Study of W.L. Gore

Introduction

A leader in performance outerwear fabrics, W L Gore & Associates uses its expertise in working with the polymer PolyTetraFluoroEthylene (PTFE) and its applications to develop and manufacture a diverse range of around 1,000 products. These products fall into four main categories: fabrics; medical; industrial; and electronics. It is a privately held firm started by Wilbert L. Gore (Bill) and Genevieve Gore (Vieve) in 1958 after Bill left his job at DuPont to pursue his belief in the untapped potential of PTFE and along with his wife Vieve launched W. L. Gore & Associates in the basement of their home.

In its 50-year history, W L Gore has taken a first-mover advantage to build a reputation for good quality and innovative products. Continual innovation in fluoropolymers for performance outerwear fabrics has generated a large proportion of the firm's sales. The company's products can be found everywhere, including automotive, aerospace, chemical processing, electronic, manufacturing, healthcare, military, and textile industries.

W. L. Gore & Associates is listed on Fast Company magazine's 2009 "Fast 50" list of the world's most innovative companies. Gore is also among FORTUNE magazine's annual list of the "100 Best Companies to Work For" since the past 12 years. Known for its unique lattice system of management, W.L. Gore repeatedly has been cited as one of the best 100 companies to work for in the United States.

Gore has an organic management system with a flat hierarchy that incorporates a lattice structure. Gore does not have defined job titles besides President and Treasurer.

The problem that this report will address is that as W. L. Gore & Associates grows as a whole, there is a possibility of internal struggles for power between individuals and departments. Also, Gore now needs to protect its people from the harsh outside elements more and more while letting their creative ideas breathe and prosper. This report studies the firm's organisation culture to identify its strengths and weaknesses, concludes with theoretical and practical findings and makes necessary interpretations to suggest future options for the firm.

Literature Review

Just like individuals, organisations have personalities which can be used to predict attitudes and behaviours of people working in them. Organisations have cultures that govern how members behave. Organisational culture refers to a set of characteristics that the organisation values - it refers to the core values that are shared by a majority of the organisation's members. Each of the characteristics exists on a continuum from low to high. Appraising the organisation on these seven characteristics can give us a composite picture of the organisation's culture.

  1. Innovation and risk taking - the degree to which employees are encouraged to be innovative and take risks
  2. Attention to detail - the degree to which employees are expected to exhibit precision, analysis and attention to detail
  3. Outcome orientation - the degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve them
  4. people orientation - the degree to which management decisions take into consideration the effect of outcomes on people within the organisation
  5. Team orientation - the degree to which work activities are organised around teams rather than individuals
  6. Aggressiveness - the degree to which people are aggressive and competitive rather than easy going
  7. Stability - the degree to which organisational activities emphasize maintaining the status quo in contrast to growth

Importance of organisation culture

  • Has a boundary-defining role - creates distinctions between one organisation and others
  • Conveys a sense of identity for organisation members
  • facilitates the generation of commitment to something larger than one's individual self-interest
  • enhances the stability of social system
  • guides and shapes the attitudes and behaviour of employees

Dominant organisation culture expresses the core values that are shared by a majority of the organisation's members.

Disadvantages of having a dominant organisation culture

  • Barriers to change - When shared values are not in agreement with those that will further the organisation's effectiveness.
  • Barriers to diversity - In strong culture, people bringing in alternative strengths and diverse behaviours to the workplace in strong cultures are unable to do so as they try to fit in.
  • Barriers to acquisitions - Cultural compatibility is a key for a successful merger or acquisition. The primary reason for failure in acquisitions/mergers is due to the conflicting organisational cultures of the firms that get together.

Two assumptions which form a corporate culture are common perceptions and shared values. Culture is subject to change over a period of time as learning goes on in an organisation. The importance is to understand the assumptions that leaders and employees brought with them to the organisation and how these assumptions had an impact on the development of the present culture.

Sustaining organisation culture

Selection

Human resource practices (selection process, performance evaluation criteria, training and development activities and promotion procedures) reinforce the organisation's culture. Selection process sustains an organisation's culture by selecting out those individuals who might attack or undermine its core values.

