Corning Incorporated: The Growth and Strategy Council
Rebecca M. Henderson and Cate Reavis
The Growth and Strategy Council provides a forum to challenge and be challenged which is essential in a company with very low attrition rates. It prevents us from becoming paralyzed by group think which can exist in a place where many of the people have a common history. —John Igel, Director, FTTx Program We are dealing with complex, difficult to measure portfolios. You have to have a leadership group which will invest time but also remain objective in order to make the hard decisions. —Mark Newhouse, Director, New Business Development It was early February 2008. Charlie Devins, the Chief Technology Officer (CTO) of a specialty chemicals and materials company, was interrupted mid-sentence as the 5:00pm whistle announcing the end of the work day at Corning Incorporated broke the mid-winter tranquility of the small town of Corning, New York, population 10,300. The sounding of the whistle came at a timely point in the conversation Devins was having with Joe Miller, Corning’s CTO. Miller had been explaining that while tradition and history were important at Corning, it did not signify that it was a company set in its ways. On the contrary: Corning was a company that had repeatedly reinvented itself to become one of the world’s leading materials companies. It was not a history that the firm took lightly: in 2002 the worldwide telecommunications crash had cut Corning’s revenues from $6.3 billion in 2001 to $3.1 billion the following year. The company’s stock had collapsed, falling from a high of $100 in August 2000 to $1.50 in July 2002. The company had to take a $5.4 billion loss and lay off over 12,000 people. (Exhibit 1 shows Corning’s stock price over time.)
This case was prepared by Cate Reavis under the supervision of Professor Rebecca Henderson. Professor Henderson is the Eastman Kodak Leaders for Manufacturing Professor of Management. Copyright © 2008, Rebecca M. Henderson. This work is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
CORNING INCORPORATED: THE GROWTH AND STRATEGY COUNCIL
Rebecca M. Henderson and Cate Reavis
By 2008, however, with 24,800 employees, 4,400 based in the town of Corning, the Corning Corporation was maintaining its global leadership position in glass for liquid crystal displays — a business with gross margins in the upper 60% range — while telecommunications sales had recovered and the company was at the leading edge in a number of other promising markets. The stock price had recovered, and in February 2008 was trading at $23, roughly its pre-bubble level. Meanwhile, roughly 70% of the people who left during the downturn in the early 2000s were back working at the company. Devins, whose own company was struggling with how to manage its innovation strategy, had been urged to visit Corning to learn more about what he had been told was a best practice approach. As Miller explained it, innovation at Corning was centrally managed by a group called the Growth and Strategy Council. The council, which was headed by a triumverate including Corning’s CEO Wendell Weeks, COO Peter Volanakis, and Miller, met once or twice a month to provide advice and guidance to the company’s four business segments. Often important strategic decisions including the allocation of resources for various projects within a business segment were made during these meetings. After hearing Miller describe the GSC and how it enabled innovation at Corning, Devins was at the same time impressed and skeptical. He wondered what made it work: Did such a structure fuel political tensions among the businesses? Wouldn’t a centralized decision-making body slow the...