Module 11: Innovation and Change
Case Study: W. L. Gore & Associates
MGMT 5135
Fall 2012
Team 2
November 6, 2012
Team Members:
Conway, Ashley
Heasty, Mark
Johnson, Laura
McDonald, Adrian
Sarkis, Christine
Mod 11 Team 2
Mgmt 5135
Business Goals
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Gore's business philosophy incorporates three beliefs and principles:
a. The company can and should offer the best-valued products in the markets and
market segments where it chooses to compete
b. Buyers in each of its markets should appreciate the caliber and performance of the
items it manufactures, and
c. Gore should become a leader with unique expertise in each of the product
categories where it competes.
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Gore wishes to expand its organization while maintaining the unique organizational design
which has made Gore successful in the past.
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The challenge for W.L. Gore and Associates is in terms of its growth over the next one to
two decades. The founder and Chairman of the Board, Wilbert Gore, died in 1986 leaving
the company to be headed by his son as President and his wife as Secretary-Treasurer.
There is currently no second-in-command or designated successor. There is similarly no
corporate-wide mission or code of ethics statement and the only formalities that exist are
done so based on the requirements of the laws of incorporation and other legal regulations.
S.W.O.T. Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company and
describes the opportunities and threats facing W.L. Gore.
Strengths
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Company Structure – Gore had always had a short pyramid structure, which consisted of a
president and secretary/treasurer (p. 560). Gore’s lattice organizational structure promotes
creativity, initiative, and helps develop beneficial relationships between employees.
Organizational structure corresponds with research based nature of the company: Specialized
niche products are possible because of the lack of bureaucracy and associated overhead,
Associate commitment, and the use of product champions (p. 556). It has numerous patents
and a team of patent lawyers to maintain its competitive advantage.
Product Development – Lack of bureaucracy, less overhead, associate commitment, and the use
of product champions are factors that are attributed to the profitable development of products.
Quality Product Offerings - Gore & Associates product line is responsible for a long list of
company successes and accolades and has also helps them achieve notoriety for quality
products. Some of Gore’s products include GORE-TEX vascular grafts, medical patches to heal
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broken hearts by mending holes, GORE-TEX filter bags, GLIDE dental floss, and GORE-TEX fabric
gear (p. 555-56).
Associate Stock Ownership Program - Gore has an Associate Stock Ownership Program. This
gives employees a sense of ownership regarding the success of the company as a whole.
Marketing - Marketing for GORE-TEX has been described by retailers as “unbeatable.” Some
retailers praise the marketing and advertising efforts as the best; Sporting Goods Business
magazine describes Gore &Associates' marketing as "unbeatable".
Small Plant Structure - The purpose of maintaining small plants was to accentuate a close-knit
atmosphere and encourage communication among Associates in the facility (p 557). This
strategy was successful because Gore was ranked the 7th best company to work for in America
by Fortune (p 554).
Industry Leader - Industry leader ranked among top 500 private companies in the US and
seventh best company to work for in America by Fortune in January 1998.
Financials of Company - The Company is debt free and has only used industrial bonds for
building facilities at a tax free rate.
Weaknesses
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Lattice Structure - This organization may not translate into the next generation of leadership by
nonfamily members. New employees often have difficulty adjusting to the lattice organization,
and a customer of Gore once stated, "the lattice has its problems with the day-to-day nitty-gritty
of getting things done on time and out the door…it's frustrating to find a lack of continuity” (p
558-59).
Management – The Company has never had titles, hierarchy, or any of the conventional
structures associated with enterprises of its size. They have also never had a corporate-wide
mission or code of ethics statement. Gore's management style has been referred to as
"unmanagement" (p 557).
Innovation – The introduction of new fabrics posed challenges because it was difficult for the
company to come up with other new brands.
Name – Many consumers knew Gore & Associates as GORE-TEX. This made it difficult to branch
out and create products under the Gore name.
Fabric Division – Gore’s fabric division is susceptible to market forces, including recessions and
fashion “fads.”
Opportunities
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Organizational Environment - An organizational environment which encourages
experimentation can constantly create new products and marketing strategies
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PTFE - The unique properties of PTFE have been the cornerstone of success for the company.
The opportunities for growth are limitless and only require the researchers to continue to apply
the properties to new products and finding new marketing venues.
Electronic Products Division - The Gore electronic products division has a history of anticipating
future customer needs with innovative products (p 555).
Age of American Population - The aging population of America has increased the need for
healthcare; As a result, Gore has invested in the development of additional medical products
and the medical division is growing (p 565)
Optical Concepts - Recently, the company purchased Optical Concepts Inc., a laser,
semiconductor technology company; In addition, Gore is investing in test-marketing a new
product, guitar strings which was developed by its Associates (p 566-567)
Creative Advantage – The Associates maintain that the profitable development, production, and
marketing of such specialized niche products are possible because of lack of bureaucracy and
associated overhead, Associate commitment, and the use of product champions (p 556).
Threats
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Rigorous Recruitment/Training Process – When people apply at Gore and Associates, they are
first screened by personnel specialists and then as many as ten references are contacted before
a person is identified as meeting the basic criteria. Before they are hired, an associate must
agree to sponsor them. This limits the pool of applicants significantly (p. 561). After training for
about a month, the employee is left on his/her own with little direction, which does not suit
everyone (p. 554).
