Conceicao 3M Case Study

J. Eng. Technol. Manage. 19 (2002) 25–38

Innovative science and technologycommercialization strategies at 3M:

a case study

Pedro Conceiçãoa,∗, Dennis Hamillb, Pedro Pinheiroca IN+, Instituto Superior Técnico, Center for Innovation,

Technology and Policy Research, Lisbon, Portugalb 3M Company, St. Paul, MN, USA

c IC2 Institute, The University of Texas, Austin, TX, USA

Accepted 12 November 2001

Abstract

Large, successful firms, even with a history of innovation, may create organizational mechanismsthat hamper innovation and customer response. This paper will describe how 3M purposefully fightsthis tendency by attempting to foster innovation within the company through the development ofefficient strategies to commercialize technology in rapidly changing environments. The paper willdescribe 3M’s general policies and its entrepreneurial culture, which are largely well publicized inthe popular literature. But the focus will be on on-going strategies to accelerate the commercializa-tion of technology in its electronic business. Specifically, the case of the Electronic Markets Center(EMC), a 3M Electronic and Communications Group unit created in 1997 to leverage the broadrange of 3M’s electronic products and technologies will be described and analyzed. Fifteen busi-ness units were organized around one single entity to more effectively ensure an overall coordinatedstrategy for 3M in the electronics market that could change the growth rate of 3M’s sales to the elec-tronic industry from 9% per year to 24% per year. The paper will focus on two critical componentsof the EMC: (1) what were the strategies behind the design of EMC; (2) how did EMC developedprocesses to manage the interdependence of the technical and business understanding of industrysegments and the relations with key accounts. The paper concludes with lessons learned from the 3Mexperience thus far, and with recommendations on how to fight some of the barriers to innovationand technology commercialization in large firms. © 2002 Published by Elsevier Science B.V.

Keywords:Commercialization; Publicized; Organizational mechanisms

∗ Corresponding author.E-mail addresses:[email protected] (P. Conceição), [email protected] (D. Hamill), [email protected](P. Pinheiro).

0923-4748/02/$ – see front matter © 2002 Published by Elsevier Science B.V.PII: S0923-4748(01)00044-3

26 P. Conceição et al. / J. Eng. Technol. Manage. 19 (2002) 25–38

1. Introduction

While the nature of competition among firms is highly dependent on industry structure,at a high level of abstraction we can contrast two ways of competing. One is through theoptimization of productive resources in order to gain the market-allowed margins of profit. Ina way, this “competition through efficiency” corresponds to the perspective of firm behaviorof neoclassical economics.1 A second way is to disrupt the market through the introductionof innovations, which give to the innovative firm a temporary absolute advantage (grantedby a formal patent or secured by secret) over every other firms. Again, these forms ofcompetition co-exist in all industries, and are a concern of most firms, but Schumpeter(1950), comparing one with the other, described the “competition through innovation” asa bomb that destroys the building, while “competing through efficiency” is not much morethan hitting the front door.

Thus, the concern with being innovative as been a major feature of most firms’ behav-ior. But to be innovative, it is important to know how the innovation process works. Earlyconceptualizations of the innovation process stressed the need to undergo research activi-ties to generate new ideas. Through R&D, firms could institutionalize efforts to search thefrontiers of knowledge for inventions that could translate into new products and processes.The commercialization of these products would ensue. Many studies confirm the linkagebetween R&D efforts at the firm level, and increased performance and competitive stance.Griliches (1998) provides an overview of a vast body of work produced by him largely dedi-cated to the study of this problem. Mansfield (1984) is another major reference. At the otherextreme, some suggested that innovation should merely be the result of perceived marketneeds by firms. The so-called market-pull view of innovation, pioneered by Schmookler, andcritically analyzed by Rosenberg (1972), started as an empirical observation, but quicklymoved into the normative world of management and policy.

