This case study explores the role of organisational management and culture within a very innovative firm, which

is responsible for some very well known products such as the famous Gore-Tex fabric, and yet few people know very much about this remarkable organisation. It is operated in a similar way to that of a cooperative such as the John Lewis Partnership in the United Kingdom, where the employees are also owners. In addition, the organisation seeks to minimise management with the emphasis on action and creativity. Today this enigmatic firm employs approximately 7,000 people in more than 45 plants and sales locations worldwide. Manufacturing operations are clustered in the United States, Germany, Scotland, Japan and China. Proprietary technologies with the versatile polymer polytetrafluoroethylene (PTFE) have resulted in numerous products for electronic signal transmission; fabrics laminates; medical implants; as well as membrane, filtration, sealant and fibre technologies for a range of different industries. Today the organisation divides its products into four main groupings: medical products; fabric products; electronic products; and industrial products. Gore has approximately 650 US patents and thousands worldwide. Further details of these can be found by visiting the US Patent & Trademark office website at www.uspto.gov. Introduction W.L. Gore & Associates is probably best known in Europe for its Gore-Tex product (that piece of material in your coat that keeps you dry yet allows your body to breathe), yet few people know very much about this privately owned and relatively secret company. Fewer still realise the very innovative and contemporary way the organisation is run it seeks to have an unmanagement style. Annual revenues top $1 billion. W.L. Gore is a privately held company ranking in the top 200 of the Forbes top 500 privately held companies for 2002. Indeed, W.L. Gore would rank in the Fortune 500 companies in terms of profits, market value and equity value. Given that the firm is a privately held corporation many details of the companys operations and strategies are not widely known. Unlike publicly listed firms it does not need to share information on such topics as marketing strategies, manufacturing processes or technology development. The company is owned primarily by its employees (known as associates) and the Gore family. W.L. Gore enterprises has more than 7,000 associates at over 45 locations around the world. W.L. Gore & Associates was founded in 1958 in Newark, Delaware, when Bill and Vieve Gore set out to explore market opportunities for fluorocarbon polymers, especially polytetrafluoroethylene (PTFE). First developed by Bill Gore when he worked as a scientist for the Dupont Corporation. Gore could not get anyone at Dupont to invest in his new idea, so he bought the patent and went into business on his own. Within the first decade alone, W.L. Gore wire and cables landed on the moon (the firm supplied cables for the 1969 lunar missions); the company opened divisions in Scotland and Germany; and a venture partnership took root in Japan. W.L. Gore has introduced its unique technical capabilities into hundreds of diverse products. It has defined new standards for comfort and protection for workwear and activewear (Gore-Tex); advanced the science of regenerating tissues destroyed by disease or traumatic injuries; developed next-generation materials for printed circuit boards and fibre optics; and pioneered new methods to detect and control environmental pollution.

Gore-Tex, a breathable fabric In 1969, Bob Gore discovered that rapidly stretching PTFE created a very strong, micro-porous material (this became known as expanded PTFE, or ePTFE), which offered a range of new, desirable properties. To be effective a waterproof fabric needs to be able to prevent moisture getting from the outside to the inside. Furthermore, a waterproof fabric must have the ability to withstand water entry in active conditions such as walking in wind-driven rain and sitting or kneeling on a wet surface. In the case of garments for wear especially in active conditions, perspiration is a common problem. If perspiration vapour becomes trapped inside clothing, it can condense into liquid moisture that causes dampness and wet heat loss is 23 times faster than dry heat loss. A fabric that would enable moisture to escape and at the same time prevent moisture from entering would seem unachievable, but that is precisely what the Gore-Tex fabric does. Raincoats incorporating the Gore-Tex fabric were first introduced way back in 1976, hence the patent for the breathable fabric expired in 1996. However, new patents are still active on improved methods of making Gore-Tex fabric. There are now many generic versions of breathable fabric on the market. The success of the product has largely been witnessed in the 1990s as outdoor pursuits grew rapidly in popularity during this period. This led to an explosion in sales of Gore-Tex related products, such as coats, back-packs, shoes and trousers. Indeed, clothing manufacturers who used the Gore-Tex fabric in their garments, such as Berghaus, Karrimor and North Face, became household names as this once esoteric specialised clothing market became mainstream. Working within W.L. Gore Associates The very unusual organisational structure and management sets this firm apart from its competitors. Moreover, there is some evidence to support its claim to be highly creative and innovative as GoreUS has made all six annual lists of the 100 Best Companies to Work for in Fortune magazine from 1998 to 2003. Its UK firm was ranked among the 100 Best Places to Work in the UK (McCall, 2002). GoreItaly ranked among the 35 Best Places to Work in Italy (2003). GoreGermany ranked among the 50 Best Places to Work in Germany (2003). It is often cited as a model for effective management of innovation, and the firm is proud of its heritage and how it works:

