What happened next was one thing for which Dougherty was not ready. 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, dressed in jeans, loading fabric into the mouth of a machine that laminates the company's patented GORE-TEX' membrane to fabric. By 1982, Dougherty had become responsible for all advertising and marketing in the fabrics group.

This story is part of the folklore that is heard over and over about W. L. Gore. Today the process is slightly more structured. New Associates' take a journey through the business before settling into their own positions, regardless of the specific position for which they are hired. A new sales Associate in the Fabric Division may spend six weeks rotating through different areas before beginning to concentrate on sales and marketing. Among other things he or she may learn is how GORE-TEX fabric is made; what it can and cannot do; how Gore handles customer complaints; and how it makes its investment decisions.

Anita McBride related her early experience at W. L. Gore & Associates this way:

Frank Shipper, Salisbury State University, and Charles Manz, Arizona State University.

2 In this case the word Associate is used and capitalized because in W. L. Gore & Associates' literature the word is always used instead of employees and is capitalized. In fact, the case writers were told that Gore "never had 'employees-always' Associates."'

1

W. L. Gore & Associates is a company that evolved from the late Wilbert L. Gore's experiences personally, organizationally, and technically. Gore was born in Meridian, Idaho, near Boise, in 1912. By age six, he claimed that he had become an avid hiker in the Wasatch Mountain Range in Utah. In those mountains, at a church camp, he met Genevieve, his future wife. She is called Vieve by everyone. In 1935 they got married-in their eyes, a partnership. He would make breakfast, and she would make lunch. The partnership lasted a lifetime.

Gore received both a bachelor of science degree in chemical engineering in 1933 and a masters of science in chemistry in 1935 from the University of Utah. He began his professional career at American Smelting and Refining in 1936. He moved to Remington Arms Company in 194 1. He moved once again, to E. I. du Pont de Nemours in 1945, where he was research supervisor and head of operations research. While at Du Pont he worked on a team to develop applications for polytetrafluoroethylene, frequently referred to as PTFE in the scientific community and known as "Teflon" by Du Pont's consumers (it is known by consumers under other names from other companies). On this team Gore felt a sense of excited commitment, personal fulfillment, and self-direction. He followed the development of computers and transistors and felt that PTFE had the ideal insulating characteristics for use with such equipment.

He tried a number of ways to make a PTFE-coated ribbon cable, but without success. A breakthrough came in his home basement laboratory. He was explaining the problem to his son, Bob. Bob saw some PTFE sealant tape made by 3M and asked his father, "Why don't you try this tape?" His father then explained to his son that everyone knows you cannot bond PTFE to itself. Bob went on to bed.

By this time in his career, Gore knew some of the decision makers at Du Pont. For the next four months, he tried to persuade Du Pont to make a new product-PTFE-coated ribbon cable. It became clear after talking to several people that Du Pont wanted to remain a supplier of raw materials and not a fabricator.

Gore began to discuss with Vieve the possibility of starting their own insulated wire and cable business. On January 1, 1958, their wedding anniversary, they founded W. L. Gore & Associates. The basement of their home served as their first facility. After finishing dinner on their anniversary, Vieve said, "Well, let's clear up the dishes, go downstairs, and get to work." They viewed this as another partnership.

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Case 6-13 W L. Gore & Associates, Inc.

Du Pont. He left behind a career of 17 years and a good, secure salary. To finance the first two years of the business, the Gores mortgaged their house and took $4,000 from savings. All of their friends told them not to do it.

The first few years were rough. In lieu of salary, some of their Associates accepted room and board in the Gore home. At one point 11 Associates were living and working under one roof. The order that was almost lost and that put the company on a profitable footing came from Denver's water department. One afternoon, Vive answered a phone call while sifting PTFE powder. The caller indicated that he was interested in the ribbon cable but wanted to ask some technical questions. Gore was out running some errands. The caller asked for the product manager. Vive explained that he was out at the moment. Next he asked for the sales manager and finally, the president. Vive said that they were also out. The caller became outraged and hollered, "What kind of company is this anyway?" With a little diplomacy, the Gores were able eventually to secure an order for $ 100,000. This order put the company over the hump, and it began to take off.

