Split a business in two when it reaches a certain size
Gary: Another unique thing about Gore is your approach to locating factories. For the most part, you’ve avoided building large, focused factories in low-cost labor locations. Factories are clustered together. Gore also splits a business in two when it reaches a certain size. None of this sounds very efficient. What’s the logic?
Terri: There are a couple of practices that have served us well. First is the three-legged stool. We like to have the functions co-located because innovation depends on having research, manufacturing and sales all in the same place, where they can build off each other. This also helps us develop leaders. Our campuses are all cross-business, whether in the U.S. or Germany or China.
Secondly, if a plant gets too big or a business gets too large—more than 250 or 300 people—you start to see a very different dynamic. The sense of ownership, the involvement in decision-making, the feeling that I can make an impact starts to get diluted. So we look for opportunities to divide big business into smaller businesses. Bill Gore said that one of the most important responsibilities of the leader is to figure out how to divide so we can multiply. We look for opportunities where dividing a unit up and replicating some of its activities can accelerate growth.
In Gore, you’ll see a lot of small plants with fewer than 300 associates, because this drives a different level of focus and ownership. Large businesses tend to stifle smaller businesses by hogging critical resources. When you split a business up, the smaller unit gets its own resources and can set its own priorities. Another bonus: new leaders emerge because you no longer have a single leadership team under one big roof, but now have two distinct leadership teams
- Terri Kelly
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Got a problem? Let’s make the team smaller!
(Source: The Wall Street Journal)
