INNOVATION AT 3M

Abhoy K. Ojha

WHAT IS INNOVATION?

Abhoy K. Ojha

• Innovation is not the same as invention.• Invention creates technical value, and

Innovation creates economic value• Innovation is the process of applying a ‘new’

idea to create a new process or product.• Innovation occurs in a probabilistic setting. A

company never knows whether a particular technical result can be achieved and whether it will succeed in the market place. For every new solution that succeeds, tens to hundreds fail.

Abhoy K. Ojha

• Technology tends to advance through a series of random - often highly intuitive - insights frequently triggered by gratuitous interactions between the discoverer and the outside world.

• The innovative process is inherently incremental. An innovator often does not know whether his problem is tractable, what approach will prove best, and what concrete characteristics the solution will have, if achieved.

Abhoy K. Ojha

HOW CAN THE INNOVATION PROCESS BE SUPPORTED?

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• The task of the innovating organization is fundamentally different from that of the operating organization. The innovating task is more uncertain and risky, takes place over longer time periods, and assumes that failure in the early stages maybe desirable.

• An organization that is designed to do something well for the millionth time is not good at doing something for the first time.

• From Galbraith’s “Designing an Innovating Organization”

Abhoy K. Ojha

• Because ongoing operations are repeatable, while innovation is nonroutine, innovation leaders must think very differently about organizing

• Because ongoing operations are predictable, while innovation is uncertain, innovation leaders must thing very differently about planning.

• Govindarajan & Trible (2010: 15)

Innovation’s Missing Link

Ongoing Operations

Organizing and planning

Execution

The need to reassess organizing and planning

is often overlooked

Making Innovation happen

Committing to an innovative idea

Innovations

Strategy

Govindarajan & Trimble, 2010: 16

Components of an Innovating Organization

• Structures• Processes• Reward Systems• People

Abhoy K. Ojha

3M History• Founded in 1902 as the Minnesota Mining &

Manufacturing Company by 5 businessmen to mine a mineral deposit for grinding-wheel abrasives in Minnesota.

• Almost went bankrupt as the venture failed• Produced a successful abrasive cloth in 1914• First dividend in 1916• Success continues….

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3M Today• 50,000+ products

– 100 major products every year– 500 products every year (or around 10 per week)

• 35 business units in 6 businesses, 45 technology platforms• 17 international divisions• 15% of sales from products introduced in the last 3 years.• Operations in 60 countries (manufacturing in 35)• 3M products sold in about 200 countries• Patents: 570 (2006), 571 (2007), 561 (2008), 518 (2009), 589 (2010), 514 (2011)• 2009

– Sales: $23.5 billion (63% outside the US) Net income: $3.2 billion– About 75,000 employees (43,500 outside US), 6700 researchers

• 2010– Sales: $26.7 billion (65% outside the US) Net income: $4.08 billion– About 80,057 employees (47,102 outside US), 7350 researchers (50% outside US)

• 2011– Sales: $29.61 billion (66% outside the US) Net income: $4.28 billion– About 84,198 employees (51,000 outside US), 7900 researchers (more than 50% outside US)

Abhoy K. Ojha

Adhesives

Abrasives

Ceramics

Electronic packaging

Micro replication

Optics

Specialty materials

Non-woven Materials

Polymer melting

3M Technology Platforms

Architecture & Const.

Auto. & Aerospace

Electronics Manuf.

Graphic arts

Health care

Home and Leisure

Industrial OEM

Consumer & Office

Safety & Security

Telecoms and Utilities

Markets

Abhoy K. Ojha

WHAT ARE SOME OF THE KEY FEATURES OF 3M’S INNOVATION STRATEGY?

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McKnight Principles

• As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their on way.

Abhoy K. Ojha

• Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs.

• Management that is destructively critical when mistakes are made kills initiatives. And it’s essential that we have many people with initiative if we are to continue to grow.

Abhoy K. Ojha

Innovation Philosophy at 3M

• Research is the transformation of money into knowledge…Innovation is the transformation of knowledge into money

• Innovation is not an accident …• It is the product of a complex set of principles and practices which

support and encourage the coupling of technology and creativity to satisfy customer needs.

• It is accomplished by people… • Leaders who give permission and encouragement• Staff who work with determination and imagination• Customers who provide input and feedback to the process

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Support for Innovation

• Explicit top management commitment to innovation• 15 % time on projects of own choosing• Failure is not fatal/ Often turned into success (Post It)• Management sponsors for projects• Dual-ladder system of promotion (pure technical role)

• Target of 30% of global sales from products introduced in the past 4 years (it used to be 25% in 5 years)

• Small divisions (despite loss of economies of scale)

Abhoy K. Ojha

Nurturing New Products• High R&D spending – over $ 1 billion in 2001, $ 1.4 billion in 2008, $1.3 billion in

2009, 1.43 billion in 2010– $ 7.02 billion in last 5 years– About 6% of sales

• R& D at three levels• Division - products• Sector – long term platform technology• Corporate – basic research

• Formal and informal forums

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•Golden Step Program•Carleton Society•Cross-functional teams (initially volunteers)•Product champion (initial idea provider)•Management Sponsor (not necessarily from division)•Send lab people to the field (field people to lab)

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Structure• Roles– Idea Generator• primarily technical recruits early in the career (rarely go

for lateral recruits)• 15% time not linked to operational work

– Sponsor• General Managers• General Managers of other divisions (matching grant

from Head office)– Orchestrators• Top Management• Top Manage

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•Differentiation• Project team consists of volunteers (15% time)• After initial clearance multi-disciplinary members

full-time•Reservations• Several R& D labs (32 international)• University projects

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Processes• Funding

• Each GM has funds• GM can fund project in other divisions• Genesis grants up to 50,000 to take projects

past idea stage

• Getting Ideas• seminars/conferences• 15% ‘free’ time• burden of proof on questioner

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• Blending Ideas• after initial stage, multi-disciplinary team

necessary• head office matches grants from other divisions

• Transitioning• idea generator stays with project, finally

becomes GM

• Managing Programs• keep divisions small ($200 m sales)• R&D at three levels

Abhoy K. Ojha

Reward Systems• Rewards for individuals and team

• 15% free time• team membership voluntary• financial rewards• membership of Carlton Society• follow and manage the project to completion.• team returns to old position in case of failure

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People• Rely primarily on engineers hired out of

college• Local hiring• Internal career paths, rare lateral hiring• Failures accepted• Peer review

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CAN SOME OF THESE FEATURES BE TRANSFERRED TO ORGANIZATIONS IN THE INDIAN CONTEXT?

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3M in India

• In India since 1988

• Headquartered at Bangalore

• 5 Manufacturing facilities at Ahmedabad, Bengaluru, Pondicherry and Pune.

• 3M India Innovation Center• 80+ Technical Personnel – plans for further growth

• Based in Bengaluru, Gurgaon, Pune and Ahmedabad

• Serve all 6 of 3M’s Big Businesses

• Localization and Local Product Development for specific Indian market needs

• Cross-functional and Cross-Country Collaborations for Customer-Centric Solutions Development

Abhoy K. Ojha

Abhoy K. Ojha

WHAT DO YOU THINK 3M SHOULD DO IN THE FUTURE?

Abhoy K. Ojha

Questions?

Abhoy K. Ojha