W. L. Gore & Associates has continued to grow and develop new products primarily derived from PTFE, including its best known product, GORE-TEX fabric. In 1986 Gore died while backpacking in the Wind River Mountains of Wyoming. Before he died he had become chairman and his son Bob, president, a position he continues to occupy. Vive remains as the only other officer, secretary-treasurer.

W. L. Gore & Associates is a company without titles, hierarchy, or any of the conventional structures associated with enterprises of its size. The titles of president and secretary-treasurer are used only because they are required by the laws of incorporation. In addition, Gore does not have a corporate wide mission or code of ethics statement, although Gore does not require or prohibit 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 for themselves. The majority of business units within Gore do not have such statements. 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; and (2) it will not tolerate illegal practices." Gore's management style has been referred to as un-management. The organization has been guided by Gore's experiences on teams at Du Pont and has evolved as needed.

was born the expansion policy of "Get big by staying small." The purpose of maintaining small plants is to accentuate a close-knit and interpersonal atmosphere.

Today, W. L. Gore & Associates consists of 44 plants worldwide with over 5,300 Associates. In some cities the plants are clustered together on the same site, as in Flagstaff, Arizona, with four plants on the same site. Twenty-seven of those plants are in the United States, and 17 are overseas. The company's overseas plants are located in Scotland, Germany, France, and Japan, manufacturing electronics, medical, industrial, and fabric products.

Gore electronic products are found in unconventional places where conventional products will not do-in space shuttles, for example, where Gore wire and cable assemblies withstood the heat of ignition and the cold of space. In addition, they are found in fast computers, transmitting signals at up to 93 percent of the speed of light. Gore cables are even underground, in oil-drilling operations, and undersea, on submarines that require superior microwave signal equipment and no-fail cables that can survive high pressure. The Gore Electronic Products Division has a history of anticipating future customer needs with innovative products. Gore electronic products are well known in industry for their ability to last under adverse conditions.

In the medical arena, GORE-TEX-expanded PTFE is considered an ideal replacement for human tissue in many situations. In patients suffering from cardiovascular disease, the diseased portion of arteries are often replaced by tubes of expanded PTFE that are strong, biocompatible, and able to carry blood at arterial pressures. Gore has a dominant share in this market. Other Gore medical products include patches that can literally mend broken hearts by patching holes and repairing aneurysms, a synthetic knee ligament that provides stability by replacing the natural anterior cruciate ligament, and sutures that allow for tissue attachment and offer the surgeon silk like handling coupled with extreme strength. In 1985 Gore won Britain's Prince Philip Award for Polymers in the Service of Mankind. The award recognized especially the life-saving achievements of the Gore medical products team.

The Industrial Products Division produces a number of products including sealants, filter bags, cartridges, clothes, and coatings. These products tend to have specialized and critical applications. Gore's reputation for quality appears to influence the industrial purchasers of these products.

The Gore Fabrics Division, which is the largest division, supplies laminates to manufacturers of foul-weather gear, ski wear, running suits, footwear, gloves, and hunting and fishing garments. Firefighters and U.S. Navy pilots wear GORE-TEX fabric gear, as do some Olympic athletes. And the U.S. Army has adopted a total garment system built around a GORE-TEX fabric component.

GORE-TEX membrane has 9 billion pores randomly dotting each square inch and is feather light. Each pore is 700 times larger than a water vapor molecule yet thousands of times smaller than a water droplet. Wind and water cannot penetrate the pores, but perspiration can escape. As a

4

result, fabrics bonded with GORE-TEX membrane are waterproof, windproof, and breathable. The laminated fabrics bring protection from the elements to a variety of products-from survival gear to high-fashion rain wear. Recently, other manufacturers including 3M have brought out products to compete with GORE-TEX fabrics. Gore, however, continues to have a commanding share of this market.

