How has innovation been used for driving growth at Corning? What is the role of Houghton family? What are the financial results? Right from the days when Corning developed the bulbs for the electric lights designed by Thomas Edison, the firms had maintained a strong dedication to technology and innovation. About 4-6 percent of the annual revenue was set aside for research, development and engineering. In the 1990s, this figure became 10 percent. There was constant emphasis on R&D efforts. Even during the telecommunication crash of 2000 which brought the company to a near close-down, the organization maintained its importance for innovation.
They aimed at opening 2-4 new businesses every decade. Corning has been instrumental in the industrial production of the light bulbs finding Pyrex etc. which brought about great strides in the world. The Houghton family who established the organization stressed on innovation from the very beginning. 5 generations of the family have been CEOs of the organization and they still hold more than 5% of the shares of the organization. They have always been looked upon by the employees and it is seen as a relief if a Houghton takes charge of the organization yet again.
They were looked upon during the times of the telecommunication crash and they were instrumental in the recovery of the organization. The financial results almost dropped to half the levels of 2000 in 2003 and the stock reached to 1/100th of the price towards the end of the year. However, the organization has slowly been able to grow back to nearly its past peak levels by constant innovation and investing in new businesses What are the learnings of telecom meltdown in 2000? How has that influenced change in strategy in Corning? Corning usually had invested in diverse businesses but around 2000-03 it focused on telecom due to the boost in the requirement of cables .
The telecom meltdown showed that one should not rely so much on a single business as to ignore those that have previously proven to be profitable, especially one that is majorly related to technology. It is possible that the technology gets outdated and there is no longer any order for the same. This crash helped Corning go for a soul searching process and understand what it exactly did. Also the budgets were reallocated in such a way that now only 30% of the R&D budget is concentrated on the telecom sector unlike the previous 70%. The biggest change is that the strategy was now focused on building up to 10 new businesses every decade, an increase from the previous focus of 2-4.
This implied more concentration on research and this helped the organization in sustaining and building itself year on year. What is corporate innovation strategy at Corning in 2007? How has Miller influenced the corporate innovation strategy? In 2007, the corporate innovation strategy was worked out with the Strategic Growth division. This division had been up and working for 3 years now and had served as the platform that gave birth to many ideas that were now being pursued. 8 projects had reached Stage-1 and 4 had reached Stage-2. These 4 also saw a potential to move into the next stage.
Miller’s major influence in developing the corporate strategy is the introduction and stress of Marketing in the innovation stages. Miller felt that marketing was an integral part of innovation and that organizations do not survive if innovation is not supported by the knowledge of consumer reactions to it. This was instrumental in developing the 5-stage innovation model that the organization followed. How well is the structure of Science and technology organization (S&T) matched with the corporate strategy for innovation? What are the key organizational components and the roles they play in driving innovation? How does resource allocation work?
The science and technology division had five sub divisions under it. They were, Corporate Research, Strategic Growth, Corporate Product and Process development, Corporate Engineering and Administration and Operation for S&T. Mainly the five divisions related to all the factors that were necessary in driving innovation in an organization and making it practically viable. They played the role of developing an idea from each front and testing its commercial viability and attractiveness in order to decide whether Corning should develop a business vertical out of it or just scrap the idea. The budget allocation for S&T was done as 34% for corporate research and 66% for the rest of the divisions.
Under corporate research, 50% of the budget was allocated to business aligned research and the rest was equally shared between exploratory research and exploratory markets and technologies. Why did Mark Newhouse decide to keep “Stage-3 Projects” reporting to him? Is this a good idea? Why or Why not? There are a lot of complications that accompany those projects which sail through the first three stages. This is majorly regarding the amount of attention that needs to be given to them and the structure of the same. A project cannot be incorporated as a separate business division until after it crosses stage three. Also, projects undergo an elimination process at the end of all these three stages. These factors make the first three stages very vital and complicated.
These complications and importance makes it pertinent that Newhouse gives them ample importance and not delegate the same, entirely to another division. Also the inter-relatedness of resource allocation makes it impossible to make such decisions single handedly by a person in charge of a single project, as they have to be justifiably divided amongst the various projects available. These factors make it a good idea to keep the reporting relationships for the first three projects under Newhouse himself. What is the strategy of Strategic Growth and how does that relate to the corporate strategy for innovation? Strategic growth as a division was formed in order to identify big business opportunities which will be worth more than $0.5 billion. It was aligned along with research activities and not just marketing. This division was headed by Dr. Newhouse and worked as an incubation center for all new businesses of Corning.
The vision of this division was to create the ability for Corning to identify and build new businesses that directly expanded its portfolio. The division was created with an allocation of about 25% of the budget of the Science and Technology division. Prior to the inception of this division, Corning came up with about 2-3 new business divisions per decade. The goal for this division was to increase this to about 10. It institutionalized the Corning’s innovation recipe and was focused on “white spaces”, or those business areas where Corning did not already have a footprint. The corporate strategy for innovation was made possible through this division.
