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Innovation Excitement Instead of Hierarchy

Pioneers of Company ReBuilding: W. L. Gore & Associates
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The objective of Company ReBuilding is the development of organizational-structural framework conditions for large companies with the aim of improving their response and innovation capability. The foundation for achieving this objective is the structuring of the company in small units that operate autonomously. During Company ReBuilding, the individual cells assure the highest possible level of customer centricity and enable flexible responses to changes. This customer centricity and flexibility open opportunities for the cells to drive the development of new products and services. There are already today companies that exhibit parallels to the Company ReBuilding approach. One of these pioneers is Gore. We have taken a closer look at Gore to see what makes Gore so special.

The company W. L. Gore & Associates, which was founded in 1958, stands for the topic of innovation, both in the field of synthetics products and for its groundbreaking and inspiring ideas in the area of corporate culture and organization. Gore has established a unique reputation based on the diversity of its highly successful product line and the more than 2,000 patents held by the company, and in 2004, it was named the most innovative company in the USA in a portrait published in the Fast Company Magazine.[1]

Gore is known all around the world as the producer of functional textiles, which are sold under the brand name Gore-Tex. The basic structure of this fabric is an expanded form of the synthetic polytetrafluoroethylene (PTFE). Besides this product (internationally well known because of its use in outdoor functional clothing), however, Gore manufactures a broad line of products in the sector of medical implants for cardiovascular systems and a sheer endless variety of filters, gaskets, fibers, cables, and electronic components. Gore’s products range from everyday objects such as dental floss and guitar strings to highly specialized cables and protective suits for space travel to Mars.

Equality and freedom from hierarchies as the foundation for innovation

Bill Gore, businessman and company founder, was inspired and driven by his desire to create a constant flow of new products and, in addition, to develop a new form of corporate organization characterized by an atmosphere of collegiality and direct and immediate interaction – all of this in favor of an environment that unceasingly encourages innovation and does away with organizational barriers.

Bill Gore believed in the potential of every single employee and chose a hierarchy-free network structure for his company as a visible expression of his convictions. The employees are all known as associates and do not carry any other defined, special titles indicating their positions. The employees are supposed to feel like they are partners in the company and even participate long-term in the company’s success by exercising stock options. Every associate can communicate at peer level with every other associate – so it is not surprising that the phrase “& Associates” is part of the official company name W. L. Gore & Associates.

Acting on your own responsibility in pursuit of the company goals

Bill Gore used four guiding principles to illustrate his corporate philosophy: freedom, fairness, commitment, and waterline. The company describes the content of these four cultural guidelines on its company website as follows: [2]

Freedom: We encourage each other to grow in knowledge, skill, scope of responsibility and range of activities. We believe that Associates will exceed expectations when given the freedom to do so.

Fairness: Everyone at Gore sincerely tries to be fair with each other, our suppliers, our customers and anyone else with whom we do business.

Commitment: We are not assigned tasks; rather, we each make our own commitments and keep them.

Waterline: Everyone at Gore consults with other knowledgeable Associates before taking actions that might be "below the waterline,” causing serious damage to the enterprise.

To ensure that communication among all associates remains consistently hierarchy-free and direct and, at the same time, to increase innovation capability and adaptability, Bill Gore established the principle that no corporate unit should exceed a maximum size of 200 associates. The company believes that adherence to this principle assures efficient processes as a consequence of direct personal contact and relationships. Whenever a production site exceeds this threshold, a new unit is formed. It is called a nucleus and is separated spatially by establishment at a new location. In 1996, Gore’s faithfulness to this “Under 200 Strategy” had resulted in 48 production locations around the world. Although the maintenance of this large number of comfortably equipped production buildings caused approximately 20% higher costs than conventional facility management, Bill Gore was convinced that these extra expenditures were more than compensated by increased efficiency, flexibility, and improved teamwork.

Managers are chosen from below, not appointed from above

Although the Gore company describes itself as free of “traditional hierarchies,” there is nevertheless a clear leadership structure. Managers act as contacts for the various divisions in the company and help to make structures transparent. An associate at Gore is not appointed to be a leader; he or she reaches this position by initiating a project through his or her own initiative and commitment that is joined by a large number of associates. The person becomes a leader by making things move and putting together a successful team. If an associate succeeds in doing this multiple times, he or she is allowed to have the position designation “Leader” printed on his or her business card. A total of about 10% of the Gore associates have this designation.[3] Yet own initiative, creativity, and an entrepreneurial mindset are the desired basic characteristics of every associate.

A look at the remuneration system reveals that Gore differs in two interesting aspects from the practices usually found in companies. The salary paid to every associate is determined by a ranking. The ranking is calculated by having (ideally) more than 20 members of a team submit assessments of an associate’s performance and a ranking of his or her value contribution. This feedback is then analyzed by a salary committee and an internal ranking of all employees of a team is determined. The associates do not learn what their exact position in the internal performance ranking is, but they are told in what quarter of the rankings they are placed.[4]

In addition to this strictly merit-oriented component, company profits are paid out in the form of bonuses to the associates, a policy that strengthens the concept of participation in the company.

The success of this organizational form is evidenced by the fact that W. L. Gore could be found in the list of the “Fortune 100 Best Companies to Work For” for twenty consecutive years and has achieved a leading position in many other national rankings of this kind. There can be no doubt that these high rankings are proof of the increased competitiveness of the company because of a corporate culture that is highly attractive to employees.

Innovation culture through freedom and adaptability

Gore associates are given half a day every week to allow their creativity free rein, making it possible to follow up on an idea, even over a long period of time, without a formal project organization, budget constraints, and the pressure to justify the work. Associates are expected to work on two or three projects at the same time and not to focus narrowly on only one project.[5]

It seems plausible to assume that the creativity of the associates is also fostered by this broader dispersion of activities and the related expansion of the horizon of their activities – an essential organizational characteristic that has contributed to Gore’s success.

The company’s willingness to permit and even encourage constant innovation and transformation is also demonstrated by its opening of a co-innovation space in Silicon Valley. Within the framework of the Gore Patch program, Gore’s expertise in ultra-thin, supple synthetic fabrics is to be used in cooperative ventures with startups operating in the field of sensors and other electronic components to create the wearable product of the future. Gore has already joined four partnerships, and future plans are to engage in 20. Gore has understood that innovations today require cross-industry expertise in new co-creation constellations and is working on building up an ecosystem with the capability of creating groundbreaking products. [6]

Gore and Company ReBuilding

Gore as a company has succeeded in creating a form of corporate organization that adapts successfully to global economic and socio-cultural changes and constantly brings forth innovations through its motivated and creative employees. These innovations always build on the special field of a synthetic variant, but lead to improvements in highly diverse product categories and constantly develop new markets and address new consumer groups. It is remarkable that even economic crises or changes in consumer behavior have never tempted anyone to call into question the fundamental organizational model and corporate culture. Gore is regarded as an outstanding example of a flexible organization with high degrees of freedom. Long before agility and flexibility had become core elements in the executive suites of companies, Gore had found a way to assure customer centricity, innovation capability, and autonomy of the individual in the company. Bill Gore’s concept of cell structures has also become a core element of the idea behind the successful transformation of a large corporation through Company ReBuilding. The binding framework of values that Bill Gore created by founding his own company and that has been maintained down to the present is also found in the Company ReBuilding approach. Both Gore and Company ReBuilding point out a path that organizations can follow to secure their future in a dynamic market environment. The structure of small cells and the high degree of flexibility in these two systems lay the cornerstone for high innovation permeability, fast market development, and adaptability – characteristics that are indispensable for the survival of companies in the digital age.

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