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Friday, March 5, 2010

Five Gates to Innovation

Corning Inc.’s process for developing inventive products actually works, a claim that few companies can make.

strategy + business magazine

by William J. Holstein

By 2007, some cell phone makers were at their wit’s end about the screens on their devices. … Sensing a business opportunity, a small team in the specialty materials division of Corning Inc. dug out of the company’s archives the formula for a superstrong but flexible glass — something called Chemcor, which Corning had unsuccessfully attempted to introduce in 1962 for automobile windshields — and sought to test it for mobile phones.

…[The] team’s boss, Senior Vice President and General Manager James Steiner, was opposed to the idea. …

However, team leader Mark Matthews was persistent — and his hunches had been right before. …

Trusting Matthews’s instincts once again, Steiner finally relented and gave the go-ahead for the cell phone glass test run at a company facility in Danville, Va. …

Today, after only a couple of years on the market, Corning’s cell phone glass — now known as Gorilla — is a huge success. …Gorilla is selling at an annual rate of $100 million and is projected to become a $500 million business by 2015. That will make it a significant revenue stream for Corning, whose sales in 2009 totaled $5.4 billion.

In Record Time

Like other top companies, Corning has a rigorous system for managing ideas through a stage-gate process in which they are embryonic in Stage 1 and commercially marketed in Stage 5. But in Corning’s case, the system actually produces consistent results; …

What Corning appears to do better than most is insist that innovation be managed not by individual inventors or small teams in silos, … but by multidisciplinary groups throughout the organization. Overseeing this process and making sure that Corning departments cooperate in product development efforts sanctioned by management are two bodies: the Corporate Technology Council, led by Executive Vice President and Chief Technology Officer Joseph Miller, and the Growth and Strategy Council, cochaired by Corning Chairman and CEO Wendell Weeks and President and Chief Operating Officer Peter Volanakis. The former unit concentrates on early-stage ideas, and the latter takes over when an idea is nearing commercialization.

In Gorilla’s case, once the test run had been completed and customers grew excited about the possible product, Steiner had to gear up the whole organization, reaching across traditional turf lines to obtain scientific, management, and sales help. …

Convincing the Researchers

The key source of technical expertise was Sullivan Park Research Center in Erwin, N.Y., the company’s heralded R&D facility, …To recruit a group of scientists for the Gorilla project, Steiner enlisted his business technology manager, Xavier Lafosse, who also works for the top brass at Sullivan Park in a dual reporting arrangement Corning designed to facilitate joint activities between the commercial units and research teams. …

Sampling began in December 2007. Four months later, Corning won its first Gorilla customer, and by June, full-scale production and marketing were under way — a fast track through the stage gates that posed any number of challenges. For one, Steiner had to find a melting tank to manufacture Gorilla in large batches because the Danville facility couldn’t handle such an ambitious effort. He approached his colleagues in the much larger and highly successful display division and was able to obtain tank space in a plant in Harrodsburg, Ky. “We kind of had to wedge in,” says Steiner.

Company Expectations

That Steiner could even accomplish that illustrates a key advantage of Corning’s innovation process. …[Executives] approached by Steiner had little to gain from working with him because their compensation was based primarily on meeting their own targets — Corning’s division heads recognize that the company expects them to support promising new product launches. …

Throughout the development of Gorilla, Steiner made sure that the scientists attached to the project were meeting face-to-face with possible customers. “We have to create demand, and our scientists are one of our best commercial weapons,” Steiner says. “The credibility they give us is more than we can grow on our own.” Moreover, Corning officials say, by talking to customers frequently, the researchers can at times anticipate their needs.

As the Gorilla project raced toward its last stage gate, it soaked up more and more resources at Corning; as a result, other projects had to be pared away. …Corning’s response is to maintain the backlog of development efforts as live but unstaffed and to avoid laying off researchers in favor of moving them to ongoing development programs. …

Add it all up, says Rebecca M. Henderson, a Harvard Business School professor who has studied innovation and knows Corning well, and Corning is able to maintain an equilibrium that other companies struggle to find. …

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