We encourage hands-on innovation, involving those closest to a project in decisionmaking. Teams organize around opportunities and leaders emerge. Our founder, Bill Gore created a flat lattice organization. There are no chains of command nor predetermined channels of communication. Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams. Associates are hired for general work areas. With the guidance of their sponsors (not bosses) and a growing understanding of opportunities and team objectives, associates commit to projects that match their skills. Everyone can quickly earn the credibility to define and drive projects. Sponsors help associates chart a course in the organization that will offer personal fulfilment while maximizing their contribution to the enterprise. Leaders may be appointed, but are defined by followership. More often, leaders emerge naturally by demonstrating special knowledge, skill, or experience that advances a business objective.

Associates are committed to four basic guiding principles articulated by Bill Gore: o fairness to each other and everyone with whom we come in contact; o freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility; o the ability to make ones own commitments and keep them; and consultation with other associates before undertaking actions that could impact the reputation of the company by hitting it below the waterline. (Gore, 2003)

Non-hierarchical corporate culture The firms unique structure was born out of Bill Gores frustration with a large corporate bureaucracy; the W.L. Gore culture seeks to avoid taxing creativity with conventional hierarchy. The company encourages hands-on innovation, involving those closest to a project in decision making; hence decision making is based on knowledge rather than seniority. Teams organise around opportunities and leaders emerge based on the needs and priorities of a particular business unit. To avoid the traditional pyramid of bosses and managers, Bill created a flat lattice organisational structure in which there are no chains of command and no pre-determined channels of communication. Instead, employees communicate directly with each other and are accountable to fellow members of multidisciplinary teams. The company bases its business philosophy on the belief that given the right environment, there is no limit to what people can accomplish. The formula seems to have worked. In 40 years of business, W.L. Gore & Associates has developed hundreds of unique products that reflect an underlying commitment to fluoropolymer technologies. The company is passionate about innovation and has built a unique work environment to support it based on a corporate culture that encourages creativity, initiative and discovery. According to Gore:

you wont find the trappings of a traditional corporate structure here: no rigid hierarchy, no bosses, and no predictable career ladder. Instead, youll find direct communication, a team oriented atmosphere, and one title associate thats shared by everyone. Its an unusual corporate culture that contributes directly to the business success by encouraging creativity and opportunity. (Gore, 2003)

The last principle is meant to protect the company from inappropriate risk. While employees are given wide latitude to pursue entrepreneurial opportunities, no one can initiate projects involving significant corporate financial commitments without thorough review and participation by qualified associates. An individual starting at W.L. Gore is assigned three sponsors. A starting sponsor helps get the associate acquainted with W.L. Gore. An advocate sponsor makes sure the associate receives credit and recognition for their work and a compensation sponsor makes sure the associate is paid fairly. One person can fill all three sponsor roles. Compensation is determined by committees and relies heavily on evaluations by other associates as well as the compensation sponsor.