Gore wanted to avoid smothering the company in thick layers of formal "management." He felt that they stifled individual creativity. As the company grew, he knew that a way had to be devised to assist new people to get started and to follow their progress. This was seen as particularly important when it came to compensation. Gore has developed what they call their 41sponsor" program to meet these needs. When people apply to Gore, they are initially screened by personnel specialists as in most companies. For those who meet the basic criteria, there are interviews with other Associates. Before anyone is hired, an Associate must agree to be their sponsor. The sponsor is both a coach and an advocate who takes a personal interest in the new Associate's contributions, problems, and goals. He or she tracks the new Associate's progress, helping and encouraging, dealing with weaknesses and concentrating on strengths. Sponsoring is not a short-term commitment. All Associates have sponsors, and many have more than one. When individuals are hired initially, they will have a sponsor in their immediate work area. If they move to another area, they will have a sponsor in that work area. As Associates' responsibilities grow, they may acquire additional sponsors.

Because the sponsoring program looks beyond conventional views of what makes a good Associate, some anomalies occur in the hiring practices. Gore has proudly told the story of "a very young man" of 84 who walked in, applied, and spent five very good years with the company. The individual had 30 years of experience in the industry before joining Gore. His other Associates had no problems accepting him, but the personnel computer did. It insisted that his age was 48. The individual success stories at Gore come from diverse backgrounds.

An internal memo by Gore described three kinds of sponsorship expected and how they might work as follows:

A single sponsor can perform any one or all three kinds of sponsorship. A sponsor is a friend and an Associate. All the supportive aspects of the

friendship are also present. Often (perhaps usually) two Associates sponsor each other as advocates.

In addition to the sponsor program, Gore Associates are asked to follow four guiding principles:

The four principles are often referred to as fairness, freedom, commitment, and waterline. The waterline terminology is drawn from an analogy to ships. If someone pokes a hole in a boat above the waterline, the boat will be in relatively little real danger. If someone pokes a hole below the waterline, however, the boat is in immediate danger of sinking.

The company's operating principles were put to a test in 1978. By this time, the word about the qualities of GORE-TEX fabric were being spread throughout the recreational and outdoor markets. Production and shipment had begun in volume. At first a few complaints were heard, then some of the clothing started coming back. Finally, much of the clothing was being returned. The trouble was that the GORE-TEX fabric was leaking. Waterproofness was one of the two major properties responsible for GORE-TEX fabric's success. The company's reputation and credibility were on the line. Peter W. Gilson, who led Gore's Fabrics Division said, "It was an incredible crisis for us at that point. We were really starting to attract attention; we were taking off-and then this." Gilson and a number of his Associates in the next few months made many of those below-the-waterline decisions.

First, the researchers determined that oils in human sweat were responsible for clogging the pores in the GORE-TEX fabric and altering the surface tension of the membrane. Thus, water could pass through. They also discovered that a good washing could restore the waterproof property. At first this solution, known as the "Ivory Snow Solution," was accepted.

A single letter from "Butch," a mountain guide in the Sierras, changed the company's position. Butch wrote that he had been leading a group and, "My parka leaked and my life was in danger." As Gilson said, "That seared the hell out of us. Clearly our solution was no solution at all to someone on a mountaintop." All of the products were recalled. "We bought back, at our own expense, a fortune in pipeline material-anything that was in the stores, at the manufacturers, or anywhere else in the pipeline," Gilson said.

In the meantime, Gore and other Associates set out to develop a permanent fix. One month later, a second-generation GORE-TEX fabric had been developed. Gilson, furthermore, told dealers that if at any time a customer returned a leaky parka, they should replace it and bill the company. The replacement program alone cost Gore roughly $4 million.

6

Case 6-13 W L. Gore & Associates, Inc.

