The Future of Management Has Already Arrived – Part II: The Lattice Organization

by Rod Collins

 

In 1958, after a seventeen-year career at the DuPont Company, a middle-aged engineer named Bill Gore decided it was time to do something radically different. He left behind the security of a well-paying job with a world-renowned company to literally start a business in his basement. From the very beginning, Gore knew that he wanted his new business to be different, especially in the ways that the people communicated with each other. Gore had no interest in building another corporate hierarchy where people watched what they said for fear of drifting from the “corporate line.” He wanted his new company to be a bazaar of innovation and a marketplace of creativity. To accomplish his dream, he knew he needed to build a network, not a hierarchy.

Gore’s time at DuPont taught him that hierarchies inhibit the most important conversations and that their top-down power dynamics too often killed good ideas and kept bad ideas alive. Gore often said that in hierarchical organizations, “communication really happens in the carpool,” meaning that the carpool was the only place where people felt free to talk with each other without worrying about the chain of command. In his new company, Gore didn’t want any impediments to conversations because he understood that the free interchange of ideas was the soil of innovation. And so, Gore built what he called a lattice organization where there would be no traditional organization charts, no chains of command, and no predetermined channels of communication. Instead, work would be self-organized by teams, projects would be accepted rather than assigned, and people would be held accountable to the members of their teams. A peer review process, similar to that used in law firms, would determine individual compensation. Thus, the workers would be rewarded based on their contributions to team success and would have an incentive to commit to more rather than less work.

Bill Gore’s organizational approach was extraordinarily innovative for the 1950s. No other company at the time was using a networked-based management model to organize the work of large numbers of people, and we can be sure that few, if any, of Gore’s management contemporaries would have given his company any chance of surviving. According to the management mindset of the mid-twentieth century, a lattice organizational model would have been perceived as a guaranteed formula for chaos and failure. After all, how would anything get done if there were no bosses?

As it turns out, a great deal can get done in networked-based organizations. With its consistent appearance on Fortune magazine’s annual list of the “Best Companies to Work For” and its enviable track record of more than fifty consecutive years of profitability, W.L. Gore & Associates, the makers of Gore-Tex and countless other innovative products, is living proof that there is a radically different alternative model that companies can use to organize large numbers of people into a sustainable, thriving, and highly adaptive business.

More than fifty years after its founding, there are still no organization charts at Gore, and all work continues to be accepted rather than assigned. While Gore does have a CEO and a small number of designated leaders for its four divisions and its companywide support functions, such as human resources and information technology, these leaders don’t assign work to anyone. Nobody at Gore—not even the CEO—tells anyone what to do or how to do it. There are no vice presidents or supervisors; there are only associates. Some of the associates may serve as leaders from time to time, but another leader never assigns this role. If you want to lead a project at Gore, you have to recruit followers. In true self-organizing fashion, the followers determine the leaders, and the leaders remain in their roles as long as they continue to maintain the respect and support of their peers.

Gore’s longstanding success in employing its lattice organizational approach is a valuable management asset in a new world where the digital revolution has suddenly made networks far smarter and faster than hierarchies. As the new technologies of our rapidly changing world continue to spawn a new breed of companies, we are seeing increasing evidence that a well-designed organizational network is a far superior alternative to traditional management structures. For those business leaders who are ready to accept that managing great change is only possible if we change how we manage, hidden in plain sight for the past 50 years is the time-tested lattice model of W. L. Gore and Associates.

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).