Employee ownership structure The goal of Gores highly flexible and competitive programme is to maximise freedom and fairness for each associate. The benefit plans consist of core benefits and flexible benefits. Core benefits are basic plans and services provided by Gore to all eligible associates. They include an Associate Stock Ownership Plan, vacation, holidays, profit sharing, sick pay, basic life insurance, travel accident insurance and adoption aid. The Associate Stock Ownership Plan (ASOP) is the most valuable financial benefit. Its purpose is to provide equity ownership, and through this ownership, to provide financial security for retirement. All associates have an opportunity to participate in the growth of the company by acquiring ownership in it. Every year W.L. Gore contributes up to 15 per cent of pay to an account that purchases W.L. Gore stock for each participating associate. W.L. Gore contributes the same percentage of pay for each associate active in the plan. An associate is eligible for this benefit after one full year of employment and qualifies for full ownership of their accounts after five years of service, when they are fully vested. Valued quarterly, W.L. Gore stock is privately held and is not traded on public markets. The ASOP, although it does not own all of the W.L. Gore shares, does own a majority of them, with the remainder owned by the Gore family. Associates also qualify for cash profit-sharing distributions when corporate profit goals have been reached. Profit-sharing distributions typically occur an average of twice a year. In addition, each pay period associates are provided with pre-tax benefits, called flex dollars, to use for the purchase of flexible benefits. These include medical plans, dental plans, long-term disability insurance, personal days, supplemental individual life insurance, family life insurance and health care or dependent care spending accounts. Unique characteristics of ownership culture W.L. Gore believes that given the right environment, there is no limit to what people can accomplish. That is where the W.L. Gore lattice system comes in to play. It gives the associates the opportunity to use their own judgement, select their own projects and directly access the resources they need to be successful. Another unique aspect of the lattice system is the companys insistence that no single operating division become larger than 200 people in order to preserve the intimacy and ease of communications among smaller work groups. As divisions grow, they are separated into constituent parts to preserve that culture. Discussion This case illustrates some of the organisational characteristics that are necessary for innovation to occur. The unique organisational model seems to work for W.L. Gore. It is certainly contemporary and does seem to help to unleash creativity and to foster teamwork in an entrepreneurial environment that seeks to provide maximum freedom and support for its employees (associates). Many of the organisational characteristics are not, however, unique to W.L. Gore and there are many other firms where these characteristics can be found, such as 3M, Hewlett-Packard, Corning, Dyson, BP and Shell. It does reinforce the need for firms wishing to be innovative to adopt these characteristics (see Table 3.2).

There are several key characteristics that help make the W.L. Gore company successful, both financially and as a place to work. First, the high-quality technology and heritage of the firm that encourages an emphasis on developing superior products. Second, the use of small teams encourages direct one-on-one communication; this contributes to the ability to make timely, informed decisions and get products to market very quickly. Third, the channels of communications are very open, the lattice structure allowing all employees the freedom to meet and discuss projects, situations, concerns and share congratulations with everyone. Fourth, W.L. Gore believes that providing equity compensation to its employees establishes a sense of ownership and increased commitment among its employees. The ASOP program at W.L. Gore is the majority owner of the company. Fifth, W.L. Gore provides a comprehensive set of employee benefits and is continually looking for ways to improve upon what is currently available. Sometimes that just means re-evaluating what the employees want and need. Finally, making sure that the individual work groups do not get too large to be effective is a key element of right-sizing for the company culture. This way W.L. Gore maintains a sense of intimacy and ease of communications among its work groups. While the employee share ownership sounds attractive, any decrease in performance and fall in value of the shares can cause enormous resentment within the firm as they see the value of their savings decrease. And unlike publicly listed firms these shareholders cannot remove the managers. W.L. Gores competitors are varied and diverse: there is no single company which competes with Gore in every product area. Firms such as Bayer, Hoecht, Corning, Dow and DuPont all compete in Gores product fields: medical, fabric, industrial and electronic applications. W.L. Gore was again winner of the UKs toughest survey yet to measure staff satisfaction. W.L. Gore & Associates topped The Sunday Times 100 Best Companies to Work For survey for the fourth year running.