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.
There's been a mad dash to find the next Tesla in recent years, with billions of dollars being poured into electric vehicle companies. Components have received less attention than complete vehicles, but one ValueWalk subscriber found a component maker he believes would be a good investment. During a recent webinar, subscriber David Schneider shared his Read More
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.
“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.’”
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.
“[Weeks] told Jobs: If you create the problem (a smartphone category that needs a surface), we can create the solution (a new category of glass).”
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.
“Corning is proof that an old company can institutionalize category design.”
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.
Excerpted from Play Bigger. Copyright 2016 by Alan Ramadan, Dave Peterson, and Christopher Lochhead with Kevin Maney. A HarperBusiness book, an imprint of HarperCollins Publishers.