What Corning Can Teach Us About Innovation

Posted by: Michael Mandel on May 05

I just put up a new piece with an interview with Wendell Weeks, CEO of Corning. Corning is an innovation-driven company which almost died in the tech bust, but seems to be doing much better this time.

I draw several lessons from the interview.

1. For an innovation-driven company, booms and busts are inevitable.

2. If a company is going to be innovation-driven on the product side, it should run its financial side conservatively. That means less debt, and what there is should be longer-term, so when the inevitable bust comes, there’s a cushion.

3. An innovation-driven company should keep a grip on manufacturing as well. That will slow growth, for sure, but it will also reduce the risks.

4. An innovation-drivn company should hold down the growth of non-R&D costs during the boom. That makes the bust less painful.

In each of these sentences, substitute the word ‘economy’ for the word ‘company’ and you will have an interesting set of prescriptions for the U.S. economy.

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Reader Comments

CompEng

May 5, 2009 10:52 AM

I've always personally agreed with those heuristics for success. Business debt ought to be mostly geared towards building capacity if market demand is large compared to the company's size (and of course, start-up costs). Otherwise, keep debt low, invest in the future, but not more than you can afford to pay if all should go wrong.

LAO

May 5, 2009 07:49 PM

I like it. We want to leverage ingenuity and compelling utility, not money -- a much more engaging existence, from my view, than second-guessing volatile finances.

Thank goodness somebody with a track record thinks that having the means of production is an advantage in product innovation -- it seems obvious to me that total immersion is bound to produce more ideas, but I would find it hard to prove.

The article left me with considerable respect for this company. I see so much disregard for corporate memory in some other quarters, and unwillingness to accept the role of failure in the process. The corporate structure itself ought to be the perfect environment for innovation, but management often seems instead to be in a mad rush to achieve a hollowed out virtual organization. I don't know where this model originated, but it also seems to underlie intentions for this nation's economy and government in recent decades, and I think it is unlikely to prove ultimately successful in any of these cases.

Sorry that Mr. Weeks seems to have escaped without actually revealing the secret to spurring innovation. Reading between the lines, it sounds like it might just boil down to knowing where your expertise lies and building on intermittent success -- intermittent reinforcement is a powerful motivator.

Jim Tarrant

May 8, 2009 09:27 PM

Ah, the sources of innovation are many. Corning is a very old, highly respected company with a very solid brand and a built in R&D component. Great as they are, they are not a good model for the many innovation-based start-ups out there, obviously. The latter are likely to rely as much on swimming in the community of fellow inventors and programmers as they are on their isolated experiments.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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