W. L. Gore & Associates has not only been described as un-managed but also as un-structured. Gore referred to the structure as a lattice organization. A lattice structure is portrayed in Exhibit I and has the following characteristics:

1. Direct lines of communication are direct, person to person, with no intermediary.

The structure within the lattice is described by the people at Gore as complex and evolves from interpersonal interactions, self-commitment to group

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known responsibilities, natural leadership, and group-imposed discipline. Gore once explained this structure by saying, "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." Another description of what is occurring within the lattice structure is constant cross-area teams-the equivalent of quality circles going on all the time. When a puzzled interviewer told Gore that he was having trouble understanding how planning and accountability worked, Gore replied with a grin, "So am I. You ask me how it works-every which way."

The lattice structure does have some similarities to traditional management structures. For instance, a group of 30 to 40 Associates who make up an advisory group meets every six months to review marketing, sales, and production plans. As Gore conceded, "The abdication of titles and rankings can never be 100 percent."

One thing that might strike an outsider in the meetings and the other places in Gore's organization is the informality and amount of humor. Meetings tend to be only as long as necessary. As Trish Hearn, an Associate in Newark, Delaware, said, "No one feels a need to pontificate." Words such as responsibilities and commitments are, however, commonly heard. This is an organization that seems to take what it does very seriously, but its members do not take themselves too seriously.

Gore, for a company of its size, may have the shortest organizational pyramid. The pyramid consists of Bob Gore, the late Bill Gore's son, as president, and Vieve, Gore's widow, as secretary-treasurer. All the other members of the Gore organization are referred to as Associates. Words such as employees, subordinates, and managers are taboo in the Gore culture.

Gore does not have any managers, but it does have many leaders. Gore described in an internal memo the kinds of leadership and the role of leadership as follows:

8

Case 6-13 W. L. Gore & Associates, Inc.

Many other aspects of Gore's operations are arranged along egalitarian lines. The parking lot does not have any reserved parking spaces except for customers and the handicapped. There is only one area in each plant in which to eat. The lunchroom in each new plant is designed to be a focal point for Associate interaction. Dave McCarter of Phoenix explained, "The design is no accident. The lunchroom in Flagstaff has a fireplace in the middle. We want people to like to be here." The location of the plant is also no accident. Sites are selected based on transportation access, a nearby university, beautiful surroundings, and climate appeal. Land cost is never a primary consideration. McCarter justified the selection by stating, "Expanding is not costly in the long ran. The loss of money is what you make happen by stymieing people into a box."

Not all people function well under such a system, especially initially. For those accustomed to a more structured work environment, there are adjustment problems. As 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

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good of the operation." The vast majority of the new Associates, after some initial floundering, adapt quickly.

For those who require more structured working conditions and cannot adapt, Gore's flexible workplace is not for them. According to Gore, for those few "it's an unhappy situation, both for the Associate and the sponsor. If there is no contribution, there is no paycheck." Anita McBride, an Associate in Phoenix, said, "It's not for everybody. People ask me do we have turnover, and yes we do have turnover. What you're seeing looks like utopia, but it also looks extreme. If you finally figure the system, it can be real exciting. If you can't handle it, you gotta go. Probably by your own choice, because you're going to be so frustrated."

In rare cases an Associate "is trying to be unfair," in Gore's own words. In one case the problem was chronic absenteeism, and in another the individual was caught stealing. "When that happens, all hell breaks loose," said Gore. "We can get damned authoritarian when we have to."

Over the years, Gore has faced a number of unionization drives. The company neither tries to dissuade an Associate from attending an organizational meeting nor retaliates when flyers are passed out. Each attempt has been unsuccessful. None of the plants have been organized to date. Gore believed that no need exists for third-party representation under the lattice structure: "Why would Associates join a union when they own the company? It seems rather absurd."

Overall, the Associates appear to have responded positively to the Gore system of un-management and un-structure. Gore estimated the year before he died that "the profit per Associate is double" that of Du Pont. However, the lattice structure is not without its critics. As 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, the University of Pittsburgh's senior resident, reported that a GORE-TEX arterial graft had developed an aneurysm. An aneurysm is a bubblelike protrusion that is life-threatening. If it continues to expand, it will explode. Obviously, this kind of problem has to be solved quickly and permanently.

