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"HOW" COMPANIES AND "WHY" COMPANIES
How Not to Run a Business
Even If You don't know what Gore-Tex is, you know what it does: It keeps you dryguaranteed. As a brand, Gore-Tex has been so successful that it sometimes seems in danger of disappearing, of becoming a generic term like "Band-Aid." Since it was invented in 1971, Gore-Tex has given rise to a number of competing products. Some of those boast properties said to be superior to the original. But if you walk into a store and want to know whether a ski jacket is waterproof, the question you'll probably ask is "Is it Gore-Tex?"
It's the kind of brand dominanceover both market share and "mind share"that marketers dream of, or lose sleep over. The story of how it came to be, and came to symbolize an entire market category, is the story of two radical ideas.
Bill and Genevieve Gore's first idea was that there were market opportunities for a chemical called polytetrafluorethylenePTFE for shortthat DuPont wasn't pursuing.
Today, PTFE is best known as Teflon, that magical polymer that keeps our pans from sticking and our pipes from leaking, among a myriad of other far-flung uses. It is supposedly so slippery that it is the only known substance to which a gecko's feet will not stick. But in 1938, it was an experiment gone wrong for Roy Plunkett, who worked at DuPont. Plunkett was trying to develop a refrigerant for car air conditioners when one of his canisters of gas seized up solid. He cut it open and found that the tetrafluorethylene inside had "polymerized"that is, turned to a kind of plastic, white and slippery. Three years later, DuPont received a patent on the stuff, but then contented itself with selling it as a raw material to those who wanted to incorporate it into their products. It would be another thirteen years before a Frenchman, Marc Gregoire, stuck it to a pan so that nothing else would.
Bill Gore had other plans for PTFE. He thought it would make a great insulator for electrical cables. But DuPont was a chemical materials company, not an electrical products company, and wasn't interested. So, at the age of forty-six, this father of four quit DuPont, licensed PTFE, and set up shop in his basement with seed money from friends in the Gores' bridge club.1
As it turned out, Bill Gore was right about PTFE's potential. But it was his and Vieve's second idea that gave the world Gore-Tex, along with more than one thousand other innovative products, and made W. L. Gore & Associates into a multibillion-dollar leader in markets spanning from aerospace and electronics to energy and health care. Like PTFE, that second idea was borrowed, in a way, from DuPont. But like the remarkable polymer, Bill's insight had to do with what the company he had worked at for years wasn't doing.
Bill Gore believed that the way we talk about one another and about our jobs affects the way we think and the way we act. So he replaced his employees with "associates," their jobs with "commitments," and their managers with "leaders."
Of course, it's possible, as George Orwell knew, to change all the words without changing reality. And changing the reality of how people work was Bill Gore's real ambition.
THE END OF "FUNNY" BUSINESS
Les Lewis, today a manufacturing leader at Gore, was one of the company's first associates. He recalled what it was like at Gore in 1965. "It was early on, at a funny time for the company," Lewis explained. "We had [one plant], seventy people, and believe it or not, a dozen 'supervisors.' I was one of them, and I decided to write the first supervisor's handbookhow to deal with back vacations, the sorts of things that a supervisor needs guidelines for."
What Lewis described as a "funny time" is a phase that almost every successful start-up goes through. The company has started to grow; maybe one day you walk in and realize that you no longer recognize everyone who works there and don't always know who does what and how anymore. Sooner or later, someone decides that order needs to be restored, or established. An enterprising manager like Lewis decides he'll share his insights by setting them down on paper, and the first manual is written to tell people how to do their jobs.
If you're one of those managers, this might seem to be an attractive opportunitya chance to show your quality and pass on your experience. Some people might even think it fun, a bit like setting down the rules of a whole new society that, from now on, will run like a well-oiled machine.
But Lewis's "fun" did not last long. Today, a handbook such as the one Lewis wanted would be unthinkable at this company. But how did founder Bill react to the manual in those early days?