Union Threats - Employees have attempted to unionize in the past. This could severely affect the
lattice structure at Gore.
Competitors – 3M, Burlington Industries, Akzo Nobel Fibers, and Dupont have brought out
products to compete with Gore-Tex fabrics. Earlier, the toughest competition came from firms
that violated the patents on Gore-Tex (Gore successfully challenged them in court). An obvious
threat, of course, is when the patents are going to run out (p 556-557)
Overdependence on PTFE - Dependence upon one chemical product, PTFE, is the biggest threat.
If an adverse outcome should be discovered similar to asbestos and the induction of
mesothelioma in exposed workers could cripple the company. Similarly, if the raw materials
used to produce the product should become scarce, then the company could face an economic
downturn.
Overdependence of Upper Management - Dependence upon two family members to head the
entire corporation without a designated successor is the second biggest threat. The company is
privately held with all Associates having an ownership stake in its success. Leaders are allowed
to reveal themselves naturally within the organization; however, business law will require a
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named successor otherwise the fate of the corporation will find itself being determined by a
judge.
Root Causal Analysis
Problem #1: Gore and Associates’ Lack of Structure
Causes:
 Gore wanted to keep the creativity that had built the company while still growing.
 Associates sometimes did not know where to start working due to the lack of structure (p. 554).
 Lack of hierarchy regarding approval for products throughout testing.
 Inconsistency from customers’ perspectives regarding a rapport with particular associates.
 The unstructured environment presents a problem as the company grows. It is currently at
7,000 employees worldwide, and the “lattice organization” may start to become unwieldy as the
company expands further. Gore has helped to mitigate this problem by keeping plants small so
that employees know each other better and communicate easier, but changing responsibilities
and commitments can create confusion and may cloud effective inter-plant communication and
customer relations.
Problem #2: Susceptibility to Adverse Environmental Forces
Causes:
 Fad for jogging suits collapsed in the mid-1980s
 Recession of 1989
 Reduction in purchases of high-end athletic apparel
 Mainframe computer business declined in early 1990s
Problem #3: Leadership uncertainty
Causes:
 Current CEO Bob Gore has not shown interest in grooming a successor once he retires or dies.
His leadership has shaped the organizational culture, but he will not be around forever. Without
a formal hierarchy except for CEO and secretary, it is difficult to get a sense of who the next CEO
of Gore and Associates will be. This could lead to tensions among Associates and possibly
damage customer relationships.
Questions and Assumptions:
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We assume Gore and Associates is willing to make some structural changes to help the company
grow and expand while still maintaining the creativity in the company.
Was or has a suitable successor for Bob Gore ever found?
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Has Gore and Associates ever considered having to change their organizational structure if they
ever become “too big to remain small” and for the Lattice structure to no longer effectively
work?
The emphasis in the case was on the corporate culture and extreme example of the
unstructured and unmanaged organizational design. Based on the fact that this company
generates more than $1.1 billion in annual revenues and operates in multiple countries with a
variety of languages, we will assume that the infrastructure is in fact more formal than
presented. The core company may be informal in structure, but we will assume that there is a
squadron of contracted specialists that maintain the formal functions of such a corporation.
These specialists would include attorneys in international business, patent, and employment
law, accountants, construction firms who are building each of the chemical production plants
and ensuring they are compliant with building and environmental regulations, and many other
corporate operation specialists.
Recommendations
The internal framework based on a lattice structure has been successful for W.L. Gore & Associates for
the last 55 years. The company has had the same CEO/president for twenty years with no second-incommand or successor. If something were to happen to the current CEO, the company could possibly
be negatively affected. No one lives forever, but corporations are given immortality as long as they are
legally maintained. As such, this organization needs to prepare itself for the next generation of
leadership. Options include becoming a public corporation, legally handing it over to another family
member or Associate, or positioning itself for a merger or acquisition.
Gore and Associates wants to maintain their creative, unstructured atmosphere but also needs to
incorporate some sort of structure to continue to grow and expand. Gore and Associates should
consider building some kind of structure to their organization. They should consider an ambidextrous
approach to their organization. An ambidextrous approach defined by the textbook means “to
incorporate structures and management processes that are appropriate to both the creation and the
implementation of innovation” (p. 418). Gore and Associates should consider building a higher pyramid
structure of management while still maintaining an unstructured research and development
department. Employees could still have the freedom to explore and develop new ideas while the
company would be more structured. Gore should also develop some formalized and written rules,
procedures, and an ethics code may be necessary to cement organizational cohesion in a global
environment. However, Gore can maintain elements of its unstructured design: the freedom employees
are given to experiment and pursue ideas is responsible for Gore’s innovativeness and success, and
should be preserved. A board of directors, which includes Bob Gore and Vieve and at least one to three
other directors selected out of the Associates, should be part of the organizational structure. A
leadership team should be created that will be groomed to take over the operations of the domestic and
international branches of the corporation and have legal/formal authority to generate contracts.
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Great work overall! See my inline comments.
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