Within only a few days of Dr. Campbell's first report, he flew to Newark to present 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 12 tries, he had developed a permanent solution; in other words, a potentially damaging problem to both patients and the company was resolved. Furthermore, Hubis's redesigned graft has gone on to win widespread acceptance in the medical community.

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Case 6-13 W. L. Gore & Associates, Inc.

Another critic, Eric Reynolds, founder of Marmot Mountain Works Ltd. of Grand Junction, Colorado, and major Gore customer, said "I think the lattice has its problems with the day-to-day nitty-gritty of getting things done on time and out the door. I don't think Bill realizes how the lattice system affects customers. I mean, after you've established a relationship with someone about product quality, you can call up one day and suddenly find that someone new to you is handling your problem. It's frustrating to find a lack of continuity." He went on to say, "But I have to admit that I've personally seen at Gore remarkable examples of people coming out of nowhere and excelling."

Gore was asked a number of times if the lattice structure could be used by other companies. His answer was "No. For example, established companies would find it very difficult to use the lattice. Too many hierarchies would be destroyed. When you remove titles and positions and allow people to follow who they want, it may very well be someone other than the person who has been in charge. The lattice works for us, but it's always evolving. You have to expect problems." He maintained that the lattice system works best when put in place in start-up companies by dynamic entrepreneurs.

Research and development like everything else at Gore are unstructured. There is no formal research and development department. Yet the company holds many patents, although most inventions are held as proprietary or trade secrets. Any Associate can ask for a piece of raw PTFE, known as a silly worm, with which to experiment. Gore believed that all people had it within themselves to be creative.

The best way to understand how research and development works is to see how inventiveness has previously occurred at Gore. By 1969, the wire and cable division was facing increased competition. Gore began to look for a way to straighten out the PTFE molecules. As he said, "I figured out that if we ever unfold those molecules, get them to stretch out straight, we'd have a tremendous new kind of material." He thought that if PTFE could be stretched, air could be introduced into its molecular structure. The result would be greater volume per pound of raw material without affecting performance. Thus, fabricating costs would be reduced and the profit margins would be increased. Going about this search scientifically with his son, Bob, Gore heated rods of PTFE to various temperatures and then slowly stretched them. Regardless of the temperature or how carefully they stretched them, the rods broke.

11

yanked at one of the rods violently. To his surprise, it did not break. He tried it again and again with the same results. The next morning Bob demonstrated his breakthrough to his father, but not without some drama. As Gore recalled, "Bob wanted to surprise me so he took a rod and stretched it slowly. Naturally, it broke. Then he pretended to get mad. He grabbed another rod and said, 'Oh the hell with this' and gave it a pull. It didn't break-he'd done it." The new arrangement of molecules changed not only the wire and cable division but led to the development of GORE-TEX fabric and what is now the largest division at Gore plus a host of other products.

Initial field-testing of GORE-TEX fabric was conducted by Gore and Vieve in the summer of 1970. Vieve made a hand-sewn tent out of patches of GORE-TEX fabric. They took it on their annual camping trip to the Wind River Mountains in Wyoming. The very first night in the wilderness, they encountered a hailstorm. The hail tore holes in the top of the tent, but the bottom filled up like a bathtub from the rain. As Gore stated, "At least we knew from all the water that the tent was waterproof. We just need to make it stronger, so it could withstand hail."

The second largest division began on the ski slopes of Colorado. Gore was skiing with his friend Dr. Ben Eiseman of the Denver General Hospital. As Gore told the story, "We were just to start a run when I absentmindedly pulled a small tubular section of GORE-TEX out of my pocket and looked at it. 'What is that stuff? Ben asked. So I told him about its properties. 'Feels great,' he said. 'What do you use it for?"Got no idea,' I said. 'Well give it to me,' he said, 'and I'll try it in a vascular graft on a pig.' Two weeks later, he called me up. Ben was pretty excited. 'Bill,' he said, 'I put it in a pig and it works. What do I do now? I told him to get together with Pete Cooper in our Flagstaff plant and let them figure it out." Now hundreds of thousands of people throughout the world walk around with GORE-TEX vascular grafts.