Top Management

Top management have a major effect on organisation's culture in the following ways:

  1. Whether risk taking is desirable
  2. How much freedom managers should give their employees
  3. What actions will pay off in terms of pay raises, promotions and other rewards

Socialisation

The adaptation process once a new employee is selected is called socialisation. Socialisation is a process which can be conceptualised in three stages

  1. Prearrival - All learning that occurs before a new member joins the organisation
  2. Encounter - The new employee sees what the organisation is really like and confronts the possibility that expectations and reality may diverge
  3. Metamorphosis - Work out any problems discovered during the encounter stage (going through changes)

How employees learn culture

Culture is transmitted to employees of an organisation through various forms mainly being stories, rituals, material symbols and language.

Stories are typically narration of events about the organisation's founders, rule breaking, rags-to-riches successes, reductions in the workforce, reactions to past mistakes, etc. Rituals are repetitive sequences of activities that express and reinforce the key values of the organisation - important goals, important peoples, etc. Material symbols convey to employees who is important, the degree of impartiality desired by top management and the kind of behaviour that are appropriate. Language is developed over time and often develops unique terms to describe equipment, offices, customers or products that relate to its business.

Johnson and Scholes (1999) present a cultural web enabling people to understand the culture of an organisation. Cultural web shows links to the political, symbolic and structural aspects of an organisation and is useful to identify a culture of an organisation. There are 7 key elements that are inter-linked. At the centre is the paradigm or the commonly held values of the organisation.

The review of the literature suggests that organisational culture can not be easily measured, observed and defined. Historical research of organisational culture involves studying and understanding past events in order to understand and explain present events and also anticipate future options.

The report emphasis on:

  1. Determine how W. L. Gore & Associates is structured and how decision making occurs within the organisation and how communication flows within the organisation,
  2. Determine how the culture is embedded within the organisation and what events have caused changes in the culture,
  3. Determine how the organisation responds to crisis and other critical events and what has been learnt from it

The report measures the overall organisation culture which involves organisation-wide policies and practices, interpersonal behaviours (peer relationships) and how the group works as a team.

Case Study

Wilbert L. Gore ("Bill") left his job at DuPont to pursue his belief in the untapped potential of polymer polytetrafluoroethylene (PTFE) and along with his wife Genevieve ("Vieve") Gore, he launched W. L. Gore & Associates in the basement of their home in 1958.

Bill liked to say "communication really happens in the car pool". He wanted to defy traditional management principles and build a company with no hierarchy, where there are no bosses, no supervisors and no vice presidents; people choose what they want to work on rather than assigning tasks to them. He conceived of a company as a 'lattice' (Organisation that involves in direct transactions, self-commitment, natural leadership, and lacks assigned or assumed authority) rather than a ladder like hierarchy.

Bill organised W. L. Gore & Associates in a very unique and unusual way. There were no bosses or set management. Every member of the company was labelled as an 'associate' except those at very top but no one had a boss. To promote this idea, he limited the size of teams keeping even the manufacturing facilities to 150 to 200 people at most. This was done so that people can get to know one another and what everyone is working on, and who has the skills and knowledge they might tap to get something accomplished - whether it's creating an innovative product or handling the everyday challenges of running a business. Gore has worked hard to maximize opportunities for personal interaction. R&D specialists, salespeople, engineers, chemists, and machinists typically work in the same building.

Associates at W. L. Gore & Associates adhere to four basic guiding principles articulated by Bill Gore:

  • Fairness to each other and everyone in contact
  • Freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility
  • Ability to make one's own commitments and keep them
  • Consultation with other associates before undertaking actions that could impact the reputation of the company

