An Article From the Archives:
We came across an article that originally appeared in our Productivity Newsletter back in 1992. What we liked, and still like, about the article is that it demonstrates the good things that take place when top leadership is driving the change process. The article focuses on James Houghton, former CEO of Corning, Inc. and his effort to turn his organization into a total quality organization. The lessons he expounds upon are even more relevant today…whether you’re talking total quality, total productive maintenance, lean, continuous improvement, etc.
Today Corning is one of the world’s biggest glass makers. It is an $11 billion company with 50,000 employees and is one of the main suppliers to Apple Inc. since working with Steve Jobs in 2007 to develop the iPhone. Corning develops and manufactures Gorilla Glass which is used by a large number of smartphone makers. Corning won the National Medal of Technology and Innovation four times for its product and process innovations.
James Houghton, CEO, Corning Inc., 1983-1996, 2002-2005
It comes as no surprise that James Houghton touts leadership as the first of “six commandments” underpinning a successful total-quality strategy. The other five: focusing on customer results, training all employees, recognizing employee participation, communicating quality throughout the organization, and providing appropriate quality measures and tools.
“Without leadership, nothing else happens,” Houghton says. “When I said, “We’re doing total quality and will commit $5 million to get started,’ I was a lonely guy.”
Houghton had seen the handwriting on the wall in 1983. Corning wasn’t making money, its employees weren’t happy, and competition was getting fiercer daily. He had been impressed with the results in a Biddeford, Maine facility where the plant manager proceeded with quality improvement despite his boss’s objection. Yields rose dramatically. Then Houghton visited IBM. “I hadn’t a clue when I started how important this was going to be,” he says. “I held my nose and jumped in the water.”
Today, Houghton is not a lonely champion, but he’s still the quality spearhead at Corning. He visits 40-50 Corning sites each year and spends 35-40% of his time out in the organization, creating the atmosphere for quality.
Even Corning’s board of directors is in step with quality. Quality tops the agenda at every board meeting, and several directors have taken Corning’s three-day quality awareness training. With that kind of top-level role modeling, Corning’s business unit managers got serious about quality in a hurry.
Houghton concedes that he hasn’t been gentle about promoting total quality. Nor have many of Corning’s front-line employees. Most managers have woken up to empowerment because employees won’t stand for people getting in their way,” says Houghton. “The fire starts at the top and then goes to the bottom.” Middle managers are usually last because they feel the most threatened. So Houghton insists that “leadership in total quality is not a one-time message; it has to be constant.”
Houghton defines quality as “meeting customer requirements 100% of the time.” Yet he’s keenly aware that understanding and meeting customer requirements gets more difficult every day. He suggests that perhaps Corning focused too long on internal processes and internal customers before looking outward. But today, Corning solicits external customer feedback in many ways, including detailed surveys and focus groups.
Additionally, the customer’s key result indicators (KRIs) measure what’s important to the customer. Houghton cites Corning’s lab testing business as an example. “We don’t use the number of tests run per hour as a KRI,” he says. “External customers don’t care about that. They want error-free reports on time.”
When Corning’s Telecommunications Division just missed winning the 1989 Baldridge Award, Houghton learned that customer satisfaction represented the biggest gap between the division’s actual performance and Baldridge best-in-class standards. “Ninety-five percent of the customers who leave you will leave without saying anything,” he says. Organizations therefore must act proactively and keep their fingers on the pulse of customer expectations.
Houghton is proud of Corning’s 1991 training goal: everyone in the organization spent 5% of their working time in training. Corning completed one million hours of training in 1990. Houghton doesn’t deny that training costs money, but “once you start training, you get a payback,” he says. And there’s no standing still. Corning’s training experts will soon report to Houghton on their plans to meet corporate training goals for 1995: sustaining the 5% criterion – and doubling training effectiveness.
Houghton cites one Corning training showcase: a plant in Blacksburg, VA where employees spend 20% of their work time in training and receive compensation under a pay-for-knowledge program.
Houghton reports that Corning currently has 2,200 teams involved in quality improvement projects, and those teams have generated 10,000 corrective action ideas. Employee involvement constitutes a large part of Corning’s “partnership process,” which includes the entire value chain from suppliers to customers.
Enabling employees to become partners has led to a “dramatic breakthrough in efficiency and employee morale,” says Houghton. “People want to contribute, but no one was listening. When you hire a pair of hands, you get a head for free. Use it.”
In addition to external customer surveys, Corning conducts detailed employee climate surveys. “You can’t over communicate total quality,” says Houghton. “The best form is live, one-on-one communication. The most important activity in the process is listening.”
Corning’s 250 KRIs measure customer deliverables (including satisfaction) and discrete processes ranging from factory production to recruitment and book closings. Top-level managers review KRIs at quarterly executive staff meetings. Now at all levels in the company, managers review KRIs alongside financial data. For unit managers, measuring themselves against a national set of standards was a cold dose of reality,” says Houghton. “Many were surprised to learn what customers, suppliers and employees thought of them.” And Corning puts its money where its mouth is regarding KPIs: Houghton links performance appraisals of his direct reports to KRIs in their span of control, and this process cascades throughout the company.
The Bottom Line
Corning has doubled its return on equity since 1983, and though Houghton doesn’t claim that total quality is entirely responsible, he feels it’s had a major bottom-line impact. But as a CEO who has been in the trenches more than most, he knows that you can’t rest on your laurels for even a second.