Still, despite the existence of a correlation between R&D expenditure in firms andinnovation, this relation was far from being direct, linear and predictable. In the simplestterms, an increase by a firm of its R&D budget would not certainly assure a proportional(or even with decreasing returns) growth in innovative output. On the other hand, merelyresponding to market needs may not provide the leading-edge technological superiorityneeded to introduce really path-breaking innovations. Tidd et al. (1997) review the defi-ciencies of both of these linear perspectives. The work of Rosenberg (1982, 1994) andothers showed the complexity of the process through which new technologies are createdand commercialized. Much has to do, more than with the resources committed to R&D,with what Teece (1986) called the firms complementary assets: the way in which in firmis organized, and interacts with customers, suppliers, and competitors. This view requiresa more casuistic analysis of successful innovation by firms. Instead of general recipes of“what makes a firm innovative”, research on how successful innovation occurs needs tobe complemented with case analysis of firms with a track record in terms of technologycommercialization.

This paper is a contribution to this literature. We will describe initiatives within a large,innovative firm, 3M, aimed at improving the performance of technology commercializa-

1 Of course that in conceptualized perfect markets, price equals marginal productivity, and thus profits are zero.

P. Conceição et al. / J. Eng. Technol. Manage. 19 (2002) 25–38 27

tion. Why does a large and innovative firm such as 3M need to do something about itstechnology commercialization capability? Very successful companies are often the victimsof their own success. Success brings growth, larger size and increasing economies of scale(Chandler, 1990), more resources to invest in business and technology opportunities (Schum-peter, 1950), higher leverage in the marketplace and in the bargaining relationships withcustomers and suppliers (Porter, 1988), to name a few advantages. These benefits translateinto better conditions for further success and growth. Still, success brings with it the curseof complacency and conservatism. These adjectives should not be understood as makingan universal “moral” judgement on the path followed by successful companies, but arerather associated with the consequences of the organizational requirements of large enter-prises: more codified and rigid procedures (as people cease to know each other personally).Weber (1997) was the first to conceptualize this need of large organizations, with his theoryof bureaucracies. Chandler (1962, 1980) showed how the creation of bureaucracies basedon organizational innovations such as the multi-division company (pioneered by AlfredSloan at General Motors) was critical to the business development of the large Americancorporations of the second half of the 20th century.

But, again, bureaucracies tend to be complacent and conservative. Technological change,innovation, and changing consumer preferences risk being overlooked. While being largebrings advantages in terms of resources available to invest in R&D and other innovativeactivities, as Schumpeter (1950) argued, it is also true that size brings with it organizationalfeatures that can hamper innovation (Teece, 1986). Anecdotes on large firms, even witha history of innovation, becoming complacent and failing to see the technological andconsumer preferences changes abound. The example of IBM in the early 1990s comesprominently to mind (Hannah, 1998).

The argument outlined in the previous paragraphs seems inconsistent with Chandler’s(1990) theory of firm development. In this well known work, Chandler (1990) arguedthat large corporations, many created by the beginning of the 20th century, were able toaccumulate technical, organizational, and marketing capabilities that translated into virtuallyunassailable first-mover advantages that led them to dominate over time the oligopoliesthey generated. Based on this argument, Chandler (1990) went as far as suggesting thatthe decline of UK’s economic dominance was associated with its inability to create theconditions for the emergence of these large global giants, while Germany and the US wereable to do just that. However, Hannah (1999) shows that Chandler’s (1990) argument,which is largely in synch with common sense perception, is clouded by selection bias:by looking only at successful firms, one looses track of the many failures that occurredover time.

Table 1 summarizes what has happened in 1995 to the global top 100 industrial of 1912.It shows that almost half of the giants of 1912 disappeared by 1995, and that almost a thirdexperienced bankruptcy. Thus, despite our common perception that giant firms created atthe start of the century are still successful today (we may think of Du Pont, Shell, Procter &Gamble, Siemens, among others), the more common outcome for a large firm, with giantmanagerial hierarchies and large market and first-mover advantages, is failure.

