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Developing Global Teams to Meet 21st-Century

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Developing Global Teams to Meet 21st-Century
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  Confirming Pages     different languages, and live in quite different cultures. The diversity among team members, combined with the company’s emphasis on growth and globalized operations, presented sig-nificant challenges for W. L. Gore as it strove to maintain a family-like, entrepreneurial culture. According to Terri Kelly, the president of Gore and a 25-year associate: 2   In the early days, our business was largely con-ducted at the local level. There were global opera-tions, but most relationships were built regionally, and most decisions were made regionally. That picture has evolved dramatically over the last 20 years, as businesses can no longer be defined by brick and mortar. Today, most of our teams are spread across regions and continents. Therefore, the decision-making process is much more global and virtual in nature, and there’s a growing need to build strong relationships across geographical boundaries. The globalization of our business has been one of the biggest changes I’ve seen in the last 25 years. Elements of the culture at Gore are captured in Exhibit 1 . The core belief in the need to take the long-term view in business situations, and to make and keep commitments, drove cooperation among individuals and small teams. This was sup-ported by key practices that replaced traditional, hierarchical structure with flexible relationships and a sense that all workers were in the same boat. I n 2010, W. L. Gore & Associates celebrated its 52nd year in business. Founded in 1958 by Bill and Vieve Gore in the basement of their home, Gore had grown into a global enterprise famous for its high performance fabrics, medical products, and next-generation electronic prod-ucts, as well as its use of self-empowered teams of employees (called associates at Gore). In its ear-lier years, the company had endeavored to restrict the size of its different corporate facilities to 200 associates or fewer, a practice that helped keep the number of teams at a given facility to a manage-able number and facilitated cross-team coordina-tion. More recently, however, to better cope with the challenges of a global marketplace, increasing numbers of teams were composed of associates in different facilities, sometimes facilities that were spread across three continents; the coordination of team members working in different facilities was enabled by online communication. In 2010, Gore’s products were sold on six con-tinents and used on all seven continents, as well as under the ocean and in space. The company global operations required teams of associates to tightly coordinate their activities in developing, producing, and marketing products to custom-ers across the world. Currently teams were orga-nized primarily along product lines, with only a few teams consisting of members working in the same Gore facility. As a consequence, it was com-mon for team members to be separated by thou-sands of miles, work in multiple time zones, speak Frank Shipper Salisbury University Charles C. Manz University of Massachusetts–Amherst Greg L. Stewart University of Iowa  CA SE 2   6    W. L. Gore & Associates: Developing Global Teams to Meet 21st-Century Challenges 1   Copyright © 2010 by the case authors. All rights reserved. tho12729_case26_C391 C405.indd C 391 tho12729_case26_C391-C405.indd C-391 14/12/10 3:01 PM 14/12/10 3:01 PM  Confirming Pages C-392 Part 2 Cases in Crafting and Executing Strategy   The four principles were referred to as  fair-ness,    freedom,   commitment,  and waterline.  The waterline principle was drawn from an analogy to ships. If someone poked a hole in a boat above the waterline, the boat would be in relatively little real danger. If, however, someone poked a hole below the waterline, the boat would be in imme-diate danger of sinking. The expectation was that “waterline” issues would be discussed across teams, plants, and continents as appropriate before any decisions about them were made. Gore still emphasized this principle even though team members who needed to share in the decision-making process were now spread across the globe. Commitment was spoken of frequently at Gore. The commitment principle’s primary emphasis was on the freedom associates had to make their own commitments, rather than having The ultimate focus was on empowering talented associates to deliver highly innovative products. Despite substantial growth, the core values had not changed at Gore. The objective of the company set forth by the founder Wilbert L. (Bill) Gore, “To make money and have fun,” was still part of the Gore culture. Associates around the world were asked to follow the company’s four guiding principles:  1. Try to be fair. 2. Encourage, help, and allow other associates to grow in knowledge, skill, and scope of activity and responsibility. 