Gore isn't fanatically flat; there is indeed a president and CEO, Chuck Carroll. And the company necessarily has some structure. The four divisions (fabrics, medical, industrial, and electronic products) each have a recognized "leader," as do certain companywide support functions (human resources, information technology) and specific businesses and cells. Bill Gore developed a keen appreciation during his years at DuPont of the difference between commitment and compliance. He puts it as "Authoritarians cannot impose commitments, only commands". At Gore, senior leaders do not appoint junior leaders. Rather, associates become leaders when their peers judge them and select them to be a leader. A leader influences his peers by demonstrating a capacity to get things done and excelling as a team builder. At Gore, those who make a disproportionate contribution to team success, and do it more than once, attract followers. Gore terms this as "natural leadership". Through this, Gore has created a system in which executive power can never be taken for granted. Since a team is free to fire it's chief, peer-chosen leaders must continually re-earn the loyalty of their colleagues to retain their authority. This ensures that a leader's primary accountability is to the associates he leads. It also means that leaders can't abuse their positional power, since they have none.

Gore's aptitude for innovation springs from a culture where people feel free to pursue ideas on their own, communicate with one another, and collaborate out of self-motivation rather than a sense of duty. The primary contribution to Gore's innovation is the flexible time allotted to its associates. All associates are granted 10 percent of their time (half a day in a week) which they can devote to their own initiative as long as they fulfil their primary commitments. As a case in point, consider Gore's guitar-string business 'Elixir Acoustic Guitar strings', which got its start when Dave Myers, an engineer based in Arizona, coated his mountain-bike cables with the same polymer that comprises Gore-Tex fabric. His tinkering resulted in Gore's Ride-On line of bike cables. That success inspired Myers to try to improve the cables used for controlling the movements of oversized animated puppets used at places such as Disney World. He used Guitar strings and coated it with a plastic and realised that the coating makes guitar strings less brittle. After spending some more time on it, Myers's team finally hit the bull's-eye with a string that held its tone three times longer than the industry standard. Today, Elixir acoustic guitar strings outsell their closest U.S. competitor by a two-to-one margin.

New recruits in Gore are hired into broad roles as HR generalists, business development leaders, or R&D engineers rather than into narrowly defined jobs. To help newcomers navigate the organization and find their niche, each is assigned a starting "sponsor" who makes introductions, and guides the newcomer through the lattice. Consider the case of Diane Davidson, whom the company hired to work on City wear. Nothing in Davidson's 15 years or experience prepared her to work in a place where there were no bosses and clear-cut roles. She recalls "When I arrived at Gore, I didn't know who did what. I wondered how anything got done here. It was driving me crazy". Like any new hire, Davidson was given a starting "sponsor" - a mentor. But she didn't know how to work without someone telling her what to do. "Who's my boss?" she kept asking. "Stop using the B-word", her sponsor replied. "Secretly, there are bosses, right?" she asked. She eventually figured out that there weren't any "your team is your boss, because you don't want to let them down. Everyone's your boss, and no one's your boss". John Mongan, another employee at Gore says "You join a team and you're an idiot. It takes 18 months to build credibility. Early on, it's really frustrating. In hindsight, it makes sense. As a sponsor, I tell new hires, 'Your job for the first six months is to get to know the team,' but they have trouble believing it and not contributing when other people are".

At Gore, tasks can't be assigned, they are only accepted; but since associates are measured and rewarded on the basis of their contribution to team success, they have an incentive to commit to more rather than less. New associates are regularly cautioned not to overextend themselves, since a bungled commitment will impact their compensation. Seasoned executives who join Gore from other companies are initially bewildered by the ethos of voluntary commitment. Those who survive must adapt to life in the lattice.

Tenacity is another ingredient in Gore's recipe for relentless innovation. This is coupled with a deeply embedded management process for identifying and minimizing unnecessary investment risks. Gore is patient— a promising project can bubble along for as long as it continues to hold the interest of a few associates.

As an "associate", you're supposed to morph your role over time to match your skills. You're not expected to fit into some preconceived box or standardized organizational structure. Compensation for an associate is tied to his/her contribution and decided by a committee. Once a year, every associate receives a comprehensive peer review. Typically, data is collected from at least 20 colleagues. Each associate is then ranked against every other member of the business unit in terms of overall contribution. This rank ordering determines relative compensation. Seniority yields no dividends in Gore's compensation system. For example, an experienced business leader might be paid less than a PhD scientist. While Gore's compensation system clearly differentiates between those who add more value and those who add less, the company also works hard to create a deep sense of shared destiny. Every associate is a shareholder. After their first year at Gore, new associates are awarded 12 percent of their salary in the form of stock. Long-time associates say Gore feels like a university as much as a corporation. And Gore's strategy still depends on its engineering prowess: The Company insists that its new ideas have to be "unique and valuable" - dramatic improvements, not me-too products.