By the same token, Chandler’s (1990) hypothesis on the superior performance of largefirms in the US and Germany versus UK fails the scrutiny of careful empirical analysis.In fact, Hannah (1998) shows that only 23% of the 1912 US giants still existed among


Table 1Summary measures of long-run performance of the 100 global largest firms of 1912 by 1995a

Type of outcome Probability ofoutcome (%)

Survives in top 100 19Survives and larger in 1995 than in 1992 28Experiences bankruptcy or similar 29Larger in 1995 or on earlier than in 1912 35Survives in any independent form 52Disappears 48

a Hannah (1999, p. 259).

the top 100 in 1995, while 75% of the large UK firms persisted from 1912 to 1995. Thus,Hannah (1998, p. 64) concludes that “Europe has been the home of the Chandlerian stableoligopolies; America has more obviously been the creative (and destructive) dynamo of theSchumpeterian paradigm”.

Therefore, we can now be more secure of Schumpeter’s (1950) assertion mentioned inthe first paragraph, that Schumpeterian competition is a much more powerful force than“efficiency” competition. But we also see that creative destruction has been a major featureof the economic history of large firms in the US, probably more intensely than anywhere inthe world. These arguments combine to reinforce the idea that the ability of firms to innovateis crucial. And even large firms, which have in principle great advantages as compared withsmall ones, are not immune to the destructive power of innovation by other firms. We havealso seen that the innovation process is not linear, nor a direct result of R&D, neither aconsequence of predicting market needs with perfect foresight.

So what do successfully innovative firms do right? This answer, obviously, has manyresponses, and we again insist that efforts to look for recipes are doomed to fail. But wecan exclude apparently simple, and seemingly reasonable, answers. For example, we sawthat just doing R&D is not enough. And that anticipating market needs is not enough either.It is also not sufficient to try to create monopolistic positions by relying extensively onpatenting is not likely to work, especially in highly volatile and vibrant high technologyareas. Flamm (1988), and Usselman (1993) showed that Sperry’s attempt to design andpatent basic approaches to computing, in an effort to establish and sustain dominant marketpositions early at the outset of the computer revolution failed miserably. The pace andbreadth of technical change was so overwhelming that Sperry’s patents would be obsoletealmost immediately after being granted. Usselman (1993) shows that it was IBM, withoutbeing a particularly outstanding technological innovator, which was able to conquer a largepie of the emerging computer market. And the reasons had more to do with Teece’s (1986)complementary assets than with technological innovative capability.

Therefore, as Mathews (1996) has argued, contrary to the traditional “strategy andstructure” thinking of organization theory, successful and innovative firms have attributessuch as flexibility, adaptability, responsiveness, that translate into a capacity to innovaterapidly. To encompass these new attributes the term “organizational learning” has been ad-vanced. Extending the concept of “learning”, which is traditionally used for human beings,


into organizations has its challenges. In the broadest sense, we will follow Mathews (1996)definition whereby organizational learning is equated with a firm ability to accommodatechanges (e.g. of products, technologies, markets).

To systematize further our concept of organizational learning, we will identify threeelements: information, people, and organizational units. Here, the term “organizationalunit” is the most ambiguous. It can stand for an entire small firm (without any structuraldivisions) or for a division within a large corporation. As a working definition, we willsay that it is the smallest unit within a firm with a very high level of autonomy. Peoplecorrespond, obviously, to the individuals that work in the firm. Here, we will be interestedprimarily in their level of knowledge and potential for learning, which economists oftencall human capital. Finally, information stands for all the codified knowledge in the firmthat is formalized, such as contracts, patents, production processes, R&D in progress, andso forth. Here, we include also all the machinery, computers, and other physical assets, orwhat is called physical capital.

