Does Innovation Stem From Corporate Culture?


"Innovation" seems to be the buzzword of the year. (Well, after "bailout," "meltdown," and "Can you BELIEVE how much Bobby Jindal sucked?!?") You can hardly open the WSJ without someone pontificating about the need for innovation, the threat to innovation, the five keys to innovation, the hidden secrets of innovation, blah, blah, blah.

In a change from all the bloviation about innovation, Terri Kelly, the CEO of W.L. Gore (the nice folks behind Gore-Tex and Glide dental floss, among other fine products) gave a refreshingly clear, jargon-free talk at the MIT business school about how the company's culture fosters innovation. For those of you who don't know, Gore is famous for not having any titles; everyone is simply an "associate." (Well, virtually no titles. Kelly is obviously the "CEO," so there are a few. But only when necessary.)

Kelly says that the company avoids titles because of the "assumed authority and power embedded in a title," that may be totally uncorrelated with the person's actual skill or knowledge level.

The lack of titles reflects the extraordinarily non-hierarchical corporate organization. People attract followers, build teams, and lead new business growth through influence, not through a formal organizational structure. And while there are guiding principles and plenty of checks and balances to ensure that enthusiastic (but misguided) associates don't sink millions of dollars into an attack on, say, the goldfish food market, by and large, employees have the freedom and support to explore new avenues of business.

Kelly says that at Gore, "people are only leaders if someone wants to follow them." In fact, she recounts the difficulty that a recently hired senior person had in adapting to a culture where influence, not title, is the key currency:

We can take a high performing leader and strip them down to their knees because they don't realize that when you take away the authority and the power of the title, and they have to do it all through influence, [through] selling, it's really frustrating.
Why am I bringing up Terri Kelly? Because Gore's view of leadership is strikingly similar to the lean leadership practiced at Toyota. As John Shook writes in his book "Managing to Learn,"

Lean management is neither a simple top-down nor bottom-up process. Rather, it is a dynamic system in which processes are well-defined, and individual responsibility is clear (and placed at the “lowest” possible level, where the work is taking place). As a result, responsibility and authority, which are generally assumed to be neatly bundled together, are revealed as separate and distinct. Lean managers focus on responsibility and ownership, which means keying on “doing the right thing,” as opposed to authority, which deals with who has the right to make certain decisions.
In his regular column for the Lean Enterprise Institute, Shook goes on to explain that

the Chief Engineer has no choice but to lead by the soft skills of true leadership. By soft skills, I am referring to the suite of skills written of in books about leadership or management books and taught in leadership training – characteristics such as "leading through influence" or "servant leadership" or "win-win negotiating". Choose your favorite. For the CE, those characteristics and skills are not optional. He is unable to simply pull rank, to put his foot down and demand that the functions do as he demands. Functional resources can and do tell him "no" if and when they have a good reason. He can only lead by being knowledgeable, proposing good ideas, expertly negotiating multiple priorities and wishes, and being very strong. In short, he has to lead by exercising true leadership skills, not relying on the authority vested in him by virtue of his position on an organizational chart.

This approach sure sounds a lot like Gore's, when Kelly explains that it's

a really tough place to lead. You have to earn your leadership everyday. You never "arrive" as a leader at Gore. You do it through influence.
To be sure, this is not an easy way to run a company. It's (seemingly) so much easier to just give orders and get stuff done quickly. But even if you don't subscribe to Shook's belief that "the assumption that authority should equal responsibility is the root of much organizational evil," you can certainly appreciate Kelly's point:

When you think about all the issues of global scale and complexity, I can't imagine leading without distributing that leadership load across a broad organization.
No matter what you call it, that's good thinking.

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