3. Make your own commitments, and keep them. 4. Consult with other associates before taking actions that may be “below the waterline.” Exhibit 1 W. L. Gore & Associates’ Culture Key DisciplinesIP ProtectionCore TechnologyCommitmentInvestments,Not ExpensesProduct ConceptStatementsSponsorshipValue PricingKnowledge-BasedDecision-MakingPracticesProfit SharingOwnershipthrough “ASOP”Contribution/ CompensationProcessCluster ConceptThree-Legged StoolCommitments,Not TitlesCulture Survey Core ValuesInnovationand CreativityHigh Ethicsand IntegrityDirect One-to-OneCommunicationLatticeDeep KnowledgeNatural LeadershipPersonal RealtionshipsBuilt on TrustFitness for UseCompensation Basedon Contribution Early InfluencesMaslow’s Hierarchyof NeedsMcGregor’sTheory X vs. YDuPont Task ForceCreating anEnterprise The Gore Culture “The objective of the Enterprise is tomake money and have fun doing so.”  –Bill Gore What We BelieveBelief in the individualPower of small teamsAll in the same boatLong-term view External InfluencesCustomersEconomic ClimateLocal CulturesGlobalizationGovernmentSuppliersTechnologyCompetitionLabor MarketEnvironment GuidingPrinciplesFreedomFairnessCommitmentWaterline GORE and designs are trademarks ofW.L. Gore & Associates, Inc. All rights reserved. © 2008 W.L. Gore & Associates, Inc. Printed in USA. Creative TechnologiesWorldwide tho12729_case26_C391 C405.indd C 392 tho12729_case26_C391-C405.indd C-392 14/12/10 3:01 PM 14/12/10 3:01 PM  Confirming Pages  Case 26  W. L. Gore & Associates: Developing Global Teams to Meet 21st-Century Challenges C-393 engineering in 1933 and a master of science in physical chemistry in 1935. He began his pro-fessional career at American Smelting and Refining in 1936; moved to Remington Arms, a DuPont subsidiary, in 1941; and then moved to DuPont’s headquarters in 1945. He held posi-tions as research supervisor and head of opera-tions research. While at DuPont, he felt a sense of excited commitment, personal fulfillment, and self-direction while working with a task force to develop applications for PTFE. Having followed the development of the electronics industry, he felt that PTFE had ideal insulating characteristics for use with such equip-ment. He tried many ways to make a PTFE-coated ribbon cable, but with no success until a breakthrough in his home basement laboratory. One night, while Bill was explaining the problem to his 19-year-old son, Bob, the young Gore saw some PTFE sealant tape and asked his father, “Why don’t you try this tape?” Bill explained that everyone knew that you could not bond PTFE to itself. After Bob went to bed, however, Bill remained in the basement lab and proceeded to try what conventional wisdom said could not be done. At about 5:00 a.m., Bill woke up Bob, wav-ing a small piece of cable around and saying excit-edly, “It works, it works.” The following night father and son returned to the basement lab to make ribbon cable insulated with PTFE. Because the idea came from Bob, the patent for the cable was issued in his name. After a while, Bill Gore came to realize that DuPont wanted to remain a supplier of raw mate-rials for industrial buyers and not a manufac-turer of high-tech products for end-use markets. Bill and Vieve began discussing the possibility of starting their own insulated wire and cable busi-ness. On January 1, 1958, their wedding anniver-sary, they founded W. L. Gore. The basement of their home served as their first facility. After fin-ishing breakfast, Vieve turned to her husband of 23 years and said, “Well, let’s clear up the dishes, go downstairs, and get to work.” When Bill Gore (a 45-year-old with five children to support) left DuPont, he put aside a career of 17 years and a good, secure salary. To finance the first two years of their new business, he and Vieve mortgaged their house and took $4,000 from savings. All their friends cautioned them against taking on such a big financial risk. others assign them to projects or tasks. But commitment could also be viewed as a mutual commitment between associates and the enter-prise. Associates worldwide committed to mak-ing contributions to the company’s success. In return, the company was committed to providing a challenging, opportunity-rich work environ-ment that was responsive to associate needs and concerns. BACKGROUND Gore was formed by Wilbert L. (Bill) Gore and his wife, Genevieve (Vieve) Gore, in 1958. The idea for the business sprang from Bill Gore’s personal, technical, and organizational experiences at E. I. du Pont de Nemours & Co. and, particularly, his involvement in the characterization of a chemi-cal compound with unique properties. The com-pound, called polytetrafluorethylene (PTFE), had come to be marketed by DuPont under the Teflon brand name. Gore saw a wide variety of poten-tial applications for this unique new material, and when DuPont showed little interest in pursuing most of them directly, he decided to form his own company and start pursuing the concepts himself. Thus, Gore became one of DuPont’s first custom-ers for this new material. Since then, W. L. Gore & Associates had evolved into a global enterprise, with annual revenues of more than $2.5 billion, supported by more than 8,500 associates worldwide. This