Lewis described Bill Gore's big idea as a product of his experience at DuPont.2 As Gore explained it to Lewis at the time, "When [DuPont] wanted to work on a project, they would assemble a small team, and that small team would work very much as equals . . . where there was not a hierarchical thing. Everybody worked, everybody brought their skill and knowledge together." This was, for Gore, an ideal way of working. But at DuPont, "once that project got to a certain point, they would all go back to their organizations, in a much more hierarchical chain of command." Gore's notion was simple: If this collaborative, nonhierarchical, liberated structure worked for important projects that needed to get done quickly, why shouldn't a company work that way all the time? So once Gore left DuPont and started his own company, he decided to do just that. According to Lewis, Bill Gore "vowed that if he ever had a company of his own, he would want it that way because he thought that it really invited a lot of people's creative skills to come forward." Even so, it took time and experimentation before Gore settled on an effective way to implement his idea.
The discovery of Lewis's supervisor handbook, as it happens, was a clarifying moment for Bill Gore. "He wasn't turned on by it," Lewis said drily, adding, "But when I wanted to introduce a requisition form for shop work, that was the end of itBill hated forms."
So Bill Gore decided to take his supervisors out to dinner. Soon the monthly dinners became an academy in the values and principles of leadership. "It was almost a Socratic approach to teaching people to lead," recalled Lewis. "At these dinners, he would talk about how to leadwe wouldn't call it 'leading' then; we were [still] 'supervisors'and how to 'sponsor'we didn't call it 'sponsoring' then. He would discuss problems that we had and would ask everyone, 'How would you do that?' We would hear different ideas about how to deal with situations," Lewis explained. "It was absolutely a dialogue. He would never drive his answers to us, [saying, 'This is] what you ought to do.' Instead, he would ask, 'How have you solved this problem? Has anyone else experienced one of these?' Meanwhile, he was also instilling in us values and value judgments."
So the "funny time" ended. No supervisors ever attempted to write rules and policies again, because there were no more supervisors at Gore. And the leaders, who took the place of the supervisors, were busy helping peopleinstead of telling them how they had to work. But it would take more experimentation and time before Bill Gore fully implemented his second big idea of a radically different way to work.
THE YELLOW BRICK ROAD
Fast-forward to the mid-1980s. Thirteen years ago, Lewis had left the company for greener pastures. After spending this period in more traditional command-and-control companies, he's now decided to return to his native Newark, Delaware, and give W. L. Gore & Associates the benefit of knowledge and experience he's gained about managing big companies. Gore itself had gotten a lot bigger over the years, with several manufacturing sites in the United States and abroad and several thousand associates. The circumstances looked perfect. The plant had just been moved to a brand-new facility and Lewis, a newly minted manufacturing leader had a big corner office, making him feel important: "I was feeling very confident'I have arrived,' you know?" There was a lot on his plate. Operations were inefficient and the manufacturing techniques people used appalled Lewis: "Instead of computers they were using a columnar pad with numbers they were ticking off to run manufacturing operations by hand."
So Lewis decided to change all that, to instill some discipline, show people that they were working in a backward way, and push them to use a newfangled tool called a computer spreadsheet.
It looked like the right thing to do. Though quite big already, the company lagged behind its main competitors in the use of modern, computer-based operations management. Lewis's proposed course of action was unimpeachable and would have been accepted in any other company. What Lewis couldn't see is how different Gore had become since he'd left.
His efforts lasted six months and the only result was personalhe was ready to leave the company again. And it wasn't because of then-president Bob Gore'sBill's sonhatred of computers ("Bill hated forms, Bob hated computers," Lewis explained) but because no associate would ever listen to him, never mind follow him. "I was using the techniques that I had been practicing for thirteen years elsewhere. More power, more influence, more whatever, and suddenly it dawned on mean epiphany: 'You know what the Gore organization is like. You were in it. Why are you trying this top-down kind of a way?'"
