Corning's Silicon Valley Connection

Many CEOs brag about nurturing a culture of innovation, but few have managed to do it over the long haul. The bosses at Corning (GLW) have. Over the company's 157-year history they have reinvented Corning time and again, tapping its ample budget for research and development to turn simple sand into a succession of big products, from heat-resistant glass for railroad lanterns and CorningWare ceramics to optical fiber and LCD screens. Now, even as other manufacturers are pulling back on R&D, Corning is pushing ahead to find the next hit.

Nearly 2,400 miles from its headquarters in Corning, N.Y., the company has set up a mini tech center in Silicon Valley. Working from the foothills behind Stanford University, 10 full-time researchers hope to hook up with folks at Google (GOOG), Hewlett-Packard (HPQ), and Intel (INTC), among other high-tech giants based nearby, and pitch them on Corning's latest inventions. These would-be customers could also pass along product ideas so Corning could develop them.

The staff is zeroing in on three areas: improving high-speed communications between computers using optical fiber, adding solar power to handheld devices, and developing better displays for smartphones and laptops. "We are trying to see what people are complaining about, and then we will come up with solutions that will help," says Waguih Ishak, the center's director.

A RISKY MISSION?

Opening a long-distance lab isn't all that new: Plenty of U.S. companies have built R&D facilities in Europe and Asia to tap local talent and tweak products for local markets. Corning's mission is different and perhaps riskier, however. Its new outpost exists primarily to suck up ideas and then relay potential winners across the continent to develop them into products.

Xerox (XRX) tried a similar experiment decades ago at its famed Palo Alto Research Center. Scientists there came up with such breakthroughs as the computer mouse. But back at Xerox's head office, upper management's focus was its basic photocopying business, recalls John Seely Brown, a former director of the center. "We would invent all sorts of things that didn't fit into the core business," he says, "so then they would sit on the shelf or eventually be spun out or licensed to other companies."

Corning, with a wider array of markets, appears more open, says Brown, who sits on Corning's board. "There is a unique, passionate interest in the whole innovation process and finding ways to cross-pollinate," he says.

Corning's upper management has given its outreach venture up to five years to show its proposals can generate sales. The company should be able to afford it. David Morse, a senior vice-president at Corning, says the Silicon Valley outpost will cost just under $5 million a year to operate, a rounding error at a company with $5.9 billion in revenue in 2007 and 25,000 employees worldwide. Still, Corning is pinching pennies, as its share price has sunk by two-thirds in 2008. Ishak has halted hiring and cut back on travel by using videoconferencing.

It helps that Ishak is running the place. Born and raised in Egypt, Ishak, 59, has spent 30 years in Silicon Valley, much of it in HP's labs, and boasts 2,200 business contacts in his Outlook database. "When you sit at a table in a restaurant in the Bay Area, behind you is Apple (AAPL), next door is Google, and then Cisco (CSCO) and HP nearby," he says. Just listen, he adds, and you'll learn.

For a video interview of Corning's Waguih Ishak, go to businessweek.com/go/08/corning