Corning: A 150-year Old Category Creation Machine
When
authors Al Ramadan, Christopher Lochhead, Dave Peterson and Kevin Maney
wanted to understand how businesses innovate new categories of business, they
looked beyond the startups that usually capture attention, including Uber and
Facebook, to a company that is more than 150 years old.
In the
following excerpt from their book Play Bigger: How Pirates, Dreamers, and Innovators Create and
Dominate Markets, they explain how CorningWare has been so successful.
Great enduring companies don’t just develop products. They
continuously create, design and dominate entirely new categories of business.
When we studied category kings and the concept of category
design, we focused on startups like Uber, Salesforce.com and Facebook – obvious
category kings. But we looked for big corporation that could teach us about
continuous category creation, and one in particular surprised us: Corning, the
glass company, which was founded in 1865.
Corning’s main business is making a substance that’s been around
almost as long as dirt. Its first big break came when Thomas Edison contracted
with the company to make the glass for his invention called the lightbulb.
Over and over again in its history, it has created, developed,
and dominated important new categories of glass, including the television tube,
laboratory glass (Pyrex, which can withstand high temperatures), catalytic
converters (ceramics that scrub pollutants from car exhaust) and fiber optics
(you know what those are), not to mention CorningWare, the hard-to-break dishes
your mother probably had in her kitchen (Corning since sold that business). If
you have a flat-screen TV from any manufacturer in the world, the glass is
probably made by Corning, the king of that business. And if you pull out your
smartphone, the super-hard touch-sensitive glass on the surface is almost
certainly made by Corning, which is the category king with its brand known as
Gorilla Glass.
We talked with CEO Wendell Weeks about the Gorilla Glass story,
which shows how category creation works inside Corning — and how it can work
inside any big entity. The story’s catalyst is Steve Jobs, but its beginning
goes back to the 1960s.
One advantage big corporations have over start-ups is the
ability to fund serious research and development, and Corning has long operated
a research lab. Two different kinds of insights lead to category creation. One
is a technology insight, which is the invention of a new technology that needs
to find a market; the other is a market insight, which identifies a new
opportunity that could be met by building a new technology. Most Silicon Valley
start-ups begin with a market insight. A corporate research lab really has one
singular purpose: to come up with technology insights.
At Corning, the lab is driven by what Weeks calls “grand
challenges.” For generations, one of those ongoing challenges has been “Glass
breaks. Fix it.” In the 1960s, Corning’s scientists first invented an ion
exchange technology that made glass far stronger than ever. They’ve since
continued to invent thinner, stronger glass, even though for about forty years
there was no category-defining market for it. A corporation like Corning has
the money, patience, and permission from its investors to work on really hard
technology problems for a long time.
But that alone doesn’t create categories. In fact, corporations
are weighed down by the deep, constant pull toward running the existing business,
and it can make them blind to their own technology insights. Xerox was a famous
example. It invented almost everything that Apple later put into its first
Macintosh computer, yet completely missed its own technology insight and never
capitalized on it. Xerox listened to its customers, who wanted better copiers,
not something different called a personal computer. As Clay Christensen pointed
out in Innovator’s Dilemma, listening to customers leads you to
constantly build better, but never to build different. And different is what
creates new categories.
This line of thinking — technology versus market insights;
better versus different — circles back to the Gorilla Glass story and why
Corning has been able to create so many categories.
An enduring company like Corning has long-standing, trust-based
relationships, and those relationships are a fantastic way to gain market
insights — as long as the leadership is listening for different instead of
better. Weeks had such a relationship with Jobs. As Weeks tells it, he and Jobs
were talking one day about Apple’s plan to build a phone, and Weeks proposed an
idea that came out of Corning’s work with lasers and fiber optics. Phones at
the time had tiny screens, and Jobs wanted to offer mobile video, so Weeks proposed
“microprojection”– a way to put lasers in a phone so it could project video on
a wall.
“Steve proclaimed this to be the dumbest idea he ever heard, as
only he can do,” Weeks told us. But that led Jobs to tell Weeks more details
about what would become the iPhone. It included the radical idea of making the
whole surface of the phone a touch screen. The surface had to be scratch-proof
and hard to break as well as touch sensitive. Jobs thought the solution was
plastic, but he couldn’t get plastic to meet his demands.
Here’s what Weeks heard: Jobs was going to create a new category
of mobile device — the smartphone. And smartphones — all smartphones! — were
going to need a new category of glass that did not yet exist.
Well aware of Corning’s decades-long work on thinner, stronger
glass, Weeks now had a market insight in one pocket and a technology insight in
his other pocket. He told Jobs: If you create the problem (a smartphone
category that needs a surface), we can create the solution (a new category of
glass). Back at Corning, he told his lab and his team: if we create a solution
(the new glass), we’ll have a problem waiting to suck it out of us
(smartphones).
From there, Corning did category design. Instead of just making
a white-label glass product for iPhones, Corning intentionally created a new
category of glass, giving it the brand name of Gorilla Glass, coming up with a
point-of-view about what it is and what else it can be used for, and using the
iPhone’s introduction to mobilize the company.
In 2007, the iPhone debuted, coated with Gorilla Glass. Corning
set out to establish the category in all mobile phones. By 2012, Gorilla Glass
was on a billion devices worldwide. By 2015, Gorilla Glass was reportedly
bringing in $1 billion in annual revenue, though Corning doesn’t break out a
specific number. The brand had category king economics, taking more than 70% of
the category’s profits.
Why did this work at Corning when it didn’t at Xerox? Certainly,
the CEO is key — Weeks had to buy into category creation and drive it inside
the company. Employees have to be conditioned to embrace category creation and
fight the gravity of their everyday jobs. Investors are conditioned to expect
that some profits will be spent on R&D and category design. A few other points
from Weeks:
·
“Listen to [customers] so that you understand what the root
problem is rather than just doing the solution, because if we just do what
we’re told, they wouldn’t need us, and if they didn’t need us, we wouldn’t be
able to generate the kind of profitability and competitive advantage that it
takes to define a category.”
·
“Understand how important time is. It takes a long time to
[invent] new materials. We build that knowledge, then the skills in our people,
then we’re able to use that knowledge to attack other markets. It’s way more
knowledge-efficient.”
·
“You’ve got to make sure you’re on the creative side of creative
destruction. Because if you aren’t, you’ll ultimately end as a company.”
Corning’s ability to define, develop, and dominate new
categories has helped the company remain relevant and vibrant decade after
decade. Creating new categories renews Corning as old categories slough away.
Take away category creation, and any company becomes tired and expendable. We
believe Corning is proof that an old company can institutionalize category
design.
Category design is not only for startup pirates who storm the
corporate gates — it works for pirates already inside the gates.
http://knowledge.wharton.upenn.edu/article/corningware-category-creation-machine/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2016-06-16
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