Learning occurs both at people level and at unit level. People learn by increasing theirhuman capital (through education, training, experience, expanding their networks of per-sonal contacts). Learning at the unit level is reflected in increased productivity, resultingfrom scale-effects, better communication, and establishment of routines, among other pos-sibilities. Typically, both of these types of learning should also be reflected in an increasein the stock of codified knowledge of the firm, even if much remains tacit. Organizationallearning is the result of this increase in the stock of codified knowledge, human capital,and unit-level productivity. Encompassing the way people and units learn is the systemof incentives, rules of conduct, guidelines and informal norms of behavior that surroundthe firm’s activity. For better of a better word, we will call this context the firm’s culture.But organizational learning, that is, learning at thefirm level, goes beyond the mere ag-gregation of individual and unit-level learning: it results from the interaction of peopleand unitsacrossthe firm. It depends on the relationships and networks that are establishedbetween people and units, within the context provided by the firm’s culture and its marketand external environment. For a discussion on economic learning see also Conceição andHeitor (2001).

Given this framework of analysis, the remaining of the paper proceeds with a case studyof one of the 3M’s efforts to enhance organizational learning. Section 2 will describe,precisely, 3M’s culture, which we classify as being oriented towards innovation. We willshow in detail how 3M’s structure, strategy, system of incentives, and informal rules ofbehavior are oriented towards innovation. A major, and important, feature of this systemis the high level of decentralization of 3M’s divisions. These divisions correspond to the“units” of our conceptual framework described above. 3M’s culture of innovation has beenextremely successful at promoting individual and unit-level learning. The high level of au-tonomy granted to its divisions allowed just the characteristics needed to innovate: flexibility,adaptability, and responsiveness, without the encumbrances of a large hierarchy. However,while learning at the people and unit levels has largely been optimized, a perception emergedthat firm-wise learning could be enhanced. Section 3 describes a deliberate effort by 3M topromote organizational learning, that is, learning at the firm level, beyond the individual unitsand employees. Since this effort is still underway, Section 4 presents a brief discussion ofpreliminary conclusions.


Table 23M technology platforms

Adhesives Inks and pigmentsBiomedical systems Laser-induced thermal imagingCeramics Mechanical fastenersChemical power sources Melt processingCoated abrasives Micro-encapsulation and micro-spheresComposites Micro-interconnect systemsDental and orthodontia Micro-replication/micro-structured surfacesDisplay technology Non-wovensElectrical insulating materials Pharmaceuticals and drug deliveryElectromechanical systems Precision coatingElectronics and software Radiation processingEngineered films Skin healthFiber optics Specialty chemicals and polymersFiltration and separation Vibration control systemFluorochemicals and fluoropolymers Visual systemsHealth information Weatherable filmsImaging

2. The culture of innovation at 3M

3M, founded in 1902 in Two Harbours, MN, is today recognized around the globe as oneof the world’s most innovative and admired companies. 3M is a US$ 15 billion2 manufac-turing company with over 70,000 employees3 worldwide and more than 60,000 productsorganized in two main business sectors: “life science sector” and the “industrial and con-sumer sector”. Its products, which are the result of 3M’s strategy of building in its morethan 30 core technology platforms (Table 2) instead of focusing on a single strategic corecompetence, range from adhesives, pharmaceuticals, to overhead projectors, abrasives andmuch more.

3M’s innovation culture comes from the times when the five entrepreneurs who created acompany to explore a mine of what they thought being corundum,4 realized that all they hadwas a low grade anorthosite, which would not meet the requirements of the booming abrasiveindustry as they initially believed. Quickly they had to adapt and focus on producing sandpa-per products. But it was with McKnight, who joined the company in 1907 has a bookkeeperand later would become Chairman for more than 40 years, that 3M really developed a cul-ture towards systematic innovation. Since then, 3M has been characterized by McKnight’sprinciples of supportive management which encourages employee initiative and innovation.

