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 / Second Quarter 1996 / Issue 3(originally published by Booz & Company)


Partnering for Results: A Case Study of Re-engineering, the Corning Way

How do you institute real change while preserving a company's culture? Corning Incorporated did it by starting at the top and by creating a partnership to transform itself through a comprehensive reassessment of its existing costs and hopes for growth.

How objectives were set and decisions made in a major re-engineering program that produced dramatic results for Corning Inc., a company that has been a world leader for many years in specialty glass materials. Telling this story are Gary Neilson, a vice president of Booz-Allen and the leader of the firm’s global Operations Management Practice, and Roger G. Ackerman, who is Corning’s chairman and chief executive officer. At the time this program was implemented, Mr. Ackerman was president and chief operating officer at Corning.

As frequently happens with large corporations, it took an unexpected shock to drive Corning to a serious self-examination. The shock was a $15 million net loss, reported in late 1993, resulting from a one-time write-down of its equity in Dow Corning that stemmed from legal issues associated with silicone breast implants. More significantly, the company’s valuation in the stock market sank 25 percent. Corning’s response was to re-engineer but, for special and understandable reasons, to re-engineer with a difference.

For a start, Corning Inc. was long on tradition. The company was founded in 1851 in Massachusetts and moved to tiny Corning, NY, in 1868. As Corning Glass Works, it flourished and Corning, NY, became a company town. This became a sensitive problem in 1994, because more than half of the 12,000 residents were employees and a typical re-engineering effort would have spelled disaster for the community. Together, Corning Inc. and Booz-Allen created Corning Competes - a program that aimed at substantially reducing costs and producing profitable growth but at the same time remained sensitive to the community.

How Corning speeded up its decision-making, created a cost-conscious environment and encouraged the horizontal flow of information across the organization, is carefully described in the “phased” approach used by the joint Booz-Allen and Corning implementation teams. For a company with a company town culture, this was indeed a breakthrough to the future.

Leaders of successful corporations are always on the lookout for ways to improve their company's overall performance. In the past, cost-cutting and right-sizing were high on the C.E.O.'s agenda. Today, there is intense interest in innovation and revenue growth. To achieve the desired gains in shareholder value, corporate leaders often end up selecting from a menu of transformation options that address both costs and capabilities, including the popular methodologies of business process re-engineering.

The trouble is, these options, however powerful they might appear, regularly fail to deliver results because they are implemented on a piecemeal basis. Though some elements in a company's performance equation may show gains, the overall outcomes are less than optimal. A common theme among companies that have re-engineered is that while costs may have come down, there is concern about the ability to drive future growth through innovation. In fact, according to Michael Hammer, one of the founders of the re-engineering discipline, more than 70 percent of transformation projects at large companies fail to achieve their desired results.

This was a problem that the leadership team at Corning Incorporated did not want to encounter as it began thinking about the need to examine the company's cost structure and competitive capabilities in the fast-changing markets in which it participates--telecommunications, life sciences, consumer housewares and components for original equipment manufacturers. As a place to begin, the team refrained from looking at the company as a collection of discrete functions. Instead, it decided to transform Corning by taking a comprehensive, integrated approach to the company's cost structure and growth aspirations. The methods that were used were drawn from a re-engineering tool kit and were arrived at while working in partnership with Booz-Allen & Hamilton.


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