Corning's model of innovation governance is an example of what we call the top management team or subset as a group. Two executive councils are in charge of Corning's innovation worldwide: the Corporate Technology Council (CTC), which focuses on more radical innovations, and the Growth Execution Council (GEC), which is responsible for the success of medium- to short-term innovation. Members of the CTC include, among others, the CTO, the three senior vice presidents of research, development, and engineering, and the vice president of legal affairs; both the CTC and the GEC are co-chaired by the CTO and the innovation officer, and the CEO regularly attends meetings. These councils were important in Corning's recovery from the telecommunications downturn of 2002, in which a huge drop in demand for optical fiber drove Corning's stock price down from $110 per share to $1.10 and threatened the company's very existence.

The company was founded by Amory Houghton Sr. in 1851 in Corning, New York, where its headquarters and its principal Science and Technology Center² – called Sullivan Park after one of the early pioneers of research at Corning – are still based. Since then it has evolved from a small company, whose first major product was the glass envelope for Edison's light bulb, to a multinational corporation, with record sales of just over $8 billion in 2012. At year-end it had approximately 28,700 full-time employees worldwide, of whom about 11,700 were in the United States. Corning is a leader in specialty glass and ceramics, and we shall see that it has discovered a multitude of ways of using this core competence to develop many different kinds of products in many different industries. Today its largest business is liquid crystal displays (LCD) for which it makes the glass substrates.

Corning has been a successful innovator – to put it mildly – throughout its history. Its leaders have been committed to innovation and to creating a culture for innovation success. In recent decades, leading companies have researched and discovered more explicitly what is necessary for innovation to be sustainable and effective, and Corning has been a leader in this advance. It has won the Product Development and Management Association (PDMA) “Outstanding Innovator” award, among other awards, and engages with peer companies to explore the most effective innovation practices. Today, senior executives use an explicit governance model to provide a structure that allows them to dig deep into the technologies and the markets that are the focus of new opportunities and innovation projects.

In this chapter, we will review the history of how Corning built its innovation competency, with particular emphasis on the first decade of the century – roughly from 2001 to 2009. This time frame saw the implementation of Corning's model for governing innovation, and although the pace of innovation as well as its scope has increased greatly in the past few years, the necessary adaptations to meet new challenges rest on the innovation governance structure and the innovation processes that we describe below.

Corning's Evolution: A Glass Factory Becomes a World Leader in Innovation³

Corning started life as a glass factory. Since then, it has discovered and created ways of using its core substance that have made it a leader in many different industries. Corning's commitment to innovation spans its more than 160-year history. CEO Wendell Weeks rarely misses a chance to remind man­agement groups that the company's goal is another 160 years of innovation and independence. Corning's leaders have always demanded that the company grow through innovation and that its innovations should not only be attractive to Corning but should also have a lasting impact on society.

The Ages of Corning: A History of Supple Governance

Corning currently participates in five market segments: display technologies, telecom, environmental technologies, life sciences, and specialty materials. In addition to these market segments, the company includes one that it describes as new business development. This segment holds new business ventures that may or may not make it to the market but ensures that it is working on the next viable opportunities.

Many companies have trouble canceling projects, even when the chances of success are not clear. Corning has learned to be more comfortable with generating many potentially viable opportunities but only commercializing those that show the most promise of success. This ability is a clear sign of effective governance – too many companies continue to ride the projects that have been approved, throwing good money after bad even as market or technology prospects look dim or the fit with company strategy is misaligned.

Corning's major innovation successes over its history include the glass envelope for Edison's light bulb, Pyrex glass, silicones and ceramics, catalytic converters, and a high-throughput screening platform for drug discovery, as well as optical fiber and glass materials used in TVs. Most recently, it has developed Gorilla^® Glass – initially as a cover glass for the iPhone to prevent it from getting scratched, but now extended to all display devices and enjoying explosive growth.

