Who's Afraid Of A New Product? Not W.L. Gore. It has mastered the art of storming completely different businesses.
(FORTUNE Magazine) – Picture this: Your company has created a successful product that accounts for the lion's share of the firm's revenues. But demand isn't going to grow forever. What do you do?
If you're W.L. Gore, the $1.35-billion-a-year Newark, Del., company best known as the maker of Gore-Tex fabric, you solve the problem before it even starts, by innovating on lots of fronts and boldly following your inventions into completely different businesses. The privately held Gore is so good at innovating, in fact, that it has become a major player in areas as diverse as guitar strings, dental floss, medical devices, and fuel cells. And it has managed to post a profit every single year since its founding 45 years ago. The way Gore goes about bringing these products from notion to reality provides useful lessons to any company trying to keep growing.
First, a bit of history. W.L. Gore got its start in 1958 when a DuPont chemist, Bill Gore, envisioned some ways to use polytetrafluoroethylene (PTFE)--the smooth, slippery polymer better known as Teflon--that DuPont wasn't pursuing. He and his wife Vieve set up shop in their Delaware home. Their first products were mundane: insulated wire and cables. It wasn't until 1969 that the business took off in a big way. That's when the Gores' son Bob (an engineer who is now chairman of the company) found a way to stretch the polymer, creating expanded PTFE, or ePTFE. It was trademarked Gore-Tex. The material became the basis for a host of new product possibilities, including the durable outdoor fabric that was introduced in the '70s and is still W.L. Gore's bestselling product line (the company won't release exact figures).
Some companies might have been tempted to focus on fabrics from then on, perhaps turning into a clothing manufacturer. But not W.L. Gore. Using Gore-Tex as its springboard, Gore has gone on to create a slew of completely different products, relying on the following principles:
Ask your potential customers for help. Gore habitually seeks out potential users of products it's developing and picks their brains. For example, it worked closely with physicians while creating its thoracic graft, now in clinical trials; the device could help treat diseases like the one that killed comedian John Ritter. In the mid-'90s, Gore enlisted hunters to test garments made of a new fabric called Supprescent. (A special membrane bonded to the fabric supposedly blocks human odor, allowing hunters to get closer to their prey. Now there's an invention with potential.)
And in 1992, when Gore developed an improved kind of ionic exchange membrane, which separates positive and negative ions, it wasn't sure which of many possible industrial applications to focus on first. But when Gore researcher Jeff Kolde sent out the prototypes to key people in the fuel-cell industry, "they got very, very excited," he says. Gore became the first commercial supplier of membrane-electron assemblies (MEAs), a critical technology for fuel cells.
Let employees figure out what they want to do. "You don't tell anybody at Gore to do anything," says Dave Lane, a sales leader in the fuel-cell group. He's not kidding. Gore employees (known as associates) don't have titles or bosses in the conventional sense. Instead, associates make commitments to work on the projects that they believe are most worthy of their time and most likely to contribute to the company's success. As a result, says Kolde, "People tend to be very passionate about what they're doing."
At Gore, few leaders are appointed. Most simply emerge as they acquire followers. For example, as Gore geared up the fuel-cell project--more than 100 of the company's 6,000 associates are now dedicated to it--Kolde recruited and hired many of the people on the team, including several Ph.D.s. He's what Chuck Carroll, Gore's soft-spoken president, calls a "passionate champion" who convinces others a project is worth their time and commitment. That's no slam dunk in a business like fuel cells, which is still in its infancy.
Recruiting volunteers turns out to be a pretty good way to see which innovations are likely to succeed. As John Bacino, a membrane expert, puts it: "If you can't find enough people to work on it, maybe it's not really a good idea."
Make time for dabbling. All research associates get to spend 10% of their work hours as "dabble time," developing their own ideas. Their "sponsor" (a senior colleague who serves as mentor or coach) will guide them if their dabblings look like they might be worthy of an investment of resources from Gore. Along the way, a cross-functional oversight group checks in periodically. "We go through an exercise called Real, Win, Worth," Carroll says. "Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?"
At any one time, Gore might have hundreds of projects in various stages of development. Says Bill Mortimer, a technology leader at the company: "It's a balancing act, because you can't have everybody moving in 6,000 different directions. But you can't have everything managed from a central entity. So we'll run into times where we're getting too many things in the air, and we'll make a judgment to pull that back." Other times, there might not be enough projects going, and people like Mortimer and Bacino will stir the pot.
Know when to let go. Not every innovation turns into a sustainable product. But a capability Gore develops for a no-go business may end up solving someone else's problem. For example, Elixir guitar strings got their start in the early '90s, when Dave Myers, a Gore associate in the medical division, invented ePTFE-coated bike cables. That business didn't get far. But Myers suspected that the cable's gunk-repelling coating might make it perfect for guitar strings. (Contaminants like skin oils can make strings go dead.) He was right: Gore's strings maintain their tone three times longer. Today, Elixir is the leading brand of acoustic guitar strings in the U.S.
For Gore, knowing when to let go also means knowing when to jettison a business that has been successful. Case in point: dental floss. In 1991 the company developed a shred-resistant floss it called Glide. An associate named John Spencer had the bright idea to take the floss to those who would recognize its superior qualities and spread the word--dentists and dental hygienists. A business was born. Glide is now the No. 2 floss, behind Johnson & Johnson's Reach, with sales of about $45 million last year. But "to stay in that market long-term," says Carroll, "you really need a whole family of health-care products. The Wal-Marts don't want to buy floss from one guy and toothpaste from another."
To Procter & Gamble, which had an oral-care line with everything but floss, not to mention major marketing muscle, Glide was irresistibly sexy. Last September, Gore agreed to sell the brand to P&G for an undisclosed amount. Under the terms of the agreement, Gore will continue to manufacture Glide, so it will still share in the product's growth. And the company gets some cash to invest in its next generation of ideas.