Every Associate is encouraged to think, experiment, and follow a potentially profitable idea to its conclusion. For example, at a plant in Newark, Delaware, a machine that wraps thousands of feet of wire a day was designed by Fred L. Eldreth, an Associate with a third-grade education. The design was done over a weekend. Many other Associates have contributed their ideas through both product and process breakthroughs. Without a research and development department, innovations and creativity work very well at Gore. The year before he died, Gore claimed, "The creativity, the number of patent applications and innovative products is triple" that of Du Pont.

Ron Hill, an Associate in Newark, said, Gore "will work with Associates who want to advance themselves." Associates are offered many in-house training opportunities. They do tend to be technical and engineering focused because of the type of organization Gore is, but it also offers in

12

house programs in leadership development. In addition, the company has cooperative programs with their Associates to obtain training through universities and other outside providers. Gore will pick up most of the costs for the Associates. The emphasis in Associate development as in many parts of Gore is that the Associate must take the initiative.

The products that Gore makes are arranged into four divisions-electronics, medical, industrial, and fabrics. The Electronic Products Division produces wire and cable for various demanding applications in aerospace, defense, computers, and telecommunications. The wire and cable products have earned a reputation for unequaled reliability. Most of the wire and cable is used where conventional cables cannot operate. For example, Gore wire and cable assemblies were used in the space shuttle Columbia because they would stand the heat of ignition and the cold of space. Gore wire was used in the moon vehicle shuttle that scooped up samples of moon rocks, and Gore's microwave coaxial assemblies have opened new horizons in microwave technology. Back on earth, the electrical wire products help make the world's fastest computers possible because electrical signals can travel through them at up to 90 percent of the speed of light. Because of the physical properties of the GORE-TEX material used in their construction, the electronic products are used extensively in defense systems, electronic switching for telephone systems, scientific and industrial instrumentation, microwave communications, and industrial robotics. Reliability is a watchword for all Gore products.

In medical products, reliability is literally a matter of life and death. GORE-TEX expanded PTFE is an ideal material used to combat cardiovascular disease. When human arteries are seriously damaged or plugged with deposits that interrupt the flow of blood, the diseased portions can often be replaced with GORE-TEX artificial arteries. GORE-TEX arteries and patches are not rejected by the body because the patient's own tissues grow into the graft's open porous spaces. GORE-TEX vascular grafts come in many sizes to restore circulation to all areas of the body. They have saved limbs from amputation and saved lives. Some of the tiniest grafts relieve pulmonary problems in newborns. GORE-TEX-expanded PTFE is also used to help people with kidney disease. Associates are developing a variety of surgical reinforcing membranes, known as GORE-TEX cardiovascular patches, which can literally mend broken hearts, by patching holes and repairing aneurysms.

Through the Fabrics Division, Gore technology has traveled to the roof of the world on the backs of renowned mountaineers. GORE-TEX fabric is waterproof and windproof yet breathable. Those features have qualified GORE-TEX fabric as essential gear for mountaineers and adventurers facing extremely harsh environments. The PTFE membrane blocks wind and

water but allows sweat to escape, which makes GORE-TEX fabric ideal for anyone who works or plays hard in foul weather. Backpackers have discovered that a single lightweight GORE-TEX fabric shell will replace a poplin jacket and a rain suit and dramatically outperform both. Skiers, sailors, runners, bicyclists, hunters, fishermen, and other outdoor enthusiasts have also become big customers of garments made of GORE-TEX fabric. General sportswear, as well as women's fashion footwear and handwear of GORETEX fabric, are as functional as they are beautiful. Boots and gloves, both for work and recreation, are waterproof thanks to GORE-TEX liners. GORE-TEX garments are even becoming standard items issued to many military personnel. Wetsuits, parkas, pants, headgear, gloves, and boots keep the troops warm and dry in foul-weather missions. Other demanding jobs also require the protection of GORE-TEX fabric because of its unique combination of chemical and physical properties.

