Corning's Object Lesson On Competitiveness

Everybody is for quality. As many as one of every four U. S. workers spends all his time fixing other workers' mistakes. That means that boosting quality will save money: Reducing the cost of correcting mistakes, both before and after a product is sold, can cut production costs as much as 30%. And, of course, higher quality increases sales.

The rub is that a commitment to improved quality almost always means investing more time and money now for a payoff later. That's why the sustained and successful efforts to improve quality at Corning Inc. are especially noteworthy. Significantly, the campaign for quality at Corning was led by an enlightened CEO with a praiseworthy disregard for the short term. Just as important, Chairman and Chief Executive James R. Houghton got out in front of his managers in the campaign and has stayed there, never letting up.

A problem is that lip service to quality has made managers cynical about crusades. That was the reaction in 1983--the year Houghton took the helm of the company and announced his plans to spend $5 million on a total quality program. "They thought it was the flavor of the month," Houghton recalls. Instead, all employees were sent through a two-day quality seminar, and long-term goals were laid out. By 1991, all employees would spend 5% of their time in job-related training, errors would be cut by 90%, and all new goods and services would meet customer requirements and match competitors' quality. The CEO hammered away at the goals repeatedly during 50 open meetings a year.

The results are there for all to see. Customer returns of optical fiber have dropped to fewer than 1,000 parts per million, from 6,800 in 1986. And a quality team in the technical-products division helped eliminate missed phone calls; about 15% of calls had been overlooked in 1986. Other corporations are paying Corning the compliment of imitation.

Yet imitators without a long-term commitment are unlikely to achieve similar results. For whatever reason, too many CEOs have chosen not to manage for the long term. Houghton is right when he says, "Quality is going to let you play in the competitive arena of the future." That arena is an international one, and without rebuilding product quality and productivity, U. S. industry has little hope of competing in world markets.

Before it's here, it's on the Bloomberg Terminal.