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MM 5011 Knowledge & Innovation

Sufian (29112017)

CORNING INCORPORATED: The Growth and Strategy Council (GSC)

Learning Points 1. Innovation was the core of cornings Identity, because corning is a science based company, Innovation is the engine for the company. Corning Incorporated tagline (motto) is Discovering Beyond Imagination. 2. Collaborative business structure and R&D focus has resulted in consistent innovations that have created new markets and established Corning as an industry leader. 3. Cornings history has been profoundly influenced by some remarkable business leaders, scientists, and engineers. The success of any business or institution depends on people. 4. Corning survived its own near-death experience in 2001 and weathered the global economic crisis of 2009 and 2010 through a strategy of strengthening and consolidating R&D with a focus on growth through innovation that builds on the companys core competencies. 5. Innovation at Corning was centrally managed by a group called the Growth and Strategy Council (GSC). The core group members are CEO, COO, CTO, heads of research, development and engineering and the head of HR.

Lesson Learned

1. Based on my own experiences In my organization, theres a group similar to GSC, we called it Business Process Improvement (BPI) team. The role of BPI team is to evaluate all existing (as-is) business process and analyze if theres lack of efficiency or pain-points in particular processes. They could redesign some processes and recommend it to the users (or Corporate Management Team - CMT) for better performance. The BPI team however could not make any decision or intervention to the existing processes without any request/ approval from users or CMT.

MM 5011 Knowledge & Innovation

Sufian (29112017)

Related to the technology and innovation, my organization is developing an innovation to improve global core processes and apply effective technology while replacing ineffective system which will take place in 2014. It is called Transform core processes with technology (TCPT) with three phases (Enable, Extend, and Empower). Another similarity with the Corning Inc., if we look at page 8 the last statement saying We do move people across divisions, early and often. It is part of their strategy in the talent and knowledge sharing. In my organization, we have some staffs called Field-based Partnership Facilitators who are placed in several places in North Sumatera, DKI Jakarta, West Java, Central Java, DIY Jogjakarta, East Java, Bali, and NTT. We also have the strategy of moving those staffs across regions (we are divided into 4 regions: West, Java-1, Java-2, and East) every 3-5 years.

2. From the perspective of management concept Business Ethics

Corning Inc. time-honored Values set it apart from other companies as well. They are the unchanging moral and ethical compass of Corning and are all-important in guiding its actions. They enable Corning to deliver superior, long-range economic benefits to its customers, employees and the communities in which Corning operate. An appreciation for innovation must be embedded in the heart and soul of the company. The preference for a growth trajectory through innovation must be part of an overall strategy and philosophy.

Marketing management

Corning divides its operations into five reportable business segments:

Telecommunications

Corning competes across all of its product lines with many large and varied customers. Cornings competition comes both domestically and foreign. Some of Cornings competitors are larger
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MM 5011 Knowledge & Innovation

Sufian (29112017)

than Corning and have broader product lines. Corning strives to maintain its competitive position through constant Research & Development expense in order to maintain its technological edge. Corning believes its competitive advantage lies within the ability to innovate. Because of its long history, Corning understands that markets are continually changing, but its commitment to its core technologies and ongoing research is its strength. By careful management of innovation and insight into markets and customer needs and creating of a pipeline of new products, Corning will ensure its future success as markets evolve.

Innovation pipeline/lifecycle and innovation effectiveness model

Operation management

Cornings reengineered five-step innovation process ensures a focus on core competency and demands more involvement from senior management and the board.

Innovation Process Effectiveness Execute Programs

MM 5011 Knowledge & Innovation Organizational Behavior

Sufian (29112017)

Corning Inc. strong, visionary leadership has always been guided by an enduring set of Values that define Cornings relationships with employees, customers and the communities in which it operate. Corning employ approximately 29,000 employees worldwide (2011). Accordingly, the commitment of present and future employees and managers will play a large part in ensuring that Corning meets the challenges of the future. Below is the organizational structure of Corning Inc.:

Corning has formed the Growth and Strategy Council (GSC) in 2001. Corning needs to maintain their performance in a long term condition. It needs strategy and great people who involved and have willingness to improve the performance for sustainability. The individual or group that undertakes the task of initiating and managing change in an organization is known as a change agent and that whats corning did when formed GSC. The role of GSC is varied from making decisions about pacing and investment, advising businesses on pricing strategy etc. The GSC is about establishing best practices and getting all innovation programs to the same level of rigor.