The GORE-TEX fibers products, like the fabrics, end up in some pretty tough places. The outer protective layer of NASA's spacesuit is woven from GORE-TEX fibers. GORE-TEX fibers are in many ways the ultimate in synthetic fibers. They are impervious to sunlight, chemicals, heat, and cold. They are strong and uniquely resistant to abrasion.

The Industrial Products Division produces joint sealant, a flexible cord of porous PTFE that can be applied as a gasket to the most complex shapes, sealing them to prevent leakage of corrosive chemicals even at extreme temperature and pressure. Steam valves packed with GORE-TEX valve-stem packing are guaranteed for the life of the valve when used properly. Industrial filtration products, such as GORE-TEX filter bags, reduce air pollution and recover valuable solids from gases and liquids more completely than alternatives; they also do it more economically. They could make coal-burning plants completely smoke free, contributing to a cleaner environment.

The coatings division applies layers of PTFE to steel castings and other metal articles by a patented process. Called Fluroshield' protective coatings, this fluorocarbon polymer protects processing vessels in the production of corrosive chemicals.

GORE-TEX microfiltration products are used in medical devices, pharmaceutical manufacturing, and chemical processing. These membranes remove bacteria and other microorganisms from air or liquids making them sterile and bacteria free.

Compensation at Gore takes three forms: salary, profit sharing, and an Associates' Stock Ownership Program (ASOP)." Entry-level salary is in the middle for comparable jobs. According to Sally Gore, daughter-in-law of the

"Gore's ASOP is similar legally to an ESOP (Employee Stock Ownership Plan). Gore simply does not use the word employee in any of its documentation.

founder, "We do not feel we need to be the highest paid. We never try to steal people away from other companies with salary. We want them to come here because of the opportunities for growth and the unique work environment." Associates' salaries are reviewed at least once a year and more commonly twice a year. The reviews are conducted by a compensation team for most workers in the facility in which they work. The sponsors for all Associates act as their advocate during this review process. Prior to meeting with the compensation committee, the sponsor checks with customers or whoever uses the results of the person's work to find out what contribution has been made. In addition, the evaluation team will consider the Associate's leadership ability, his or her willingness to help others to develop to their fullest.

Besides salaries, Gore has profit-sharing and ASOP plans for all Associates. Profit sharing typically occurs twice a year but is dependent on profitability. The amount also depends on time in service and annual rate of pay. In addition, the firm buys company stock equivalent to 15 percent of the Associates' annual income and places it in an ASOP retirement fund. Thus, an Associate becomes a stockholder after being at Gore for one year. Gore wanted every Associate to feel that they themselves are the owners.

The principle of commitment is seen as a two-way street. Gore tries to avoid layoffs. Instead of cutting pay, which is seen at Gore as disastrous to morale, the company has used a system of temporary transfers within a plant or cluster of plants and voluntary layoffs.

Gore's marketing strategy is based on making the determination that it can offer the best-valued products to a marketplace, that people in that marketplace appreciate what it manufactures, and that Gore can become a leader in that area of expertise. The operating procedures used to implement the strategy follow the same principles as other functions at Gore.

First, the marketing of a product revolves around a leader who is referred to as a "product champion." According to Dave McCarter, "You've got to marry your technology with the interests of your champions, as you've got to have champions for all these things no matter what. And that's the key element within our company. Without a product champion you can't do much anyway, so it is individually driven. If you get a person interested in a particular market or a particular product for the marketplace, then there is no stopping them."