Since 1980s, Gore has learned that superior technology often isn't enough and there is a need for breakthrough marketing to push past entrenched but inferior market leaders. For 20 years, Gore kept trying to interest consumer-products manufacturers in its technology for creating a better dental floss, but the industry resisted. In the early 1990s, Gore took Glide to market itself and built a following by giving out free samples to dentists and hygienists, who spread their enthusiasm to their patients. It was an early example of viral marketing. Gore followed the same tactic with Elixir guitar strings, which retailed for $15 apiece, three to five times as much as other strings. The product was so expensive that merchants refused to carry it. But the Gore people figured that consumers would demand it when they realized how much better it sounded. They gave away 20,000 samples in the first year, sending the product to the subscriber lists of guitar magazines. The strategy worked brilliantly -- with a 35% share, Elixir now leads the market for acoustic guitar strings.

Gore's humanistic culture is the legacy of Bill Gore, who died in 1986. Colleagues describe Bill as quiet, humble, and completely approachable. His company has always been private, which helps to keep it out of the news.

But there is no codified set of ranks and positions as there is in the typical corporation. Gore encourages risk taking. When Gore people pull the plug on a failing initiative, they still celebrate it with beer or champagne, just as they would if it had been a success.

Discussion

In this section we appraise W. L. Gore & Associates based on the characteristics listed in the Literature review section and find advantages and disadvantages of Gore's organisational structure.

Innovation and risk taking

Gore fosters an environment in which each associate truly owns his or her own destiny and makes an individual commitment to the success of the company. It's a stimulating atmosphere because associates have freedom to choose to work on projects that they are extremely passionate about. Associates at Gore take up work based on self-motivation rather than any sense of duty. The company also provides 10% free time to the employees to pursue their own ideas and devote to their own initiative. Gore encourages risk taking as when people pull the plug on a failing initiative; they'll still celebrate it with beer or champagne just as they would if it had been a success.

Attention to detail

Associates exhibit precision out of their own interest and because the company gives them the freedom to try innovative ideas, they have the liberty to try their best as long as they wish to achieve the best in the market or to give up. There are no deadlines for a new innovative idea which helps. We see this in the example described for Elixir strings where the team worked for 3 years before they launched the guitar string that held its tone three times longer than the industry standard.

Outcome orientation

Gore is more than patient in nurturing ideas and giving them time to flourish. There are no deadlines for any new innovative product to be launched. Associates spend part of their time on their own ideas and there is no pressure on them about it. But, since associates are measured and rewarded on the basis of their contribution to team success, they have an incentive to work on their ideas more aggressively.

People orientation

Respect for associates as individuals with unique talents and needs is at the heart of Gore's corporate culture. Gore is a solid example of a people oriented company. There are ample evidence cited in the case study for this - the company provides employees free time to pursue their own ideas. Also the company enshrines the idea of natural leadership where leaders are not designated from the top. People become leaders by actually leading and recruiting followers. Every associate is a shareholder in the company. After their first year at Gore, new associates are awarded 12 percent of their salary in the form of stock.

Team orientation

At Gore, the team of an associate is his/her boss. Everyone in the team is a boss while no one is a boss. An associate becomes a team leader when his/her peers judge and select him/her to be a leader. Since the team is free to fire its leader, leaders must continually re-earn the loyalty of their colleagues to retain their authority. This also ensures that leader's primary accountability is to the associates he leads.

Aggressiveness

Compensation for an associate is measured and rewarded on the basis of their contribution to team success. Hence, they have an incentive to commit to more rather than less. Bungled commitment also impacts their compensation.

