How Has Innovation Been Used for Driving Growth at Corning? What Is the Role of Houghton Family? What Are the Financial Results?

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 It is possible that the technology gets outdated and there is no longer any order for the same.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