Maximizing the Organization’s Potential
A discussion with W. L. Gore CEO Terri Kelly
Last week, at Gary Hamel’s Future of Management conference (see Part 3), I had a chance to sit down with Terri Kelly, CEO of W.L. Gore & Associates. While Gore, the makers of Gore-Tex fabric, generates more than $2 billion in annual sales, employs more than 8,000 people worldwide, and is currently celebrating the 50th anniversary of its founding, it still behaves like a start-up and is widely recognized as one of the country’s most innovative companies. Here are some outtakes from my notes on our conversation.
Every initiative must start with clarity of purpose, but most companies have a purpose that is no longer relevant to the world we live in. To get clear about its purpose, Gore asks the question, “Who do we intend to serve and who would miss us if we weren’t here?” The purpose must be specific enough to guide management and strategic priorities, and clear enough to be understood by everyone.
Gore then asks, “What are our ‘guiding principles, ‘ our ‘rules of engagement? ‘ What key disciplines can we embrace and excel at? What are our fundamental beliefs and how do they affect the way we behave?” When you join the company you must sign up to support this framework.
Gore uses a value-pricing model for the products it sells, not a mark-up based model. People don’t ask, “What margin do we want to make?” All that matters is, “What value are we providing through the products we sell?”
There are no policy manuals at Gore.
Gore’s associates are guided by principles, not rules. Be fair in everything you do. Consult with others if you are putting the company at risk. You have the freedom to commit to projects of your choosing, but your commitment is essentially a contract — and you (and your teammates) are responsible for the result. These principles may seem vague, but every associate knows them and is quick to bring them up when challenging decisions. Principles are useless if they aren’t used. Most companies’ principles are too complex to be remembered, let alone used –including those we’ve developed at Seventh Generation. Gore’s principles are effective because they are both meaningful and memorable.
Leaders must live the company’s values and use its principles every day. Leaders can’t make commitments for others. They must understand the limits of individual and collective capability. They must ensure that the whole system is working. The toughest challenge for any leader: managing the tension between influencing and directing. If you direct too much, others won’t own the responsibility for the outcome.
While Terri Kelly is the CEO, she has no direct reports! Nor does she have a job description. What does she do? She and other leaders are responsibility for how the work is divided. They focus on decentralizing as much as possible and ensuring that working groups are cross-functional. And they allocate resources.
Everyone at the company must have a sponsor. A sponsor is a mentor who guides your growth and development. Most people, on average, sponsor between five and seven other people. People must find their own sponsors.
No business unit has more than 150 people. Gore’s founder believed that when a unit exceeds 150 people, “we decided” becomes “they decided” — people have a smaller stake in key decisions and are less motivated to carry them out.
One of Gore’s toughest challenges: ensuring that small teams effectively coordinate and communicate with each other.