At an IAPD workshop in 2001, Jacques LeMoine, director of Corning's Science and Technology International Laboratories until his retirement later that year, described Corning as toujours young.⁴ “Corning's business strategy at the most basic level,” he said, “is to focus on attractive global markets where Corning's leadership in fiber optics, materials, and process technology will allow us to achieve and sustain competitive advantage and superior growth over time.”

Frequently in its history, when Corning's core technology competency gives rise to a product, the product is then supported by a specific manufacturing process. For example, the light bulb envelope developed by Corning was a critical factor in bringing Edison's discovery to market in 1879, but without the “ribbon machine” that the company later invented, it would not have been possible to manufacture light bulbs cheaply enough to make them commercially viable. These machines are still in use today.

The scope of innovation at Corning has spread over the years to include more and more products that draw not just on one of Corning's competencies but on a combination of them. The process is one that Bruce Kirk, director of corporate innovation effectiveness, describes as “iterating and learning,” and the outcome is often the discovery of new uses for older inventions and technologies. For example, signal lamp technology paved the way for cookware. Equally, the company's core competency in glass often provides a base from which it is able to recognize opportunities that can be fulfilled only by accessing other technologies. This has led to joint ventures, acquisitions, and partnerships, as well as licensing and contract manufacturing, which allow it to enter areas that would otherwise have been out of reach. These have taken the company into a variety of different industries, including building products (with PPG Industries), fiber glass (with Owens-Illinois), silicones (with Dow Chemical), display technologies (with Asahi Glass, Samtel, and Samsung), telecom (with Siemens), cooktops (with St. Gobain), and ceramic substrates (with NGK). Corning protects its intellectual property carefully, but it also does not hesitate to sell or spin off technologies and businesses that no longer provide competitive advantage. Unlike many companies that hold on to outmoded business models, Corning appears to be as willing to invent business models as it is to formulate materials and processes.

Defining the Core

An IAPD Workshop in 2002 addressed the significance of core competencies in innovation. Jurriaan Gerretsen, then innovation process manager at Corning, provided a dynamic model of the interplay between Corning's businesses and its core competencies, each business drawing deeply on the competencies and associated applications, overlapping with one another, and positioned to provide space for the new applications and businesses that will emerge as older ones fade away.⁵

Although of course the picture has expanded in the decade or so since Gerretsen's talk, his description of Corning's competencies gives us a clue as to how the company holds its assets and might help explain its ability to generate and regenerate technologies and businesses. He maps Corning's core competencies (see box) as four overlapping circles. Around the competencies at the center, or core, of the model Gerretsen rings more overlapping circles that represent some of the areas of application – networks, halides, surfaces, catalysis, and so on. These varied competencies and applications make it possible for Corning to develop capabilities in many areas; at the time of Gerretsen's talk, Corning participated in five industries and nine major businesses.

The four competencies at the core are not likely to change much. They are so intertwined with Corning as to represent its identity at a very deep level. However, the application areas – along with the capabilities, businesses, and products to which they give rise – can and do change in response to shifting technology and market forces. “Growing and shedding” of these application areas, according to Gerretsen, “is a continuous process.” And this is facilitated by the fact that Corning has defined its core at such an elemental level.

From Success to Crisis: The Dot-com Downturn

In the later decades of the 20th century Corning's technology focus turned to fiber optics. The company invested in the segment for 20 years before it finally turned profitable in the 1980s and took off. By 2000, Corning was deriving 70% of its revenues from telecommunications and investing the same proportion of its research budget in the sector. It was the most significant player in the fiber optic market, with a 40% share.

The decision to pursue fiber optics meant that Corning had to build capabilities that it did not yet possess. The necessary expertise was acquired, and temporary offices were built at key locations including Sullivan Park and Fontainebleau Research Center (FRC), Corning's site in France, to make space for new employees and new labs. Then came the telecom crash. Within two years, the merger in 2000 between AOL – the darling of dot-com investors – and Time Warner, the world's largest media company, had gone sour and many companies like Corning felt the effects. They no longer had the infrastructure to monetize their investments. By 2002, the company's revenues had halved, its share price had tumbled and it was on the verge of bankruptcy.