The following is an analysis of the creative and innovative acts of management usedby 3M to promote innovation within the company, according to the model proposed byKozmetzky (as discussed in Carbonara, 1998). On the innovation strategy at 3M see alsoFigueroa and Conceição (2000).

2 3M 1998 annual report.3 3M 1998 annual report.4 Corundum is the word used to describe the group of gemstones to which both ruby and sapphire belong. Its

chemical composition is aluminum oxide and trace of various transition elements.


2.1. Strategy

3M managers take Peters’ words that “only the companies that thrive on chaos by constantinnovation are the only ones set to survive in the years to come” (Peters, 1997), very seriously.Coyne, 3M Senior VP, Research & Development, says that while for other companiesinnovation is an important element of their strategies, for 3M innovation is its strategy(Coyne, 1997). Innovation is so important for 3M that is clearly stated in its vision “To bethe most innovative company in the markets it serves”. To promote that innovative spirit3M has been driven by the following set of strategies.

• 30%/4 Rule: This rule states that each year 30% of 3M’s sales must result from productsintroduced in the last 4 years.

• 15% Rule: One of the most important principles in management at 3M is the promotionof entrepreneurship and freedom to pursue innovative ideas. At 3M that is materializedthrough the “15% rule”, which allows technical people to spend 15% of their time inprojects of their own choosing without needing approvals or even without having to tellmanagement in what are they working on.

• Products are a division’s responsibility: Each division is oriented directly towards themarket, aiming at responding to its customer base.

• Technologies are shared throughout the company: While products’ responsibility lieswithin each division, technologies belong to the company. Every division has access tothe technology resources of the entire company but also has the responsibility to shareits customers technological needs throughout 3M.

• Technology combinations: 3M promotes the combination of its core technologies in orderto advantage of those synergies to innovate new products and new applications.

• Strong intellectual property protection.

Furthermore, in order for 3M to prioritize major new programs and allocate the neededresources to bring them to market sooner, it also sponsors the “Pacing Plus Initiative”. Underthis program, each division is encouraged to develop one or two products that will changethe basis of competition, increase sales and profitability, eliminate low-value projects andproduce growth. Products that qualify for the Pacing Plus Initiative program will be givenadditional financial support and access to other resources. To qualify for the Pacing PlusInitiative, a program must meet all the criteria below:5

• Change the basis of competition for a business unit.• Provide new unit growth.• Meet corporate financial targets.• Use a new product commercialization system.• Be fully resourced.• Have an accelerated time frame.• Have global applications.• Incorporate proprietary technology that has patent protection.

5 3M Intranet: “Bill Coyne on the Pacing Plus Initiative”.


2.2. Culture and environment

3M’s culture is based in McKnight management principles laid out in 1948. More thana great manager McKnight was also a business philosopher, who crated a corporate culturethat encourages employee initiative, entrepreneurship and innovation. The following arethe basic rules of management he laid out in 1948:6

As our business grows, it becomes increasingly necessary to delegate responsibility andto encourage men and women to exercise their initiative. This requires considerabletolerance. Those men and women to whom we delegate authority and responsibility, ifthey are good people, are going to want to do their jobs in their own way.

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

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

• Failure is part of the innovation process: Tolerance for ideas that do not work and learningfrom mistakes is an integral part of 3M’s culture of innovation, where failure is seen asa learning experience.

• Informality: 3M is open, informal and in a first name basis.• Entrepreneurship and intrapreneurship: Evolutionary spin-offs have developed a key role

in 3M’s growth. 3M also fosters innovation by allowing the formation of both formaland informal new venture teams. These teams, which are composed by manufacturing,engineering and marketing full-time volunteers, have the ability to stay together if aproduct proves to be successful. These may represent the first steps towards a new businessunit. New venture teams are ruled by the principle of start small, learn how a businessworks and then expand “make a little, sell a little”.

