ORGANIZATION DESIGN AND DEVELOPMENT

CASE STUDY ANALYSIS- W.L.Gore & Associates, Inc.

Submitted to: Submitted by:Dr. Richa Awasthy Vinod Gandhi

IMI, New Delhi 11PGDMHR59

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Table of Contents

Topic Page No

INTRODUCTION.............................................................................................................3

CASE-ANALYSIS.............................................................................................................5

QUESTIONS................................................................................................................5-8

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INTRODUCTION

W.L. Gore & Associates, Inc., best known for its Gore-Tex fabric, manufactures a wide range of products derived from polytetrafluoroethylene, an artificial fiber frequently referred to as PTFE. PTFE is best known by Du Pont’s brand name, Teflon. W.L. Gore began in 1958 to use PTFE for insulating electric cables. By 1990 it manufactured a wide range of related products, arranged into four divisions: electronics, medical products, fabrics, and industrial products.

This case examines the origin of cultural values and norms; it mirrors the position that cultural values result from people, structure, property rights, and ethics. Each of these four factors is considered. The entrepreneurial culture shows the relationship between organizational structure and culture. This case depicts an organic approach and a highly decentralized organization. The case chronicles the growth of the company and the nature of the structure and culture created by its founder, Wilbert (Bill) Gore.

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CASE

ANALYSIS

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CASE-ANALYSIS

This case is best used to illustrate the origins and nature of organizational culture. It provides examples of the importance of culture in organizational design and shows that culture can be created to achieve a competitive advantage. It also illustrates how an organic structure works and the design challenges that an organization confronts when it chooses to use this structure. This case illustrates the importance of leadership in shaping a company’s development and culture

There are three clouds on Gore’s horizon.

First, Gore is dependent on a single basic material, PTFE, for manufacturing a high percentage of its products. If the raw material required to make PTFE became expensive or the product or production process were found to be environmentally unsafe or a low-cost or technically superior substitute became available, Gore could face difficulties. To reduce risk, Gore might diversify its material base.

Second, Gore’s products are vulnerable to imitation by competitors. To grow and remain profitable, Gore must innovate, or the company could fall upon hard times. Gore’s culture seems ideally suited for innovation.

Third, Gore’s culture has been sustained through a prolonged period of corporate growth. The company has not tried to sustain itself through a period of slow growth and/or market reversals. Other companies, such as IBM, have had real difficulties trying to sustain their culture in such circumstances. It is not clear how well Gore’s culture would stand up to adversity.

QUESTIONS

Quest 1 What influenced the Gore system of “unmanagement”?

The major influence on the Gore system of unmanagement was the strong leadership of W.L. Gore himself. Bill Gore exemplifies the visionary, charismatic leader who founds an organization that functions according to the founder’s values. From the very beginning, he envisioned an organization where people were not inhibited by such traditional principles of management as hierarchical levels of authority, reporting channels, and subordinate relationships. He and more recently his son, Bob Gore, have carried forward this vision. Both Bob and Bill Gore show that strong leadership does not have to be authoritarian. A leader who can communicate an organizational direction does not have to use authoritarian approaches and generates greater loyalty.

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Quest 2What are the values of the Gore culture?

The terminal values of the Gore Company are high quality, innovation, and excellence. The instrumental values that guide the achievement of terminal values are fairness, freedom, commitment, and discretion.

Gore’s employees have freedom to experiment, to take risks, to respond creatively to new product development or improvement, and to use the company’s resources responsibly for innovation and excellence. The case discusses the norms and rules that indicate appropriate behavior at Gore, such as behavior governing travel expenses. The emphasis is on the maximum amount of self-control and the minimum amount control and direction from written rules and procedures.

Quest 3How are these values transmitted to Gore associates?

The very word associate–employee is not used by Gore—it is a part of the communication that has emerged in the Gore Company to transmit terminal and instrumental values. There are no job titles and minimal emphasis on superior-subordinate distinctions and differences between functions. The organizational language mirrors the company’s guiding values—fairness, freedom, commitment, and discretion.

Employees learn their own roles in the organization. Other ways of transmitting the company’s values are the design of offices and factories, their location in attractive areas, the central communal eating areas, and the minimum of status differences.

Gore epitomizes the meaning of individualized socialization practices. New employees are left alone to discover how the organization works and what their role should be. The role of existing Gore associates is to be supportive, to invest new employees, and to provide guidance to help newcomers discover their role and behavior. Individualized socialization tactics encourage an innovative role orientation that supports terminal values.

Quest 4What are the origins of Gore’s cultural values?

Following the discussion of Gore’s culture and how it is transmitted, focus on the four factors that cause cultural values: people, property rights, structure, and ethics.