James Houghton, founder Amory's great great grandson, was brought back to fill the role of CEO for a second time. The first place he went when he was reappointed was to Corning's Science and Technology Center at Sullivan Park. He wanted to make sure that the scientists and engineers who worked there realized their importance to Corning's future. And, true to its commitment to innovation, even during the worst parts of the downturn Corning never lowered its overall R&D investment below 10% of revenue. LeMoine affirmed, shortly after the downturn, that in order to continue to lead through innovation Corning needed a solid foundation in science and technology: “Even through the downturn, although there has to be realism in research, in understanding what the company can afford in order to protect the future of the company, still there is a focus on science and technology, on innovation.”⁶

Building a Structure for Effective Governance

The term innovation governance has been more widely used only recently, but the practice of governing innovation is not new. Throughout Corning's history we can see the impact of a steady hand on the tiller. The culture and the explicit commitment of leadership to innovation, the strategy to employ some of the best scientific talent available, and the willingness to seek partnerships with others well before the “buzz” of open innovation – all these were elements of how Corning governed innovation. They defined some of the key questions of innovation, as outlined in Chapter 3:

• Why – because Corning is defined by its consistent focus on innovation, and because its core enables innovation.
• Where – in any field in which its competencies might create something of value to Corning and to society as a whole.
• How much – whatever was needed to accomplish its innovation goals, even if the payback time was long.

Corning's leaders not only articulated these lofty ideals; they have acted on them over the company's long history. And Corning's employees are aware of the importance of innovation and are ready and willing to play a role.

The shock of the telecom downturn, however, influenced Corning to make its governance policies clearer and more explicit and to make sure that the discussion and decision making included voices across the top level of the company. As a result, Corning has adopted the model that we call the top management team or subset as a group. As we have already mentioned, the Corporate Technology Council (CTC) and the Growth Execution Council (GEC) are responsible for governing innovation at Corning. These councils, led by C-suite executives, oversee and support the projects that will continue to enable Corning to out-innovate competitors and to position itself as a valuable ally in any number of industries.

Governing Corning's Medium-term Growth: The GEC

The GEC oversees Corning's medium-term growth projects. Generally, its innovations pass through a five-stage process that includes gathering information/building knowledge; determining feasibility; testing practicality; proving profitability; and managing the life cycle. The last stage was previously referred to as commercialization, but was changed to reflect the need to continue to manage innovations once they have been developed and launched and to prevent fast followers from seizing the advantage. This flexibility is a vital part of Corning's approach to innovation.

Governing Long-term Growth: The CTC

Corning's radical innovation projects spend more time in the first two stages of the innovation process, under the guidance of the Corporate Technology Council (CTC), which was set up in 2003 to focus on long-term growth. Although it is important in this early stage to make sure that resources are directed to the most promising opportunities, the focus of the CTC is more to support and help than to winnow and decide. Group members are experienced in and knowledgeable about the early stages of innovation. They can help teams to identify the robustness and unique qualities of potential future technologies, and support them in differentiating offerings and building market opportunities.

They often encourage players to look more broadly. For example, they might provide a sense of the IP space for a particular opportunity and encourage teams to explore further on issues where needed. When initiatives are approved for further exploration and work, CTC members continue to provide advice and encouragement, and they often participate in overseeing significant investments until near the end of the second stage, i.e. determining feasibility.

Many of the projects that the CTC is concerned with have emerged from Corning's Strategic Growth Organization (SGO), which includes Project Magellan, the company's front-end exploratory program. The SGO was established in 2002 like a separate business division within R&D to help identify and incubate radical innovations that might develop into new businesses. It was staffed by people with technical experience in NPD and/or market development expertise. Today, it is known as Emerging Markets and Technologies, possibly a more apt description of its current role.

