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Monday, November 15, 2004

The Fabric of Creativity -Part II

Fastcompany has come with an excellent article about W.L.Gore where,it notes that innovation is more than skin deep: The culture is as imaginative as the products. W.L.Gore & Associates ranks #12 Among Fortune Magazine’s “100 Best Companies to Work For”. In Part 1 we saw the core operating philosophy od Gore. In this part, we shall continue with excerpts from the article about how the process and people work together inside W.L.Gore :

Leaders Are Talent Magnets - 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 . 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.
Breakthrough Ideas Need Breakout Marketing -Longtime 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. But since the 1980s, the company has learned that superior technology often isn't enough. You also need breakthrough marketing to push past entrenched but inferior market leaders.The company insists that its new ideas have to be "unique and valuable" -- not me-too products. Gore's first marketing coup came with Gore-Tex. For Gore, which in essence is a component manufacturer, the challenge was to find a way to outflank the middlemen and talk directly to potential consumers -- the people who buy clothing in retail stores. Gore simply sold the laminated fabrics to apparel manufacturers, which in turn relied on retailers. The solution: Gore created tags for the final garments that said "Gore-Tex: Guaranteed to Keep You Dry." This pathbreaking idea was later copied in the 1990s by Intel, with its "Intel Inside" ad campaign and its conspicuous stickers on personal computers. Since then, Gore has repeatedly broken through resistance from hidebound industries. For 20 years, it 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's decision to give away lots of Glide floss predates Netscape's move to give away its browser. 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.
Innovation for the Long Run - 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. Your compensation is tied to your "contribution" and decided by a committee, much the way it's done in law firms. The company looks at your past and present performance as well as your future prospects, which takes away the potential disincentive for investing time and effort in speculative projects. 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.

Even though Gore is private, it rewards its associates with stock, just as if it were a real startup. As you get to be a bigger and bigger company, it's hard to rely on one-person ideas," says Mongan, who's leading an effort to develop fuel cells to power cars. "Twenty years ago, a $10 million business was exciting. Now we need bigger ideas and bigger markets to keep us going." Fuel cells are a good example: It's a huge long-term opportunity, and already Gore is working with General Motors. It's not a spare-time side project the way that Elixir was. "Gore has immense patience about the time it takes to get it right and get it to market." "If there's a glimmer of hope, you're encouraged to keep a project going and see if it could become a big thing." But a $1.6 billion company can't run on hope. Gore's next big challenge is to keep up its double-digit growth rate even as it gets bigger. That means venturing into the hazards of the greater world, where Gore might find it difficult to safeguard its unusual culture. It means teaming up with giants like GM, the quintessential hierarchical organization. It means expanding overseas to tap new markets and new sources of talent. While the Gore culture is progressive for U.S. business, it's radical almost everywhere else. "Europeans generally like hierarchies, job specs, and knowing who the boss is," says Doak. Gore isn't a cult. But its culture is much like Gore-Tex, its most famous product. As Gore grows from nearly 7,000 employees to 14,000 and then 21,000, 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.

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