The Fabric of Creativity
When Fast Company set out to find the most innovative company in America, we wanted to rely on objective measurements, but that proved daunting. How can you quantify something as intangible as innovation? You can count up patents and discover that IBM is the leader, with a record 3,415 awarded in 2003. But patents have come to mean a lot less than they used to. The most creative companies of the Internet era -- Amazon, Google, Yahoo, eBay -- have only a few patents apiece. You can look at who spends the most on R&D, but a torrent of cash hardly guarantees breakthrough innovation. Over the past decade, Microsoft has poured $5 billion or more a year into research, but its vast expenditures still haven't yielded the next big thing [..]
So we gave up on crunching numbers and focused on other criteria. For starters, we looked for a company with a long history of innovation. We needed proof of sustained inventiveness through multiple waves of technological and economic change. That knocked out Amazon, Google, and the other Silicon Valley startups. We also wanted a company that is as adept at product innovation as it is at process innovation. That eliminated Dell, which is highly innovative at making its operations incredibly efficient -- but not at bringing original and inspiring offerings to consumers. Apple, on the other hand, keeps coming out with dazzling new technologies, but count it out for process: The company relies too much on the inscrutable instincts of one man. What if Steve Jobs wasn't there anymore? It's a possibility that investors contemplated recently when Jobs underwent emergency surgery for pancreatic cancer. We wanted a company where innovation is resilient and doesn't depend on the ingenuity of a single individual or even a small cadre of geniuses. That led us to a few big operations that have hatched countless new products over the decades -- justly famous names such as 3M and General Electric.
But then we found an outfit that does it all, without the overwhelming size and awesome resources of a GE. In other words, a company that proves that brains beat brawn. Pound for pound, the most innovative company in America is W.L. Gore & Associates [..].
Gore, a privately owned company, doesn't release its annual financial data, but a spokesperson says that the company has had "double digit" revenue growth for the past couple of years. In many businesses, Gore has come out of nowhere and seized the market lead [..] When Gore's people think they can create a much better product, they're fearless about attacking new markets.
Gore is a strikingly contradictory company: a place where nerds can be mavericks; a place that's impatient with the standard way of working, but more than patient with nurturing ideas and giving them time to flourish; a place that's humble in its origins, yet ravenous for breakthrough ideas and, ultimately, growth. Gore's uniqueness comes from being as innovative in its operating principles as it is in its diverse product lines. This is a company that has kicked over the rules that most other organizations live by. It is tucked away in the mid-Atlantic countryside, 3,000 miles from Silicon Valley and even further (in its mind-set) from Wall Street. And in its quietly revolutionary way, it is doing something almost magical: fostering ongoing, consistent, breakthrough creativity.
What really distinguishes Gore is its culture, which goes back to 1958, when Wilbert ("Bill") L. Gore left DuPont, where he had worked as an engineer for 17 years, and launched his startup. Bill liked to say that "communication really happens in the car pool." At a hierarchical company, the car pool is the only place where people talk to one another freely without regard for the chain of command. He also observed that when there's a crisis, a company creates a task force and throws out the rules. That's when organizations take risks and make big breakthroughs. Why, he wondered, should you have to wait for a crisis?
So Bill Gore threw out the rules. He created a place with hardly any hierarchy and few ranks and titles. He insisted on direct, one-on-one communication; anyone in the company could speak to anyone else. In essence, he organized the company as though it were a bunch of small task forces. To promote this idea, he limited the size of teams -- keeping even the manufacturing facilities to 150 to 200 people at most. That's small enough 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 [..].
Consider the case of Diane Davidson, whom the company hired to work on Citywear, an effort that has persuaded designers such as Prada, Hugo Boss, and Polo to use Gore-Tex fabrics in clothing that people can wear to the office or out to a party. Nothing in Davidson's 15 years of experience as a sales executive in the apparel industry, including a stint at Bostonian, prepared her for life in a place where there are no bosses and no clear-cut roles.
"I came from a very traditional male-dominated business -- the men's shoe business," 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 all new hires, Davidson was given a "starting sponsor" at Gore -- a mentor, not a boss. 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.
As an experienced executive, Davidson assumed that Gore's talk was typical corporate euphemism rather than real practice.
"Secretly, there are bosses, right?" she asked.
There weren't. She eventually figured out that "your team is your boss, because you don't want to let them down. Everyone's your boss, and no one's your boss."
What's more, Davidson saw that people didn't fit into standard job descriptions. They had all made different sets of "commitments" to their team, often combining roles that remained segregated in different fiefdoms at conventional companies, such as sales, marketing, and product design. It took a long time to get to know people and what they did -- and for them to get to know her and trust her with responsibilities. Eventually, Davidson went on to oversee the sales force and product development for Citywear. She describes herself as a "category champion." She's involved in marketing, sales, and sponsorship -- a good example of how Gore's associates create roles that aren't easily defined by traditional corporate departments.
