Get $3 Billion Big By Staying Small (Part II)
Lessons from WL Gore & Associates, the original “Culture-Driven” Company (Part ll)
Lessons from WL Gore & Associates, the original “Culture-Driven” Company
In my previous article on Gore, we looked at the origins of the company and how the company grew big ($3 billion big) by staying small, with each plant housing no more than 150–200 employees, thanks to founder Bill Gore’s observation, based on his own experience, that once a group hits around 200, the ‘we decided’ conversations became ‘they decided’ — and that generates a lot of issues.
Gore does far more than simply limit the number of employees at its plants, though. Associates refer to the unique culture at Gore as ‘The Gore Way’, and central to the ‘Way’ are four guiding principles, which have shaped the company culture for the last 60 years.
The Guiding Principles of the Gore Culture
Four guiding principles permeate the entire business, regardless of which country any particular plant is in:
1. Freedom: to direct your own work, to fail, to take action and to make mistakes with minimal bureaucracy
2. Fairness: towards self, others, customers and suppliers
3. Commitment: to doing what you say you’ll do, and
4. The waterline: a companywide commitment by every Associate to consult other Associates before taking any action that might damage the company by falling ‘below the waterline’ and sinking the ship.
Freedom to Experiment
Ideas are welcomed at Gore, but above all, action is what helps Associates discover whether their ideas have any merit. Entrepreneurial spirit sits at the core of the culture.
This strategy isn’t without risk for a company though, and Gore knows that. Many companies pull the plug early if an idea looks like it’s not going to work out, but at Gore, Associates are encouraged to keep investigating and playing with an idea even if there’s only a glimmer of hope left in it. (After all, that’s how Bob Gore, Bill’s son and successor, initially discovered that rapidly stretching PTFE made it stronger — he experimented to the point of frustration, and in his frustration, pulled it extremely quickly, thus discovering that it didn’t snap and break and instantaneously discovering expanded PTFE, known as ePTFE, which went on to become the basis for all Gore-Tex materials.)
If an idea or project does fail, everyone involved participates in reflecting on what happened, what worked and didn’t work and why. This ‘post mortem’ extracts any learnings which are then applied elsewhere throughout the business. When an initiative or project is killed off, the champagne comes out. Failure is still progress at Gore, because the company isn’t looking for quick wins; its focus is always on the long term.
Treating oneself, one’s colleagues, customers and anyone else you do business with fairly is a core part of the Gore Way. Primal energies such as envy and rivalry are reined in by this guiding principle, and everyone’s ego’s are kept in check. The principle of fairness ensures that the company operates from a place of what current CEO Terri Kelly describes as ‘the utmost integrity’ and corners aren’t cut to secure a quick win.
The fairly radical practice of giving employees freedom to choose what they work on is counter-balanced by the shared perspective that your commitment to a project is almost a sacred oath. You can say no to joining a project in advance, but once you’ve committed, your feet are held to the fire and you are expected to honour your word. Bill Gore is quoted as saying, ’No man can commit for another. All commitments are self-commitments. Authoritarians cannot impose commitments, only commands. The difference in response is enormous.’ As Terri Kelly stated in a 2009 talk, associates live the culture, create products they are proud of and both the people and products commit to doing what they say they’ll do.
While autonomy and creativity are encouraged, Associates are not permitted to indulge in them just for the sake of it. They always have to bear in mind the principle not to go ‘below the waterline’ without first consulting fellow associates. On a ship, the waterline is the point where the ship’s hull meets the surface of the water. At Gore, it means that you commit to consulting other Associates before taking any action that might go ‘below the waterline’ i.e. damage the company.
This principle balances the freedom and autonomy inherent in being an Associate at Gore by providing a clear boundary. As one associate on the Gore website says, ‘You need to be a self-starter, with the balance of knowing when to seek input from others.’
The waterline principle creates a shared sense of responsibility for the company, so that even if an associate does not own stocks in the company (either having chosen not to, or because of not working at Gore for the 12 months to make them eligible as owners), they still have a profound sense of ownership over the company. It also substitutes for corporate controlled budgets — people can choose to invest in whatever they want to, as long as it’s not ‘below the waterline’.
But what exactly happens in those plants that is so revolutionary, that has led to Gore being listed at a great place to work not just once but multiple times in multiple countries since 1982? Answering that question is the focus of this article.
A Lattice, Not a Hierarchy
Gore mostly operates without a traditional hierarchy, taking the form of a ‘lattice’ structure instead — although in recent years as the business has grown there is a bit more standard structure: a CEO (Terri Kelly who was voted in), four major divisions, and a number of product-focused business units. Apart from this, there are no bosses, no direct reports and no job titles; instead, everyone is simply an associate. Relationships between associates really matter, and global teams are brought together fairly regularly to build and maintain a sense of connectedness. Company legend has it that because associates can put whatever they want on their business cards, one associate had the words ‘Supreme Commander’ printed on hers!
This neutralising of hierarchy is spread across the entire organisation, regardless of which country it applies to. Gore specifically hires people who inherently ‘get’ the appeal and usefulness of this approach. Only in rare cases, when the company has to interact with the wider external environment and culture does this change. In South Korea for example, hierarchies are a key part of the wider country’s culture, so associates are given rank-based titles on their business cards, but only as an externally facing tool for people in the wider culture. Internally, those job titles mean nothing, and everyone who works at Gore knows it.