placed Gore at number 180 on Forbes  magazine’s 2008 list of the 500 largest private companies in the United States. The enterprise’s unique, and now famous, culture and leadership practices had helped make Gore one of only a select few companies to appear on all of the U.S. “100 Best Companies to Work For” rankings since they were introduced in 1984. Bill Gore was born in Meridian, Idaho, in 1912. By age six, according to his own account, he was an avid hiker in Utah. Later, at a church camp in 1935, he met Genevieve Walton, his future wife. In their eyes, the marriage was a part-nership. He would make breakfast and Vieve, as everyone called her, would make lunch. The part-nership lasted a lifetime. Bill Gore attended the University of Utah; he earned a bachelor of science in chemical tho12729_case26_C391 C405.indd C 393 tho12729_case26_C391-C405.indd C-393 14/12/10 3:01 PM 14/12/10 3:01 PM  Confirming Pages C-394 Part 2 Cases in Crafting and Executing Strategy  it.” The new arrangement of molecules not only changed the Wire and Cable Division but also led to the development of GORE-TEX fabric and many other products. In 1986, Bill Gore died while backpacking in the Wind River Mountains of Wyoming. Vieve Gore continued to be involved actively in the company and served on the board of directors until her death at 91 in 2005. W. L. Gore had only four presidents in its 50-year history. Bill Gore served as the president from the enterprise’s founding in 1958 until 1976. At that point, his son Bob became president and CEO. Bob had been an active member of the firm from the time of its founding, most recently as chairman of the board of directors. He served as president until 2000, when Chuck Carroll was selected as the third president. In 2005, Terri Kelly succeeded Carroll. As with all the presidents after Bill Gore, Kelly was a longtime employee: she had been with Gore for 22 years before becoming president. The Gore family established a unique culture that continued to be an inspiration for associates. For example, Dave Gioconda, a current product specialist, recounted meeting Bob Gore for the first time—an experience that reinforced the com-pany’s egalitarian culture: Two weeks after I joined Gore, I traveled to Phoe-nix for training. . . . I told the guy next to me on the plane where I worked, and he said, “I work for Gore, too.” “No kidding?” I asked. “Where do you work?” He said, “Oh, I work over at the Cherry Hill plant.” . . . I spent two and a half hours on this plane having a conversation with this gentleman who described himself as a technologist and shared some of his experiences. As I got out of the plane, I shook his hand and said, “I’m Dave Gioconda, nice to meet you.” He replied, “Oh, I’m Bob Gore.” That experience has had a profound influ-ence on the decisions that I make. Due to the leadership of Bill, Vieve, Bob, and many others, W. L. Gore was selected as one of the “100 Best Companies to Work For” in 2009 by Fortune  magazine for the 12th consecutive year. In addition, the company was included in all three 100 Best Companies to Work For in America  books (1984, 1985 and 1993). It was one of only a select few companies to appear on all 15 lists. Gore had been selected also as one of the best The first few years were challenging. Some of the young company’s associates accepted stock in the company in lieu of salary. Family members who came to help with the business lived in the home as well. At one point, 11 associates were liv-ing and working under one roof. One afternoon, while sifting PTFE powder, Vieve received a call from the City of Denver’s water department. The caller wanted to ask some technical questions about the ribbon cable and asked for the prod-uct manager. Vieve explained that he was not in at the moment. (Bill and two other key associates were out of town.) The caller asked next for the sales manager and then for the president. Vieve explained that “they” were also not in. The caller finally shouted, “What kind of company is this anyway?” With a little diplomacy the Gores were eventually able to secure an order from Denver’s water department for around $100,000. This order put the company over the start-up hump and onto a profitable footing. Sales began to take off. During the decades that followed, W. L. Gore developed a number of new products derived from PTFE, the best known of which was GORE-TEX fabric. The development of GORE-TEX fabric, one of hundreds of new products that followed a key discovery by Bob Gore, was an example of the power of innovation. In 1969, Gore’s Wire and Cable Division was facing increased competi-tion. Bill Gore began to look for a way to expand PTFE: “I figured out that if we could ever unfold those molecules, get them to stretch out straight, we’d have a tremendous new kind of material.” The new PTFE material would have more volume per pound of raw material with no adverse effect on performance. Thus, fabricating costs would be reduced and profit margins increased. Bob Gore took on the project; he heated rods of PTFE to various temperatures and then slowly stretched them. Regardless of the temperature