Gore's knack for innovation doesn't come from throwing money or bodies at a challenge, or from building a great ivory tower of an R&D lab. It 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. Gore enshrines the idea of "natural leadership." Leaders aren't designated from on high. People become leaders by actually leading, and if you want to be a leader there, you have to recruit followers. Since there's no chain of command, no one has to follow. In a sense, you become a talent magnet: You attract other talented people who want to work with you. You draw them with your passion for what you're working on and the credibility that you've built over time.
"Natural leadership" is how Gore, which had no experience whatsoever in the music business, wound up inventing Elixir, the top-selling acoustic guitar string and a big advance in a field that had gone three decades without a technological breakthrough. Elixir came out of an unlikely place: one of Gore's medical-product plants in Flagstaff, Arizona. Dave Myers was an engineer there who helped invent new kinds of plastic heart implants. Gore encourages its associates to spend some of their time -- typically around 10% -- on speculative new ideas. As a side project, Myers was working on his mountain bike, trying to make the gears shift more smoothly. He coated the gear cables with a thin layer of plastic, much like Gore-Tex. 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 at places such as Disney World and Chuck E. Cheese's. He needed cables that had small diameters, so he tried taking guitar strings and coating them with a similar plastic. His eureka moment came in 1993, when he asked himself: "Gosh, would this make a good guitar string?" He had an instinct that the coating would make guitar strings feel less brittle.
Myers wasn't a guitarist himself, so he sought out help from a colleague who was: Chuck Hebestreit, an engineer who knew firsthand the frustrations that musicians had with the instrument. The natural oils on their fingers, which carry particles of dust and skin, contaminate the strings when they get into the minuscule nooks between the tightly wound wire coils. The accumulation of this tiny debris dampens the sound of the vibrating string and makes it maddeningly unpredictable. And metal corrodes over time, just from exposure to the air. So the strings had short, unpredictable lives.
The pair experimented for two years without success. Then another colleague at the Flagstaff plant, John Spencer, heard about their project. Spencer had recently finished working on Gore's launch of Glide, which two years ago racked up $45 million in sales. He sensed there was a chance to create as big an advance in guitar strings as they had made in dental floss. He joined the guitar effort, contributing in his spare time even as he worked on his main "commitment," [..]
Gore puts its R&D technologists and its salespeople in the same building as its production workers, so the entire team can work together and roles can blend. The trio in Flagstaff persuaded a half-dozen colleagues to help with improving the strings. They all did it in their spare time. Finally, after three years of working entirely out of their own motivation -- three years without asking for anyone's permission or being subjected to any kind of oversight -- the team sought out the official support of the larger company, which they needed to actually take the product to market [..].
Gore's humanistic culture is the legacy of Bill Gore, who died in 1986. If you were asked to list the great visionaries of American business in the 20th century, other names would be more famous, but Wilbert L. Gore surely deserves to be on the roster. He's the closest thing to an East Coast version of David Packard and William Hewlett, both for his company's far-ranging engineering acumen and its reputation as an uncommonly benign place to work [..].
The Gore organization isn't as fanatically flat as some idealized accounts have made it out to be. There is indeed a president and CEO, Chuck Carroll, a quiet man who succeeded Bob four years ago. 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. But there is no codified set of ranks and positions as there is in the typical corporation. As a Gore "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 niche [..].
Gore encourages risk taking. When Gore people pull the plug on a failing initiative, they'll still have a "celebration" with beer or champagne, just as they would if it had been a success.
"We were a lot more radical compared to the norm in 1958," says Brad Jones, who leads the industrial-products division. "The gap between Gore and other companies has narrowed. But we're still different. Companies may have fewer layers today, but they still have pyramids and reporting structures. You can still feel the difference in an organization when the only person speaking in a meeting is the top person. It's easier to compare us to a startup company."
From Organization Theory and Design by Daft
Bursting with resolve, Jack Dougherty, a newly minted M.B.A. from the College of William and Mary, reported to his first day at Gore Assoc. (GA) on July 26, 1976. He presented himself to Bill Gore, shook hands firmly, looked him in the eye, and said he was ready for anything.
Jack was not ready, however, for what happened next. Gore replied, “That’s fine, Jack, fine. Why don’t you look around and find something you’d like to do?” Three frustrating weeks later he found that something: trading in his dark blue suit for jeans, he loaded fabric into the mouth of a machine that laminated the company’s patented GORE- TEX ®1 membrane to fabric. By 1982, Jack had become responsible for all advertising and marketing in the fabrics group. This story is part of the folklore of W. L. Gore & Associates. [..]