And so Lewis rediscovered the values and principles of leadership Bill Gore had taught him and others at their Socratic dinner meetings. Lewis dubbed it the "yellow brick road."
"You ask your associates 'Where do you want to go?'" Lewis told us. "And they say, 'To the Emerald City.' So you don't tell them, 'Follow the yellow brick road,' the road your own knowledge dictates is the right one," Lewis explained. "You don't, because all they will say is, 'You're crazy. We're going off through the woods.' So you take your bricks and go with them, and throw them one by one in front of themnot giving the answer, but ideas, information, letting them find their own answers. And with every new brick they step on, [your] credibility goes up." Lewis summarized: "I had no credibility, but little by little each of those bricks brought my credibility up."
Lewis had rediscovered that, with all his responsibility for leading a big plant, all his knowledge and experience about how to run operations better, associates wouldn't follow him until he filled what he called his "credibility bucket." He was learning that a "leader" is not just a manager with a different title. A leader is someone whom others follow naturally. At Gore, when Lewis returned, that culture was already so strong that he ran into it face-first, and it nearly drove him back into the command-and-control world. But even at more traditional companies, this same dynamic holds. It's just that at traditional firms, all the tension is under the surface. As Gore's CEO, Terri Kelly, explained, "What you find in a lot of companies is that if there isn't true support for the decision, it gets undermined along the way. In fact, it may never come to fruition. So on the one hand you've made a very quick decision'We're going to go to China'but then you've got all kinds of resistance."3 So in those companies, the employees may not go into open revoltmost of the time. But if they are not sincerely consulted by their manager, or if they think he lacks credibility, your company will quietly leak productivity every dayand perhaps even sink.
The difference at Gore is that the associates there are genuinely consultedand they are free to choose. This freedom is one of the hallmarks of all of the liberated companies in this book. And by exercising their choice not to follow the Les Lewis who had returned from the outside world, Gore's associates were actually doing him a favor. They were providing him with valuable information about how he was doing his job that allowed him to change tack and become a more effective leader. The all-too-familiar alternativeeach of us grumbles to himself, his family, or his coworkers, but keeps his head down and does enough work to avoid attracting attentionmay be one of the invisible but profound reasons your company isn't performing the way you think it should.
OK, you may say. But how do you get everyone to row in the same direction without a boss at the helm? What guides people's freely chosen actions and prevents them from pursuing their own interests at the company's expense? Gore has a way of thinking about these challenges. And unsurprisingly, it's just a little bit different from the way most companies do. Gore people live the company's four principles: The first is "freedom." But along with it are "fairness," "commitment," and "the waterline." The thing to know about these principles is that, unlike the mission and values statements at many companies, associates actually think about and live them. Fairness, commitment, and the waterline make freedom work for Gore.
"FORMULA FOR FAILURE"
Fairness is about being fair to othersboth inside and outside the company. According to Lewis, W. L. Gore & Associates wants to treat its suppliers and its customers as equals. But fairness has an internal component as wellit's about treating your colleagues with dignity and as equals. Lewis, in fact, once needed a little help to understand the fairness principle.
Back in the mid-1960s, when Lewis was a young supervisor, the company was scraping by and still working out the kinks in its production of PTFE-coated cablesits only product at the time. When a batch went bad, Lewis came up with what he thought was an enterprising way to save money by stripping the bad cables so the materials could be reused. "So, I got these three women in the back of the plant and I gave them a wire spool each to sit down on," Lewis explained. "And I put these spools of cable that had to be stripped there, and I gave them some kind of a knife or something to strip it, and they are sitting back there in the bowels of the Earth like a coffee klatch, stripping this wire off." Lewis thought to himself: " 'All right. I am set up. Man, we are getting this stripped off and getting it recoated; we are going to save all this.' Back then we couldn't afford to throw stuff away." Needless to say, Lewis was pretty pleased with his economy and enterprise. Bill Gore, however, thought that Lewis needed some help.
Lewis left the women to their work and went back out onto the shop floor, where Bill found him. Lewis continued the story: