Greg Hannon probably doesn’t worry about rain.
The chief technology officer of W.L. Gore & Associates has spent nearly three decades at the Delaware-based company that developed the popular waterproof fabric Gore-Tex.
Gore, which was founded in 1958, is a materials science company active in more than 15 industries, including aerospace, automotive, and consumer products. One of the largest privately-held companies in the US, Gore employs more than 11,500 workers and posts annual revenue of about $3.8 billion.
It invests about 12 percent of that revenue in R&D, Hannon says. We spoke to him about how that organization is structured; what it measures; and how organic innovation and acquisitions co-exist.
Could you talk about your R&D unit and what it focuses on?
We’re a materials science-based company, so we tend to hire material scientists, chemical engineers, mechanical engineers, things like that. We build a lot of our own equipment and we’re integrated from front to back, from the materials to the final products.
From an R&D perspective, our current innovation focus is on the following megatrends of health care, sustainability, and electrification. We’ve done a lot of external research looking to see where the next decade will play out. We’ve partnered with companies like Institute for the Future, to try to get some future visioning on where markets will be going and using that to guide our R&D investments.
We invest about 12 percent of revenue in R&D right now. That’s distributed a couple ways. We have the core technology group that I’m responsible for leading directly. That group does a lot of foundational materials science work that supports our enterprise today and into the future. The core technology group largely resides on the East Coast, where I am. But we also have a location in Flagstaff, Arizona, [and others] in Germany and in Japan.
How many workers does Gore employ in those three locations?
Overall, in core technology, which isn’t all R&D, there probably are about 1,300 associates, total. That’s involved with what we call the mission around invent, rapid develop, and reliably supply. So the core technology group supports what our divisions need. It’s really a captive supplier to all our other divisions. Then we have research and development in each of our different divisions that are very specific to the mission of that division.
With the aging population, health care is a bigger concern for folks. A lot of the products we produce allow people to have a better quality of life, longer life.
Which is the quickest-growing division?
I think we have a mix of up and down. Healthcare is a strong megatrend for us that translates into our medical products group. Then electrification is another one; it is part of our industrial products group. So, I’d say the healthcare segment is probably leading the way right now. But we believe over the next decade, the industrial space will continue to grow and maybe outpace the medical products division.
Why has the healthcare division grown so well?
I’ll give you my opinion, but I’m not leading that division. I think with the aging population, healthcare is a bigger concern for folks. A lot of the products we produce allow people to have a better quality of life, a longer life. The aging population around the world that really is helping take that off.
What R&D trends have changed how you operate?
I’d say over the last decade, we’ve become much better at external partnerships…[especially] to learn about a certain capability or technology. We’ve had multiple efforts with a university in Munich, and locally the University in Delaware here, as well as others. A lot of these shifts are around how can we move more quickly. How can we accelerate our efforts? How can we move forward more quickly, without having to build all the capability internally?
We have what we call a Silicon Valley innovation center, which is an innovation outpost in California, in Silicon Valley, whose primary focus is to be our eyes and ears locally in that San Jose area — looking for opportunities with startups to join efforts.
How can we accelerate our efforts? How can we move forward more quickly, without having to build all the capability internally?
Is Gore being more inclusive in its growth strategy, both organic growth and via M&A?
Yes, but I’d say we’re being more open by looking at how we intend to grow. About a third of it will be based on just our base business growth that will track typical economic trends and GNP; some of our industrial products will grow as the economy grows. New product development will be another third of what we anticipate — [developing] new categories, new products, and new capabilities. And about a third of it will ultimately be around M&A or acquisitions.
Did Gore make that shift consciously or by happenstance?
It was intentionally. My team, core technology, has been looking at some alternative materials in the area of polyethene to complement the current material set that we have. We came across a company that was up for sale in Europe, a small outfit that has some development and manufacturing capability. We said we can either choose to take five years and build all this ourselves, which maybe two decades ago would have been our preferred route. But [instead] we said, “Why don’t we just buy this capability?” We just executed that capability purchase in August 2021. It’s going to be a new facility in the Netherlands, and we already have materials [from that acquisition moving] into product development streams internally. It’s all about accelerating the work we’re doing.
We measure the vitality index, which is the measure of revenue created from products introduced over last X number of years. And we report these measures to our board of directors every quarter.
How does R&D measure its progress?
Our primary measure we’re using is called the portfolio health index, which I believe came from Gartner. It’s a subjective assessment of your innovation portfolio based on six different questions that you grade yourself on.
What we tend to do for performance indicators, KPIs, is measure for execution for a subset of our portfolio. Are they delayed or are they hitting their timeline? We also look at overall portfolio value. Is it increasing or decreasing over time? Then we measure the vitality index, which is the measure of revenue created from products introduced over last X number of years. And we report these measures to our board of directors every quarter.
How’s the hiring process trending? Has it changed over the years?
I think hiring today is probably challenging for most companies, and I think most jobs. It’s difficult to find people. People don’t necessarily want to relocate like they once did. From an R&D perspective, you need to be in the lab, you need to be together, you need to be in the plant, which has been a challenge through the pandemic. There’s more mobility in today’s workforce, generationally. It has been more difficult to interview people when you do it purely by video conferencing as opposed to live and in person. Again, when they do come in, they don’t have the same level of access to the facility, so it makes it more challenging in the onboarding process.
We’re starting to do things a little bit more with machine learning and AI to study material sets, do more predictive modeling.
Have recent advances in technology made R&D easier or more difficult?
I think for the most part it makes it easier. Once you can sort through it, the amount of information you can get can be overwhelming. But I think in general, I’d say on average it’s much better. It’s much better because of the internal databases. I want to start a project, I can go back to find out if it’s been done before quickly. As opposed to starting a project, and a couple of months into it someone says, “Hey, I remember someone did that 30 years ago.”
Information technology has really helped. We’re starting to do things a little bit more with machine learning and AI to study material sets, do more predictive modeling. I think it’s making us overall better as an organization — and stronger.