or how care-fully he stretched them, the rods broke. Working alone late one night after countless failures, Bob in frustration stretched one of the rods violently. To his surprise, it did not break. He tried it again and again with the same results. The next morn-ing, Bill Gore recalled, “Bob wanted to surprise me so he took a rod and stretched it slowly. Natu-rally, 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 tho12729_case26_C391 C405.indd C 394 tho12729_case26_C391-C405.indd C-394 14/12/10 3:01 PM 14/12/10 3:01 PM  Confirming Pages  Case 26  W. L. Gore & Associates: Developing Global Teams to Meet 21st-Century Challenges C-395  The thing I love about Gore is that we have four very diverse divisions. During my time here, I’ve noticed that when one or two divisions are down, you always have one, two or three that are up. I call them cylinders. Sometimes all four cylinders are working really well; not all the time though. Normally it’s two or three, but that’s the luxury that we have. When one is down—it’s good to know that another is up. At the end of 2007, all four divisions were performing well. Having four diversified divi-sions not only protected against swings in any one industry, but it also provided multiple investment opportunities. Entering 2008, Gore was investing in a large number of areas, with the heaviest area of investment in the Medical Products Division. This was a conscious choice, as these opportu-nities were judged to be the largest intersection between Gore’s unique capabilities and some very large, attractive market needs. As Brad Jones, an enterprise leader, said, “All opportunities aren’t created equal, and there’s an awful lot of opportu-nity that’s screaming for resources in the medical environment.” At the same time, the leadership at Gore scrutinized large investments so that those in what Brad Jones referred to as “big burn” proj-ects were not made unless there was a reasonable expectation of a payoff. Developing Quality Products by Creating and Protecting Core Technology The competitive objective of Gore was to use core technology derived from PTFE and ePTFE to create highly differentiated and unique products. In every product line, the goal was not to produce the lowest-cost goods but rather to create the highest-quality goods that met and exceeded the needs of customers. Of course, Gore worked hard to maintain competitive pricing, but the source of competitive advantage was clearly quality and differentiation. Gore was a company built on technological innovations. Leaders at Gore often referred to a three-legged stool to explain how they integrated opera-tions. As shown in Exhibit 2 , the three legs of the stool were technology, manufacturing, and sales. For each product, the legs of the stool were tied together by a product specialist. For instance, a product specialist might coordinate efforts to companies to work for in France, Germany, Italy, Spain, Sweden, and the United Kingdom. In 2009 Gore had annual revenues of about $2.5 billion and approximately 9,000 employees located in 30 countries worldwide. 3  It was one of the 200 largest privately held U.S. compa-nies; the company’s common stock was owned by members of the Gore family and by associ-ates. Because of its privately held status, Gore did not make its financial results public. It did share, however, financial results with all associates on a monthly basis. Gore executives believed that pri-vate ownership reinforced its strongly-ingrained cultural emphasis on “taking a long term view” when assessing business situations and making decisions. COMPETITIVE STRATEGY AT W. L. GORE For product management, Gore was divided into four divisions: Electronics, Fabrics, Indus-trial, and Medical. The Electronic Products Division (EPD) developed and manufactured high-performance cables and assemblies as well as specialty materials for electronic devices. The Fabrics Division (FD) developed and provided fabric to the outdoor clothing industry as well as the military, law enforcement, and fire pro-tection industries. Gore fabrics marketed under the GORE-TEX, WINDSTOPPER, CROSS-TECH, and GORE CHEMPAK brands pro-vided the wearer protection while remaining comfortable. The Industrial Products Division (IPD) made filtration, sealant, and other prod-ucts. These products met diverse contamination and process challenges in many industries. The Medical Products Division (MPD) provided products such as synthetic vascular grafts, inter-ventional devices, endovascular stent-grafts, sur-gical patches for hernia repair, and sutures for use in vascular, cardiac, general surgery and oral procedures. Although they were recognized as separate divisions, the EPD, FD, IPD, and MPD frequently worked together. Since it had four divisions that served differ-ent industries, Gore could be viewed as a diver-sified conglomerate. Bob Winterling, a financial associate, described how the four divisions worked together financially as follows: tho12729_case26_C391 C405.indd C 395 tho12729_case26_C391-C405.indd C-395 14/12/10 3:01 PM 14/12/10 3:01 PM
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