3MProfile of an Innovating

Company

Organizational Behavior - IIMar 18, 2012

What s in …

3M: The Beginning3M’s Approach: New ProductsPolicies & PhilosophiesInternal Practices

Entrepreneurial EnvironmentInternal Restructuring

Lehr Jake DeSimone

External FactorsRetrospectSWOT Analysis7-S Framework Analysis

3M – The Beginning1902: Minnesota Mining and Manufacturing1902 to 1916: Embarkation stage – struggle for survivalThe change by McKnight: direct communication between sales and plant improved quality, helped develop new products

Further influences 1916: “lab” Dedicated product developer –Wetordry 1925: masking tape born

With over 76,000 employees they produce over 55,000 products, including: adhesives, abrasives, laminates, passive fire protection, dental products, electrical materials, electronic circuits and optical films

POWER OF INDIVIDUAL ENTREPRENEURSHIP

3M’s Approach: New Products

Entrepreneurial works are more popular3 approaches to NPD at 3M

Skunk-worksSpearheaded by employeesPost-it Notes

Traditional developmentPacing programs

promising projectsScotch-Brite

Selected Policies and Philosophies of 3M

15 Percent Option30 Percent RuleDual Ladder Career PathSeed CapitalTolerance for failure Reward for successR&D SpendingThree-Tiered Research

Business Unit Laboratories (short term)Sector Laboratories (10 Years time horizon)Corporate Laboratories (20 Years time horizon)

Technology ForumCustomer Contact

3M and post-it notes

Entrepreneurial Environment

Right mix ofFreedom and disciplineAuthority and responsibility

Personal freedom: ‘15:85’ time splitNatural advantage & CraftsmanshipInquisitive, passionate and self-startingKnowledge sharingSatisfy market needsFrom 3M

Willingness to listen and rewardSupport projects though not promising

1937: Central Research Laboratory‘Not a hi-tech company but a creative companythat needs high level of technology’Tripod-like stability: Sales, Manufacturing andProductionRetain good people: “Dual Ladder” career trackPermitted “well-intentioned failures”1944: ‘adhesive division’ formed – a success1960s: Grow and Divide30% of revenue to come from new products launched in last 4 years.

Internal Restructuring

Lehr (1980 – 1985)

1980 Reorganization:42 divisions into 4 sectors

Corporate Strategic Planning Committee

20 Strategic Business Centers (Thought centers)

Cooperating for Growth – sales clubs, trade fairs, trade shows

Lehr legacy: Technology base

Jake (1986 – 1991)

Uncompetitive cost structure

J35: 5 yr target reduction in labor and cycle time

Action Teams to reduce time to market (Occupational Health and Safety Division)

Selective funding for projects

Technical audit – important management tool

Pacing Programs – projects identified

DeSimone (1992)

Combination of his predecessorsHerzog’s motivational style

Lehr’s ability to bring the best out of individuals

Jake’s discipline, focus and objectivity

Four sectors to three

Continued 5 yr plans

Questions about innovation as main vehicle

External Factors

Balance between external demand and internal capability

International expansion

1977: economic slowdown and foreign competition

1980: Oil shock

Competition – globalRefine processes

Become more efficient

Apt resource allocation

Retrospect …

Respect and exploit the potential of employees

Expression of their individuality

They seed innovation and this sets standards for the organization

Hindsight, better streamlining and coordination of such practices needed when organizations grow on a global scale given the constraints for survival – competition, cultural changes and the very need to innovate.

SWOT Analysis…Strengths

Strong research and development capability Diversified business portfolio Strong financial performances Strong return on average assets and investments

Weaknesses Poor inventory management Rapid expansion of business volume which made them difficult to manage

OpportunitiesRising healthcare spending in the US Global expansion

ThreatsGrowth in private labels Exchange rate fluctuations Slowdown in the US and Eurozone

7-S Framework Analysis…Shared Values – “Innovation”Structure – “Freedom & Discipline”Systems – Open communication & planned innovation support from all levels.Style – CooperativeStaff –Natural skills and craftsmanship.Skills – Meet the distinct need of customer needs, relationship-building business.Strategy – To build a truly global brand, build market leadership.

Questions?