The beauty of the lattice structure is in how it enables anyone in the company to interact and collaborate with anyone else, without any of the usual nervousness or invisible rules about who can interact with whom. Information can flow freely between people and no line manager approval is needed, making communication direct and personal. Bill had experienced the positive effects of this back when he’d worked on different skunk work type task forces at DuPont, where the usual formalities of calling colleagues by their surnames melted away, to be replaced by a familiarity that wasn’t just less formal — it also resulted in enormous creativity and productivity.
The actual structure at Gore is fluid and cannot be articulated on paper, unlike in many organisations where there is a fixed and observable hierarchy. Instead, it continually evolves according to personal interactions, projects, commitments to the groups one chooses to become a member of, and group-imposed discipline. The closest you could get to an org chart would simply be to list who works at each plant.
Everyone’s Your Boss, No One’s Your Boss
In a 2001 article for Fast Company, Alan Deutschman describes an interaction between a new Gore employees, Diane Davidson, hired to work on the Citywear brand, and her starting sponsor — the person allocated to mentor her through her first few weeks.
Davidson kept asking who her boss was, and was frustrated by the responses her sponsor gave her over and over again: “Stop using the B-word”. Davidson, a seasoned executive, suspected that this was yet another corporate euphemism, not unlike the many she’d encountered in previous organisations. “Secretly, there are bosses, right?” she asked, although she eventually learned that at Gore, ‘Everyone’s your boss, and no one’s your boss.”
No one’s your boss at Gore because there are no line managers, and everyone’s your boss because if you make a commitment to work alongside colleagues on a project, you are accountable to every single person on that team. So, while associates don’t report to a specific manager who then reports up to their own manager, everyone is expected to be in charge of communicating fully and proactively to any colleagues who are impacted by or involved in their work. In certain countries Gore operates in, such as Taiwan, South Korea or Japan, where traditionally there are very deeply entrenched hierarchies, this is nothing short of revolutionary.
In addition, people work very closely with each other. Silos are not an issue at Gore because salespeople, engineers, marketers and PR people all communicate closely as a matter of course. As one associate says, this gives associates a complete picture of the products and the markets those products are being sold into.
Underlying this aspect of the Gore Way is the fundamental belief that individuals want to do what is right for the company and that people have the capacity to recognise that we are all in the same boat (which is reflected in the associate stock plan — associates own 25% of the company which of course means that both the risks and rewards truly belong to them).
While there are no specific job titles, Associates are hired for particular skills, so there are R&D specialists, machinists, chemist, salespeople and engineers working at each plant. This creates a spirit of genuine collaboration and allows roles to blend. However, rather than being assigned to projects, Associates choose which projects or ideas they wish to contribute to, and people are seen as multifaceted so aren’t expected to work solely on one project.
Joining a team throws you into beginner mode. In the aforementioned article, another Gore Associate, John Morgan, states that it takes around 18 months to establish any kind of credibility at all at Gore — and your first six months on a team are primarily about you getting to know the people you’re working with, working far less than everyone else is but absorbing and immersing yourself deeply in what the team is doing and why. What people do at Gore isn’t as easily definable as it is in many corporate cultures; you might find yourself involved in multiple areas simultaneously. Eventually, you may find yourself taking on a lot of responsibility, but this happens slowly.
After a few months on their initial team, Associates are encouraged to join a second or perhaps even a third, which recognises that most humans have diverse interests. This offers Associates enormous scope to contribute to the company, and it also puts a certain amount of pressure on them to perform at peak levels.
Speaking of performance, compensation at Gore is directly related to it and is determined by a peer ranking system. Everyone at Gore is ranked by 20–30 of their peers, and in turn each associate must evaluate 20–30 others. Interestingly, there are no set or specific criteria for this process — people are simply asked to state who is making the biggest contribution to Gore’s success. The next stage involves a discussion by a committee individuals in leadership roles from various functions, during which the results are discussed and an overall ranking of 1–20 is assigned to the associates. A pay curve is then aligned with the rankings, to correlate to the contributions. My sense is that this system works precisely because of how closely people work with each other on a day-to-day basis. Knowing that your peers will be ranking you according to what you’ve contributed alongside the philosophy of natural leadership can act as a powerful motivator to bring your best.
Reading about Gore, you get the sense that not many people choose to leave, and the statistics back this up: voluntary turnover at the company is a stunningly low 3%. The company boasts huge longevity among its Associates because the culture naturally generates loyalty. Work doesn’t — indeed, cannot — become boring since you’re consistently challenged to grow, learn, experiment and improve, and the people you work with are not just colleagues — they are co-creators, peers, mentors and mentees.
The four guiding principles at Gore have helped to shape one of the world’s most celebrated company cultures. Gore trusts its associates by giving them the freedom and autonomy to work on what excites and interests them; it also demands more in terms of accountability than many companies would dare to, requiring deep commitment to the company that reflects a high level of trust. The lack of bureaucracy and hierarchy are testament to Bill Gore’s belief in the revolutionary ‘Theory Y’ proposed by Douglas McGregor in the 1960s, which posited that people are not fundamentally lazy, but were fundamentally motivated to contribute to something meaningful.
As a company, Gore has produced countless innovative products and has created and sustained a truly inspiring company culture over six decades. In the third and final article in the series, we will look at what Gore does instead of line management (it’s fascinating), and we will address how leaders emerge rather than being appointed. We’ll also look at how perks work at Gore. Unsurprisingly, like many other aspects of the Gore culture, the approach to perks sets the company apart.
For more blogs about company culture check out www.culturegene.ai/blog