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Two Models of Success

The Western New York Chapter of the New Product Development Association held its third annual professional development seminar on September 13, 2000, in Rochester, New York, and there were two noteworthy presentations.

The Western New York Chapter of the New Product Development Association held its third annual professional development seminar on September 13, 2000, in Rochester, New York, and there were two noteworthy presentations. These two talks have implications not only for the auto industry but for all well-meaning new product and new service offering enterprises.

The first of these two presentations was given by Gary Einhaus, Director of Kodak’s Systems Concept Center (SCC). This dedicated team of innovators was first established in 1994 by the Chief Technical Officer Jim Meyer with a vision of being the catalyst for renewed Kodak growth through new imaging frontier technology and "really new" products—not just better, cheaper and faster existing product improvements. A multidisciplinary team of marketing, technology, industrial, and graphic design professionals was linked up with business development, market research, human factors, legal and manufacturing people. The whole idea was to move quickly from rough concept to value demonstration through rapid prototyping, emphasizing cross-customer solutions.

SCC now has 70 people in three locations (Rochester, NY; Palo Alto, CA; and Paris, France). Many of the ideas from this group are focused on emerging markets in China, India, and Latin America. Linking technology with unique regional customer needs sets the mission of SCC apart from tradition at Kodak. Market sensing goes beyond the voice of the customer (although focus groups and on-line surveys are used) to include observation. A venture board meets every eight weeks to hear new proposals and get updates from on-going projects. Each project is funded in these eight-week time buckets and eventually, total expected revenue projections are weighed against risk, time to returns, balance in the product and technology portfolio, as well as project synergy. Can the large corporation act like a venture start-up group? This is what Kodak is trying to find out.

Mr. Einhaus gave three examples of new products that have resulted from SCC: (1) Index prints (which most of us have seen with our CD produced photos); (2) Picture Maker Greater China (which responds to the frequent need there for I.D. portraits), and (3) Picture Pages (which rests on the idea that rolls of film and photos tell a story and can be composed to build this history for the customer).

Kodak has made progress in the age-old fight to make sure corporate technology is applied to its best advantage and leveraged in new products. On the other hand, all of these products are essentially platform extensions of existing ideas. And while Kodak has formed some joint ventures to exploit future impact technologies (like Kodak Polychrome), this company's struggle is the battle all large companies fight to continue to secure a future for themselves in an uncertain technology and market preference world.

The second noteworthy talk was given by Charles Craig, division vice president for Strategic Planning and Innovation Management, Corning Corp. Corning has become a great corporate darling and go-go success story in Western New York. The company's stock price increases are the talk of the town. Corning has doubled sales to $7 billion in three years and doubled R&D investments during this same time period. Corning has a growth target of 30% per year and continues to make good on this target with a true combination of breakthrough and revenue-sustaining product improvements.

Corning technologies and products are at the crossroads of the new economic revolution driven by e-business. Fiber optic technology leadership is not new to Corning, since they invented this technology and continue as the market leader. But now Corning has a prototype optical switch that could replace every telephone interchange technology in the world. Flat panel display technology seems to have almost unlimited market potential, and Corning just announced a new genome life science technology for printing strands of DNA for diagnostic products which is a true breakthrough. But Corning invested for nearly seven years in these technologies before markets were defined, which was key to the breakthroughs. How many companies are good at this—creating, shelving and then unshelving new product technology? Not many. Now the world is ready for these products. Or, perhaps, really ready is more accurate, since demand seems almost unlimited for these new products. Even without a telecommunications revolution, Corning would be introducing a whole range of hot new products. The reason: there is a corporate culture, philosophy and belief at Corning that the future matters and that growth into that future, with careful tending and nurturing of the innovation process, is how you march a company forward with purpose.

Corning is now ranked 10th behind number 9 Ford in the Forbes most valuable company list, and the company has a market cap greater than General Motors.

Large-scale systems integration looms as one of the next major challenges for this extremely successful company, as does attraction of key technical personnel to the company. There simply aren't enough people to go around. If technology was the basis of success in the past, execution and capacity ramp up will be the success factors of future in these high-tech industries. In 1995, 30% of Corning's sales came from products introduced by the company during the previous four years. In 2000, it is estimated that 80% of Corning's sales will come from products the company introduced during the last four years. And yet, Corning still struggles with perennial questions common to all companies: (1) how much to spend on R&D? 5% of sales? 8% of sales? Or just enough to continue as the market leader in all core businesses? And (2) who do you benchmark when the technology leaders have a "tight lid on" all information sharing, according to Mr. Craig.

Sound familiar?

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