Stability

Maintaining the status quo at Gore comes naturally because of Gore's organisational culture, their appraisal system. W. L. Gore & Associates has experienced raging success throughout most of its life due its structure and the freedom to associates to choose to work on projects based on their interests.

Gore has a very dominant organisation culture that expresses its core values that are shared by all of the organisation's members.

Advantages of Gore's organisational culture

Gore fosters an environment in which each associate truly owns his or her own destiny and makes an individual commitment to the success of the company. It's an exciting and stimulating atmosphere because associates have the freedom to work in businesses or on projects that they are extremely passionate about. That passion pays off in business results. Gore doesn't have rigid titles and roles, associates have the latitude to take on additional projects and commitments which are of special interest to them. W. L. Gore & Associates has been innovative continuously since the past 50 years and has emerged as a very respectable and well-known company, winning multitudes of awards internationally mainly due to the unique organization structure of the corporation. As the associates are flexible, they are quicker to respond to external business changes in contrast to a company with a rigid structure. The world will always have new demands for specific products and Gore can deliver with their fast paced change system. As compensation for an associate is measured and rewarded on the basis of their contribution to team success, there is a driving force to commit more to the team they work for.

Disadvantages of Gore's corporate culture

Gore is an example of an internally focussed with flexibility and discretion organisation as it has sense of cohesion with goals that are strongly shared. There are drawbacks due to this as in the existing market, it is very important to scan the external market and make your move based on the competitors in the market.

While the open and relaxed environment of the company may allow some associates to excel, the workers that do not immediately adapt to the system are often left to fall through the cracks. Gore's eccentric management system can be deeply disturbing to executives who've grown comfortable with the power and perquisites of life in more hierarchical companies. Also, a newly joined employee is not given specific direction of where to go and what to do. Instead the company promotes creative thinking and the employee places himself where he thinks he needs to be. As an associate does not have imagination about his/her job initially, there can be frustrating moments sitting at a desk wondering what in the world he/she should be doing. Within Gore, the pressure to contribute can be both exhilarating and exhausting due to its organisation culture.

Gore has offices across the globe. The working culture in many developing/under developed countries are a bit different. For example in India, people would prefer to be assigned a task rather than finding tasks by their own to execute also the attrition rate matters. It also depends on how tolerant people of a country are. Associates would prefer quitting and moving over to other jobs rather than being frustrated doing nothing for six months (as mentioned in the case). It will be difficult for Gore to find associates who fit into their structure easily in many countries due to this.

W. L. Gore & Associates has more superfluous costs and projects than that of any of its competitors. One such influencing factor in this is that the company is very hands-off about the way its associates choose to spend their work-time, often having the freedom to start projects and give themselves goals as they find appropriate.

A common and profitable technique W. L. Gore & Associates has used in the past is to invent new technologies and perform well in the new product sectors until their patents wear off, at which time they are forced to compete with other companies to a greater extent. Emergence of more and more competitors would start price wars in the market which Gore might find it difficult to match with due to its organisational structure.

Conclusion

Gore fosters an environment in which each associate truly owns his or her own destiny and makes an individual commitment to the success of the company. It's an exciting and stimulating atmosphere because associates have the freedom to work in businesses or on projects that they are extremely passionate about. That passion pays off in business results. This also has a negative effect. While the open and relaxed environment of the company may allow some associates to excel, the workers that do not immediately adapt to the system are often left to fall through the cracks. Some additional goals or guidelines should be implemented when this is seen to be occurring in order prevent the loss and waste associated with losing a fully trained associate that may be quite useful to the company.

So far, Gore has often been able to avoid being forced to produce the lowest-priced product by constantly expanding to new industries. Slowing of technological advancement in the areas of production Gore focuses on may result in them having to change their strategies.

As Gore grows, it must continue to invent ways to protect its people from the harsh outside elements; even as it lets their big and creative ideas breathe and prosper. Also, more specific goals and guidelines should be set is that of research and development. W. L. Gore & Associates must now, more than ever before, pursue and achieve specific research goals in order to retain its position as one of the leading technologically advanced companies in each of its respective industries.

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