In most companies, turning down the founder and chief executive’s request to look after a pet project would be a career-stopper for a young engineer on her first assignment. But WL Gore and Associates is not most companies. And Terri Kelly, the engineer in question who became its president and chief executive in 2005 — only the fourth in the company’s 50-year history — tells that story to illustrate a couple of Gore’s most singular characteristics.
At Gore — a US$2.4 billion, high-tech materials company that most people know best for the Gore-Tex fabric that waterproofs their anoraks and walking boots — no one can tell any of the company’s 8,500 associates what to do. Although there is a structure (divisions, business units and so on) there is no organization chart, no hierarchy and therefore no bosses. Kelly is one of the few with a title.
As she acknowledges, that makes her job rather different from that of most chief executive officers (CEOs). Bill Gore, who set up the company with his wife Vieve (short for Genevieve) in the family garage in 1958, wanted to build a firm that was truly innovative. Trust, peer pressure and the desire to invent great products — market-leading guitar strings, dental floss, fuel cells, cardiovascular and surgical applications and all kinds of specialized fabrics — would be the glue holding the company together.
Traditionalists looking at Gore wonder how it works. Kelly laughs and counters that it works just fine, particularly in chaotic times like these. The financial crisis is also a management crisis and the symptom, she believes, of a wider issue: a deficit of trust.
Gore, however, has “focused on generating value through trust — with our associates [the private company is co-owned by the Gore family and the workforce], suppliers and customers,” she said.
The best governance, especially in troubled periods, is the absence of external rules: Gore would rather rely on fiercely motivated people who, having internalized true north, have no fear of challenging leaders to justify decisions.
In Gore’s self-regulating system, all the normal management rules are reversed. In this back-to-front world, leaders aren’t appointed: They emerge when they accumulate enough followers to qualify as such. So when the previous group CEO retired three years ago, there was no shortlist of preferred candidates. Alongside board discussions, a wide range of associates were invited to nominate to the post someone they would be willing to follow.
“We weren’t given a list of names — we were free to choose anyone in the company,” Kelly says. “To my surprise, it was me.”
Similarly, Gore doesn’t have budgets in the sense that most companies do.
“Budgets hinder associates from reacting in real time to changing circumstances,” she says.
Most of Gore’s investment will only have an impact years ahead: “We don’t want folks making short-term decisions that are not in the best interest of the long term. The planning and investment horizon have to match.”
Gore also seems to reverse the usual notions of economies of scale.
Kelly cites Bill Gore’s counter-intuitive belief in the need “to divide so that you can multiply.”
When Gore units grow to around 200 people, they are usually split up. These small plants are organized in clusters or campuses, ideally with a dozen or so sites in close enough proximity to permit knowledge synergies, but still intimate and separate enough to encourage ownership and identity.
A Gore lifer, Kelly joined the company as a process engineer in 1983 after graduating with distinction from the University of Delaware with a degree in mechanical engineering.
She cut her teeth as a product specialist with the military fabrics business — a unit she eventually led — before moving to head the global fabrics division. Here she helped set up a fabrics manufacturing plant in Shenzhen, China, Gore’s first fabrics plant in Asia, now at the center of one of the company’s fastest growing operations.
Is lack of experience outside the company a disadvantage, or an essential qualification for running Gore? It is hard to imagine an outsider being able to understand, let alone manage, a distinctive culture such as this. Proof of the importance of the “Gore factor” is the company’s consistently high ranking in “good places to work” surveys — the UK arm headed the London Sunday Times Best Companies to Work For list four years in a row.
Most companies find safety in numbers, ending up broadly resembling their industry counterparts in strategy, products and management processes. For the consequences, look no further than the credit crunch, which has overwhelmed the copycats in the financial sector.
Although at present, Gore is being prudent with investment plans, cutting back on hiring in areas most exposed to the downturn, Kelly is not rowing back from the promise that the company will double in size over the next few years. As a private company, Gore doesn’t release detailed figures, but it is no secret that the balance sheet is strong and the company has been in the black every year in its history. It doesn’t lack opportunities, nor is it constrained by ability to invest.
Growth, then, will largely be dictated by its ability to assimilate new people.
“It’s all about how we bring new folks in, get them to understand our values and focus leadership on fitting it all together,” Kelly says. “For our associates to know we aren’t constrained by markets or finance, just by our own culture — that’s a good problem to have. It’s all in our own hands.”
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