before joining Gore. ...
An internal memo by Bill Gore described three kinds of sponsorship and how they might work as follows:
1. ...
W. L. Gore & Associates had not only been described as unmanaged, but also as unstructured. Bill Gore referred to the structure as a lattice organization. ...
The structure within the lattice was described by the people at Gore as complex and had evolved from interpersonal interactions, self-commitment to group-known responsibilities, natural leadership, and group-imposed discipline.
EXHIBIT 1
The Lattice Structure
Bill Gore once explained this structure by saying. ... As Bill Gore has conceded, “The abdication of titles and rankings can never be 100 percent. ... As Bill Gore stated, “I’m told from time to time that a lattice organization can’t meet a crisis well because it takes too long to reach a consensus when there are no bosses. ... Charles Campbell, the University of Pittsburgh’s senior resident, reported a Gore-Tex arterial graft had developed an aneurysm. ... Campbell’s first report, he flew to Newark to present his findings to Bill and Bob Gore and a few other associates. ... Bill Hubis, a former policeman who had joined Gore to develop new production methods, had an idea before the meeting was over. ... of Grand Junction, Colorado, and a major Gore customer, said, “I think the lattice has its problems with the day-to-day nitty-gritty of getting things done on time and out the door. ... ” He went on to say, “But I have to admit that I’ve personally seen at Gore remarkable examples of people coming out of nowhere and excelling.”
Bill Gore was asked a number of times if the lattice structure could be used by other companies. ...
Organizational Culture
In addition to the sponsor program, Gore associates were asked to follow four guiding principles:
1. ... For example, W. L. Gore had no travel policy, no request for travel forms, no prohibition against first-class travel, and no expense reports. ... All tickets issued to Gore travelers were accompanied by a note that stated, “The normal coach fare is X, you’ve saved Y. ... For example, W. L. Gore had been doing business with three different rental car companies when one became more expensive. ... By this time, the word about the qualities of Gore-Tex were being spread throughout the recreational and outdoor markets. ... The trouble was that the Gore-Tex was leaking. Waterproof fabric was one of the two major properties responsible for Gore-Tex’s success. ...
Peter W. Gilson, who led Gore’s fabric division, said, “It was an incredible crisis for us at that point. ... First, the researchers determined certain oils in human sweat were clogging the pores in Gore-Tex and altering the surface tension of the membrane. ... ”
In the meantime, Bob Gore and other associates set out to develop a permanent fix. One month later, a second generation Gore-Tex had been developed. ... The replacement program cost Gore roughly $4 million.
One thing that might strike an outsider in the meetings and the other places in the Gore organization was the informality and amount of humor. ...
Gore, for a company of its size, had a very short organizational pyramid. The pyramid consisted of Bob Gore, the late Bill Gore’s son, as president, and Vieve, Bill Gore’s widow, as secretary-treasurer. All the other members of the Gore organization were referred to as associates. Words such as employees, subordinates, and managers were taboo in the Gore culture.
Gore did not have any managers, but it did have many leaders. Bill Gore described in an internal memo the kinds of leadership and the role of leadership as follows:
1. ... As Bill Gore said, “All our lives most of us have been told what to do, and some people don’t know how to respond when asked to do something—and have the very real option of saying no—on their job. ...
For those who required more structured working conditions and could not adapt, Gore’s flexible workplace was not for them. ... When Bill Gore learned what she did, he loved it and recounted the story to others. ... In one case, the problem was chronic absenteeism and in the other the individual was caught stealing. “When that happens, all hell breaks loose,” said Bill Gore. ... ”
Over the years, Gore & Associates faced a number of unionization drives. ... ”
Overall, the associates appeared to have responded positively to the Gore system of unmanagement and unstructure. ...
Associate Development
Ron Hill, an associate in Newark, said W. L. Gore “will work with associates who want to advance themselves. ... Most were technical and engineering focused because of the type of organization W. L. Gore was, but the company also offered in-house programs in leadership development. In addition, the company had cooperative programs with associates to obtain training through universities and other outside providers in which Gore picked up most of the educational costs for the associates. The emphasis in employee development, as in many parts of W. L. Gore, was that the associate must take the initiative.
Compensation
Compensation at W. L. Gore & Associates took three forms—salary, bonus, and an Associates’ Stock Option Program (ASOP). ... According to Sally Gore, daughter-in-law of the founder, “We do not feel we need to be the highest paid. ...
Besides salaries, W. L. Gore had a bonus and ASOP profit-sharing plan for all associates. ... Thus, an associate became a stockholder after being at Gore for one year.
Approximate Word count = 10808
Approximate Pages = 43.2
(250 words per page double spaced)
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