Knowledge & Innovation

Knowledge sharing approaches can be done with following activities: 1. 2. 3. 4. 5. 6. Morning meetings (Progress reports and seeking input) Technical tutorials (teaching specific expertise) Technical reviews open Senior Leadership Team meet (sharing information and interact) Technical/Business Information Center Special events, such as anniversary celebration

MM 5011 Knowledge & Innovation

Sufian (29112017)

Innovation at Corning was centrally managed by a group called the Growth and Strategy Council (GSC). Innovation is a social activity. Multidisciplinary teams working together with purpose and energy beat individual genius every time. Innovation is not a handoff process; many peoplewith diverse experiences and perspectivesneed to be involved from the beginning. Innovation is essentially team based, and leadership has the responsibility to create a culture that welcomes input from every member of that team. Corning developed a community of practice, such as Self-initiated or suggested by leadership; Entech our largest community of practice; Best practices, lessons learned, skills development; invite external speakers; and strong linkage with outside networks. Corning also centralized RD&E essential for effective knowledge sharing. Centralizing Cornings R&D activities and consolidating facilities was a brave step in an era when many companies were globalizing and decentralizing. The innovation process requires capabilities, processes, money, a nurturing culture, and much more. But perhaps most importantly, innovation requires will. It requires a determination to succeed. In practice, innovation at Corning followed what was called the innovation recipe as shown in the figure below. Cornings innovation recipe keeps the company focused on its core competencies.

Accounting (Finance management)

Costs of goods (COGS) sold were projected as a percentage of revenue. Cornings core products require significant quantities of energy, uninterrupted power sources, certain precious metals, and various batch materials. Cornings manufacturing processes can operate on oil, propane, natural gas or a combination of these energy sources. This flexibility allows the company to keep energy costs low. Going forward we project costs of goods sold to increase with increasing margin pressure from customers, specifically in Display Technologies where inability to pass costs to customers has begun to deteriorate margins.
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MM 5011 Knowledge & Innovation

Sufian (29112017)

Corning Inc. applied the straight-line method to project depreciation and amortization. It depreciates computer hardware and software, manufacturing equipment, furniture and fixtures and transportation equipment. The straight-line deprecation time was the most accurate depreciation for the fiscal year ending January 25, 2012.

Net working capital was projected using a working capital model which incorporates a number of ratios to calculate an expected path for working capital into perpetuity. The most significant change in the model was to cash, as management has built up an enormous cash balance and plans to disperse this cash in a number of different ways going forward. The projections show cash depleting to more normalized levels for Corning as management buys back shares, acquires companies, and increases spending on R&D. Corning also increased its dividend by 50% in 2011, which could also contribute to a declining cash balance in the future. Other line items were projected as a percent of revenue, with a few exceptions, and the current ratio was used as a guide to ensure reasonable projections into the future.

MM 5011 Knowledge & Innovation

Sufian (29112017)

Revenue Breakdown by segment

Business Strategy

The main growth driver for the company is its focus on R&D. Management has historically targeted a spending level around 10% of revenue for R&D and they plan to maintain their focus on this area of the business. As scientists focus on innovation within the companys labs, the management team has strategically sought acquisitions with a similar focus on innovation. Cornings acquisitions are used to gain access to technology and product offerings that supplement its five business segments. One more important strategic growth initiative Corning has pursued in the past is a significant focus on joint ventures. Some of these ventures have become a material part of Cornings earnings, with Dow Corning and Samsung Corning Precision being the two largest.

References
1. http://www.corning.com/about_us/faq.aspx 2. Corning, Inc. (University of Oregon Investment Group), February 10, 2012 3. Corning Incorporated by Brian Howard (Reprinted from American Biotechnology Laboratory, October 2005) 4. Knowledge sharing and communities of Practice (Front end of innovation conference) by Dr. James Scott, Science & Technology, May 22, 2006 5. Out of a near-death experience into a chaotic global economy: how Corning rediscovered its innovation roots, by Joseph A. Miller, Jr. (November-December 2011)
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