It incorporated the innovation recipe and institutionalized the same within Corning. Structurally, it was one of the five divisions under science and technology and worked in close co-ordination with corporate research. Its major divisions were EMT, business development, human resources, financing and manufacturing.
It ensured the integration of scientific innovation along with marketing to understand the feasibility of a project in order to enable innovation in the organization. In other words, the soul of this division lay in promoting the corporate strategy of keeping innovation as the lifeblood of the organization. What is Newhouse’s background and strategic leadership approach? How does strategic growth work together with corporate research led by David Morse? What are the natural tensions that exist between these two organizations and what mechanisms have been put in place to resolve them? How well do they seem to be working? Newhouse was a senior vice president with Corning and also appointed the head of Strategic Growth. He was initially hired as a scientist in 1986 and later promoted to the executive role within the organization.
He was with the organization through its downfall due to the optical bust and was instrumental in facilitating the changes during the same. He has always been a strong believer in Corning’s idea of innovation for success. He also incorporated the five stage innovation process followed by Corning within the Strategic growth division.
He was instrumental in setting out a structured approach within the strategic growth division. The Strategic growth division was incorporated with the idea of working in close collaboration with the corporate research team. While corporate research mainly focused on the initial research process, Strategic growth focused on the commercial potential of the same. This way, with inter-related interests, they also worked hand in hand and project escalation through different stages was done in joint consultation of the two teams. The major tension that exists between the two groups is the primary nature of the two. Corporate research is majorly scientific research oriented and Strategic growth is market oriented. The issue of what is more important and who is in charge of new projects bring about issues in the organization. However the 5 stage model of business development clearly draws out the demarcations of what work should be carried out when.
This is a major conflict reduction mechanism that has worked for Corning. Though overlaps still exist, they have been able to clear them out to a large extent due to this model. They seem to be working well enough to enable the basic purpose of innovation happen without internal conflicts in the organization. What are the key components of strategic growth organization? Why did they choose this structure? What is the role of Lina Echeverria’s group and how do her direct reports (Deb Mill and Daniel Ricoult) work together and to what end? What is the role of David Charlton’s group? How does Lina Echeverria’s group work with David Charlton’s group?
What are the natural tensions that exist as the project moves from Stage-1 to Stage-2 and what mechanisms have been put in place to address them? How well do they seem to be working? The strategic growth organization was focused formally on fuelling the strategic renewal of Corning Incorporated in partnership with research, by identifying and developing new, profitable, large business opportunities. The major components of the same are EMT, business development, Human Resources, Finance and manufacturing. This structure was chosen so that there would be a smoother way of transforming the innovative ideas into feasible business possibilities. Lina Echeverria was in charge of a group called exploratory markets and technologies. This group basically looked after the Stage-1 activities.
Deb Mill worked as head of the Marketing work stream and Daniel Ricoult worked as head of the technological work stream. Basically, they worked on the two major ends which seemed as opposite poles, but needed to be worked out in co-ordination to arrive at a successful business. David Charlton’s group was in charge of the Stage-two activities. Those projects which were considered successful after work by Dr. Echeverria’s group, was transferred over to David Charlton’s group for further determining the feasibility. The main tensions that existed were that of the personnel who worked within the project team and who would now be in charge of the project.
To cope with this, it was left upon the scientist as to whether he wanted to continue on this project as Stage-2 was more customer oriented rather than scientific. Hence those who stayed on would help in incorporating consumer feedback while others could work on projects which needed their expertise. Also, the project was handed over by Mills and Ricoult to Charlton as a project proceeds from being a Stage-1 project to a Stage-2 project. This has so far helped transit through these issues smoothly without much tensions arising in the transition stage of the projects. What is the role of CTC? How does it actually work? What does it tell about Corning culture?
Corning Technology council is the body that decides if a particular project should be allowed to be promoted from one stage to another. The voting team was made up of Miller’s staff but all of the research directors and research fellows were also invited to the CTC meetings. The decisions were made even before the meetings. The meetings were conducted more for the sake of information than for the sake of raising points. This showed that, Corning encouraged participation of all important members through voting and also facilitated others to know what exactly is going on in the organization. However they did not waste time in deliberating and verbatim.
Decisions were made separately while other members were also kept in the loop and not made to feel left out. It showed a democratic but to the point culture in the organization. How are corporate financial strategy matched with corporate innovation strategy? By the amount of the percentage of revenue a company diverts to research, we can understand its efforts towards product innovation. For Corning, the major financial strategy that was aligned with the corporate innovation strategy is that 10% of the annual revenue is set aside only for the research division. This has certainly caused a huge strain on the other divisions of Corning as the research investments do payback only by about 10-17 years, which is a long gestation period. However, Corning continued to do it even during the downfall that it faced from the telecom boom. With time, it is seen that the 10% might increase to a much larger figure.