Going Outside-In to Find What's Next

Project Magellan's task is to research attractive markets and promising technologies, especially those that can fill new, as yet unidentified, needs. The focus has recently been broadened to include what Corning calls adjacencies – i.e. new markets, purposes, and uses for existing technologies. According to Deb Mills, director of early stage marketing and leader of Magellan, their approach is largely “outside in – teams of marketing and technology professionals systematically look for important systems problems that require a technical or materials solution.”⁹

Mills describes their process as “far from linear.” It includes “creative collision” between outside thought leaders and internal Corning technologists, scientists, strategists, and business people. Project Magellan workshops, which focus on a market/technology megatrend, bring outside and inside experts together. The outside experts provide specific market or technology knowledge, or informed points of view on social or technology trends. Magellan project teams use white papers to screen potential themes, and spend four to six months assessing those that they deem the most promising. The content and form of the white papers is prescribed in order to make it easier to compare different possibilities, and teams use tools and frameworks to allow them to put the information in a common format.

Corning's Innovation Recipe¹⁰

On April 25, 2002, Houghton gave his first address to shareholders since his return as the company's chairman and CEO. In his talk, Houghton sounded two chords: Corning's technology leadership and his commitment to the company. “We must remember that technology and innovation are at the heart of this company's future, a future we will never allow to be jeopardized.”¹¹

Corning's experience after the telecom bust motivated it to reenergize its commitment to radical growth through innovation. In reflecting on past cycles of innovation, leadership spelled out the DNA of, or the recipe for, the company's culture of innovation. This recipe includes deep understanding of a specific technology combined with the identification of customers' difficult systems problems. Corning's objective, in using this recipe, is to increase the number of large new businesses it initiates each decade.

In his role as director of corporate innovation effectiveness, Bruce Kirk is responsible for developing and deploying the current innovation process, as well as defining next generation processes. Employee education and training and global benchmarking are also part of his remit. At the IAPD Roundtable on Innovation Governance in 2009, he enumerated the following critical success factors that he and his team had extracted after considering Corning's R&D history:

• Belief in the power of technology
• Sustained leadership commitment
• Real understanding of what Corning was capable of
• Connected to customers and big problems
• Took big but well understood risks
• A steady stream of successes.

A diagram of core competencies reminiscent of the one Gerretsen used back in 2002 depicts the growth and emergence of what Corning can do and has done with its core substance, glass. These reflections, held at the highest levels of the company, yield Corning's innovation recipe, and the recipe drives strategic actions.¹²

Patient Money: Investing for the Future

Corning is a publicly traded company, but its way of doing business sometimes looks more like a privately held one. Its willingness to shift from one “age” to another and the exploration of the “white spaces” between established technologies have sometimes made its pattern of growth quite “bumpy.” It has often preferred to take chances on long-term growth opportunities instead of ensuring stock performance in the short term. Nonetheless, its stock performance over the long haul continues to be excellent.

According to Henderson and Reavis, “Innovation at Corning has always meant being willing to make significant, sustained investments knowing that the payback would likely be well into the future. Internally this is known as ‘patient money’.” ¹³

Patient money has played a role through Corning's history – the long-term view of the investment in optical fiber is a good example. Significantly, patient money does not imply that Corning will be willing to continue to invest in projects that are not likely to be successful in the market; it does, however, give innovators confidence that their work will be supported even if the payoff time seems long. It may take anything from seven to 15 years, or even more, to get innovations to market on a large scale.

Patient money also means that Corning will invest in projects when money is tight. “In 2001, the company approved the appropriations request for a $250 million new factory for the diesel [particulate filter] business at a time when the telecom business was crashing and the emission regulations for 2007 were not yet in place.”¹⁴

The Role of Information in Governing Innovation

Corning divides its time horizons into today, tomorrow, and beyond. Today focuses on expanding existing businesses; tomorrow anticipates business needs; beyond engages the research community in trying to expand core competencies for breakout businesses. Each is funded independently in order to maintain development of the longer-term areas and resist the temptation to divert funds from tomorrow and beyond to today.