People- The vision and values of the founder play a major role in explaining the origin of this company’s culture. Based on his experiences in many other organizations, such as Du Pont, Gore saw how the four instrumental values of fairness, freedom, commitment, and discretion resulted in entrepreneurship and excellence. He made them central to his organization and transmitted them to his associates. Presumably, the people attracted to gore accept these values. There is turnover by those who find ambiguity in company operations, so using the attraction-selection-attrition framework, these values become stronger as people become more homogeneous.

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Property Rights and Personnel Policies- The strength of the property rights given to employees can be seen in personnel policies, a direct product of the founder’s leadership and vision. These policies are based in company culture and explain company success. Gore avoids we/they atmosphere and has achieved its culture by practicing equality from the parking lot to the office. There are no status differentials at Gore: no reserved parking spots except for customers and the handicapped, no separate dining facilities, no plush offices for management elite, no organizational charts, no lengthy policy manuals, no separate compensation systems, and no job titles (everyone is an associate). What does exist is a flexible organization based on fairness and contribution.

Gore’s employees get formal feedback twice a year on their performance from a compensation committee that includes their peers. They regularly receive informal feedback from their sponsors. Associates are encouraged to make commitments, join teams, create new products or production processes, make suggestions, and in general improve themselves on the job.

To recognize and reward associates’ achievements, Gore has established a property rights system that compensates everyone through six-month salary reviews, a profit-sharing scheme, and an Associates Stock Ownership Program, giving associates 20 percent of the company. Strong property rights encourage a feeling of ownership, and employees are encouraged to contribute in whatever way they feel best suits them. Clearly, Gore’s property rights system leads to values that encourage commitment.

Structure- Gore reinforces these values by using its very flat, decentralized lattice structure, really a product team structure in which teams are formed and disbanded as products are developed and marketed. Gore’s flat hierarchy and minimum supervision reinforce property rights. Both are based on the philosophy that employees control their behavior and work effort. The flexible nature of the system allows employees to find suitable roles within the organization

The lattice structure demonstrates how an organic structure works and the importance of mutual adjustment as people are responsible for communicating and coordinating to solve problems. 1. Differentiation—Gore keeps this to a minimum to reduce the problems of integration2. Decentralization of authority3. Mutual adjustment4. The importance of the informal organization

Ethics- Gore has a clear and unambiguous set of ethical values that guide behavior. As a major supplier of medical products, Gore demonstrates its values to stakeholders by recalling products and absorbing the costs.

The interaction of the personal and professional characteristics, property rights, and structure demonstrates the power of culture in shaping behavior and in motivating and coordinating employees.

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What is the source of Gore’s competitive advantage?

Gore’s competitive advantage stems from three company features. First, the Gore family clearly articulated a company vision and has pursued it without variation since 1958. Second, the company has a core competence in applying PTFE to numerous applications. PTFE-based materials manufactured by Gore have found applications in areas as diverse as insulation cables for the space shuttle, cables in computers, outdoor clothing, and medical products. Gore has reaped the benefits of being a first mover.

Its first-mover advantage is protected by patents and by keeping processes secret. Its first-mover advantage allows for a premium price charged for many products and has helped develop a strong brand name.

The third source of Gore’s competitive advantage is its culture. Gore’s decentralized culture, characterized by direct lines of communication, no fixed or assigned authority, a flat hierarchy, and use of self-managing teams, (1) facilitates employee commitment, (2) promotes innovation—demonstrated by Gore’s history of new products, and (3) allows a quick response to market demands and crisis situations.

Quest 5Can Gore maintain its culture as it continues to grow?

Gore’s culture is best suited to a small organization. To have an organization in which everyone has access to others, in which people find their niche, in which teams play a large role, and in which formal authority structures are absent, the number of people must be small. Bill Gore recognized this when he decided that no facility should exceed 150–200 associates. By following this policy, Gore has grown big while remaining small. The company exceeds 5,300 employees, divided among 44 plants worldwide, so the size of any one facility is held to manageable proportions.

Of course, there is a cost to this policy: It limits economies of scale and leads to duplication. Because many of Gore’s products serve niche markets, the lack of scale economies might not be serious. So far, the benefits of limiting facility size outweigh the costs.

Quest 6Can the Gore management culture work in other companies?

Other companies send managers to Gore to learn how to produce a creative, loyal, and motivated workforce. Yet, other companies cannot imitate Gore’s culture without radical de-structuring and a change of established cultures. Gore has built its culture from its inception. Others could follow the Gore model, but it is doubtful whether an established organization could adopt Gore’s radical structure. In an established organization with a well-developed structure and hierarchy of authority relationships, Gore’s personnel practices would at best be unsettling to those in power. Subordinates could see these practices as a revolt.8 | P a g e