GA has never had titles, hierarchy, or any of the conventional structures associated with enterprises of its size. The titles of president and secretary-treasurer continue to be used only because they are required by the laws of incorporation. In addition, Gore has never had a corporate-wide mission or code of ethics statement, nor has Gore ever required or prohibited business units from developing such statements for themselves. Thus, the Associates of some business units who have felt a need for such statements have developed them on their own. When questioned about this issue, one Associate stated, “The company belief is that (1) its four basic operating principles cover ethical practices required of people in business; (2) it will not tolerate illegal practices.” Gore’s management style has been referred to as unmanagement. The organization has been guided by Bill’s experiences on teams at DuPont and has evolved as needed.
For example, in 1965 GA was a thriving company with a facility on Paper Mill Road in Newark, Delaware. One Monday morning in the summer, Bill Gore was taking his usual walk through the plant. All of a sudden he realized that he did not know everyone in the plant. The team had become too big. As a result, he established the practice of limiting plant size to approximately two hundred Associates. Thus was born the expansion policy of “Get big by staying small.” The purpose of maintaining small plants was to accentuate a close-knit atmosphere and encourage communication among Associates in a facility.[..]
GA has been described not only as unmanaged, but also as unstructured. Bill Gore referred to the structure as a lattice organization (Exhibit 3). The characteristics of this structure are:
1) Direct lines of communication—person to person—no intermediary 2) No fixed or assigned authority 3) Sponsors, not bosses 4) Natural leadership defined by followership 5) Objectives set by those who must “make them happen” 6) Tasks and functions organized through commitments
The structure within the lattice is complex and evolves from interpersonal interactions, self commitment to group-known responsibilities, natural leadership, and group- imposed discipline. Bill Gore once explained the structure this way: “Every successful organization has an underground lattice. It’s where the news spreads like lightning, where people can go around the organization to get things done.” An analogy might be drawn to a structure of constant cross-area teams—the equivalent of quality circles going on all the time. When a puzzled interviewer told Bill that he was having trouble understanding how planning and accountability worked, Bill replied with a grin: “So am I. You ask me how it works? Every which way.”
The lattice structure has not been without its critics. As Bill Gore stated, “I’m told from time to time that a lattice organization can’t meet a crisis well because it takes too long to reach a consensus when there are no bosses. But this isn’t true. Actually, a lattice by its very nature works particularly well in a crisis. A lot of useless effort is avoided because there is no rigid management hierarchy to conquer before you can attack a problem.”
The lattice has been put to the test on a number of occasions. For example, in 1975, Dr. Charles Campbell of the University of Pittsburgh reported that a GORE-TEX arterial graft had developed an aneurysm. If the bubble-like protrusion continued to expand, it would explode.
Obviously, this life-threatening situation had to be resolved quickly and permanently. Within only a few days of Dr. Campbell’s first report, he flew to Newark to pres- ent his findings to Bill and Bob Gore and a few other Associates. The meeting lasted two hours. Dan Hubis, a former policeman who had joined Gore to develop new production methods, had an idea before the meeting was over. He returned to his work area to try some different production techniques. After only three hours and twelve tries, he had developed a permanent solution.[..]
As Bill Gore said: “All our lives most of us have been told what to do, and some people don’t know how to respond when asked to do something— and have the very real option of saying no—on their job. It’s the new Associate’s responsibility to find out what he or she can do for the good of the operation.” The vast majority of the new Associates, after some initial floundering, have adapted quickly.[..]
Within GA, the various people who take lead roles are thought of as being leaders, not managers. Bill Gore described in an internal memo the kinds of leadership and the role of leadership as follows:
1) The Associate who is recognized by a team as having a special knowledge, or experience (for example, this could be a chemist, computer expert, machine operator, salesman, engineer, lawyer). This kind of leader gives the team guidance in a special area...
10) Entrepreneuring Associates who organize new teams for new businesses, new products, new processes, new devices, new marketing efforts, new or better methods of all kinds. These leaders invite other Associates to “sign up” for their project.
It is clear that leadership is widespread in our lattice organization and that it is continually changing and evolving. The situation that leaders are frequently also sponsors should not imply that these are different activities and responsibilities.
Leaders are not authoritarians, managers of people, or supervisors who tell us what to do or forbid us to do things; nor are they “parents” to whom we transfer our own self-responsibility. However, they do often advise us of the consequences of actions we have done or propose to do. Our actions result in contributions, or lack of contribution, to the success of our enterprise. Our pay depends on the magnitude of our contributions. This is the basic discipline of our lattice organization.
Annually, Gore also buys company stock equivalent to a fixed percent of the Associates’ annual incomes, placing it in the ASOP retirement fund. Thus, an Associate can become a stockholder after being at Gore for a year. Gore’s ASOP ensures Associates participate in the growth of the company by acquiring ownership in it. Bill Gore wanted Associates to feel that they themselves are owners. One Associate stated, “This is much more important than profit sharing.” In fact, some long-term Associates (including a twenty-five-year veteran machinist) have become millionaires from the ASOP.