The company has a set of well-developed processes for gathering and sharing information. It uses business/technology roadmaps and what it calls event mapping to allow it to show today, tomorrow, and beyond visually – and at a glance. Emerging Markets and Technologies continuously maps the landscape, both internally and externally. Event maps bring in technical trend analysis and anticipation of new waves of innovation and opportunity domains in a time horizon that provides for planning and response. Product and technology roadmaps allow planners to link opportunity with capacity and create specific plans for resource allocation to close the gap between opportunity and reality. The existence of a clear understanding of its science and material assets allows Corning to plan how to move into future opportunities. In his presentation on technology road mapping at the 47th IAPD Workshop in 2007, Kirk emphasized that the key to effective portfolios is their link with ongoing business practices.¹⁵

Constantly Evolving Innovation Practices

Corning has never been content to rest on its laurels where innovation processes are concerned. It first implemented an explicit innovation process in 1987, based on Robert Cooper's then new stage-gate™ process. The process was customized for the company after analyzing around a hundred of its most successful projects to identify their key success factors, which enabled them to draw up guidelines for its model. Once again, Corning's top management commitment to innovation was evident. For roll-out, the management committee was trained first, followed by division general managers and their employees, and then the project teams themselves. This meant that everyone was quickly up to speed on the whole innovation process.

The company now employs an ongoing practice of continuous improvement. For example, innovation effectiveness facilitators constantly interact with the innovation teams to understand what improvements to their system might deliver more value. Some of the facilitators are experts in understanding specialty areas such as value propositions, manufacturing process development, and commercialization, and they are called in to help when needed by the other facilitators. The innovation processes make it possible to combine multiple competencies in the service of discovery and learning, and – as we have seen above – multi-functionality is a key part of how innovators at Corning work together.

Looking to the Future

To stay young – or toujours young, to borrow LeMoine's earlier description – Corning must remain alert to the dynamics that play around its core. It has achieved this by constantly monitoring its competencies against market opportunity, by developing new scientific and technological capabilities, by widely investigating markets in which its competencies might provide value, and by identifying key partners that might extend its ability to enter any of these areas. As we have seen, the core is not depicted as separate areas that meet different criteria, as is often the case in other companies. Instead, by presenting the core as a set of overlapping circles, innovators and decision makers are encouraged to speculate on how these different circles might interact to create new uses and open new areas of exploration.

How Will the Governance of Innovation Stay Fresh?

As we have seen, the governance of innovation was not invented overnight at Corning. It has been integrated into the practices and culture of the company since the beginning, becoming more explicit – i.e. overseen by named councils – only quite recently. The design of the governance practices included dialogue among the people involved, work with a consulting firm, and a series of templates, all of which encouraged participants to think deeply about the steps they were taking and to focus on the most important issues. The top management team has not been reluctant to make changes where it sees problems and the operation of the councils has already been altered in some ways.

Corning's leaders' level of hands-on engagement with project teams is impressive. It will be interesting to see how these practices might evolve in the coming years, but one thing seems sure: Corning's leaders will remain committed to innovation and will use their experience and expertise to ensure, to the best of their ability, that those who are responsible for carrying out the actual work of innovation get the best support possible.

One thing that will not change is the inevitability of change itself. According to Charlie Craig, senior vice president of administration and operations; science and technology, Corning's innovation governance is adapting again to changing markets and technologies – “faster paced markets, shorter product development life cycles, and intense technology competition.” In response to the CEO's exhortation in late 2012 to pursue agile innovation, Corning must now take into account the need for “dramatic strategic changes to accelerate innovation,” which are necessary to achieve near-term growth in consumer electronics, as well as the “significant change in approach” that the soaring growth in Corning's Gorilla® Glass is demanding. To date it has been embedded on 1 billion devices worldwide.

Corning's long history of innovation success provides it with the culture, the practices, and the ongoing commitment to make it work yet again, and the innovation governance structure and processes implemented in the early part of the century are providing a foundation for the necessary adaptations today.