Second, a product champion is responsible for marketing the product through commitments with sales representatives. "We have no quota system," said McCarter. "Our marketing and our salespeople make their own commitments as to what their forecasts are. There is no person sitting around telling them that that is not high enough, you have to increase it by 10 percent, or whatever somebody feels is necessary. You are expected to meet your commitment, which is your forecast, but nobody is going to tell

15

you to change it.... There is no order of command, no chain involved. These are groups of independent people who come together to make unified commitments to do something and sometimes when they can't make those agreements.... You may pass up a market place.... but that's OK because there's much more advantage when the team decides to do something."

Third, the sales representatives are on salary. They are not on commission. They participate in the profit-sharing and ASOP plans in which all other Associates participate.

As in other areas of Gore, individual success stories come from diverse backgrounds. McCarter related one of these success stories as follows:

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company reputation probably is most important. You have to have a good reputation with your company." He went on to say that without a good reputation, a company's products would not be considered seriously by many industrial customers. In other words, the sale is often made before the representative calls. Using its marketing strategies, Gore has been very successful in securing a market leadership position in a number of areas ranging from waterproof outdoor clothing to vascular grafts.

Gore is a closely held private corporation. Financial information is as closely guarded as proprietary information on products and processes. About 90 percent of the stock is owned by Associates who work at Gore. According to Shanti Mehta, an Associate, Gore's return on assets and sales rank it among the top 10 percent of the Fortune 500 companies. According to another source, Gore is working just fine by any financial measure. It has had 31 straight years of profitability and positive return on equity. The compounded growth rate for revenues at Gore from 1969 to 1989 was over 18 percent discounted for inflation. In comparison, only 11 of the 200 largest companies in the Fortune 500 have had positive return on equity each year from 1970 to 1988, and only two other companies missed only one year. The revenue growth rate for these 13 companies was 5.4 percent compared to 2.5 percent for the entire Fortune 500. Moreover, in 1969 Gore's total sales were about $6 million and in 1990, $660 million. This growth has been financed without debt.

Some analysts are beginning to question whether a large, multinational organization such as Gore can prosper in the 1990s without formal strategic planning and with such an unstructured, unusual management style. Do you feel the analysts' concerns are legitimate, or would you conclude from the case that Gore's strategic management process, or lack thereof, is effective? In the event that Gore's top management decides to institute strategic planning, prepare a document that gives an overview of the benefits and potential problems of the process in light of Gore's unorthodox operating principles. Which principles, if any, would need changing? Outline a plan of action for Gore to implement strategic management.'

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BIBLIOGRAPHY

Aburdene, Patricia, and John Nasbitt. Re-inventing the Corporation. New York: Warner Books, 1985.

Angrist, S. W. "Classless Capitalists." Forbes, May 9, 1983, pp. 123-24.

Franlesca, L. "Dry and Cool." Forbes, August 27, 1984, p. 126.

"The Future Workplace." Management Review, July 1986, pp. 22-23.

Hoeff, J. "A Company Where Everybody Is the Boss." Business Week, April 15, 1985, p. 98.

McKendrick, Joseph. "The Employees as Entrepreneur." Management World, January 1985, pp. 12-13.

Milne, M. J. "The Gorey Details." Management Review, March 1985, pp. 16-17.

Posner, B. G. "The First Day on the Job." Inc., June 1986, pp. 73-75.

Price, Kathy. "Firm Thrives without Boss." AZ Republic, February 2, 1986.

Rhodes, Lucien, "The Un-manager." Inc., August 1982, p. 34.

Simmons, J. "People Managing Themselves: Un-management at W. L. Gore Inc." Journalfor Quality and Participation, December 1987,
    pp. 14-19.

Trachtenberg, J. A. "Give Them Stormy Weather." Forbes, March 24, 1986, pp. 172-74.

Ward, Alex. "An All-Weather Idea." The New York Times Magazine, November 10, 1985, sec. 6.

Weber, Joseph. "No Bosses. And Even 'Leaders' Can't Give Orders." Business Week, December 10, 1990, pp. 196-97.

"Wilbert L. Gore." Industry Week, October 17, 1983, pp. 48-49.

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