• Diversified technological base.• Technology exchange within the company.• Customer driven innovation: 3M has a strong commitment to develop products driven

by the marketplace. Since its early days that 3M realized that in order to create productsthat really satisfy the customers needs, both sales representatives and technical peo-ple had to be in frequent contact with the customers where the products were beingused. It was again McKnight as a Sales Manager who understood that a salesman wouldhave a better chance of providing competitive products if he could get into the factoryfloors, talk to the workmen who used those products, and understand exactly what werehis needs and explain him how 3M products were superior to the competition. Thisway 3M identifies the customer problems, anticipate their needs and develop innovativesolutions.

All of these aspects promote a culture that emphasizes risk taking, teamwork, innovationand entrepreneurship.

6 Available on the Internet at:http://www.mmm.com/profile/looking/mcknight.html.

http://www.mmm.com/profile/looking/mcknight.html


2.3. Networks

Communication is an essential part of 3M success. To facilitate the communicationbetween technical people, marketing, sales, manufacturing and customers, 3M encouragesformally and informally networking activities that will assure coordinated actions.

The following are some of the means through which 3M creates conditions to an efficientinteraction and cooperation among its employees, internal organizations and customers.

• 3M’s Technical Forum: Organization to which all technical people belong and wherethey share technology, best practices, policies and procedures. Besides its lectures andproblem solving sessions, the Technical Forum also sponsors an annual event where allthe divisions show their latest products and technologies, and also sponsors specializedchapters in different technical areas.

• Exchange of personal between divisions and countries: It is a common practice at 3M tosee engineers and other personal come to US labs and US personal go oversees to helpintroducing new products or new technologies.

• Infrastructure to facilitate communication: 3M takes advantage of the latest technologiesto promote communication and interactivity between teams. At 3M, the usage of toolslike groupware applications, teleconference and videoconference equipment is a com-mon practice within the entire company. 3M also has its own internal TV to disseminatecorporate information, values and messages, which is also used for distance education(seminars or courses). Furthermore, even the facilities are designed to facilitate theinteraction between people from different divisions and different functions.

2.4. Organizational form

At 3M each division is managed as an individual company. This decentralization intosmall and autonomous business units allows them to minimize bureaucracy and concentrateon new ideas and their own customer base. Typically, the creation of a business unit isthe result of the consolidation of a new product team. When a 3Mer has an idea for anew product, he or she recruits a team of members from technical areas, manufacturing,marketing and sales. The team designs the product and plans how to manufacture, marketand sell it. All members of the team grow according to the project growth. Some of thembecome departments, some become divisions, while their project leaders become departmentmanagers or division managers. As a result, although 3M is big it acts small.

2.5. Motivations and incentives

At 3M, recognition is done through formal and informal mechanisms. In addition to thecommon tools to promote creativity and innovation, like salary increases and promotions,nothing is so effective as assuring that dedication, hard work and success are recognizedboth by peers and senior management. In this context, 3M developed the following seriousof programs and awards to recognize its most valuable employees:

• Golden Step Award: Recognizes teams whose new products have achieved US$ 5 millionin profitable sales within 3 years of being launched.


• Technical Circle of Excellence: Recognizes technical employees who excel in their work.These awardees are nominated by the entire technical community.

• Carlton Society: Honorary organization of individuals who made extraordinary contri-butions to 3M’s science and technology.

• Genesis Grants: Corporate grants to support ideas which do not fit into the technicalpeople’s division.

• Alpha Grants: Grants awarded for innovations in administrative, marketing and non-technical areas.

3. Case study: the Electronic Markets Centerand the 3M electronic business

In 1995, worldwide 3M sales to the electronic industry were approximately US$ 1 billionor about 10% of 3M’s total sales. These sales were addressing an estimated total worldwideelectronics industry of US$ 800 billion and an available market for 3M products of at leastUS$ 20 billion.

3M’s approach to this market has been very fragmented, mainly based on individualproducts and divisions focus. As a result of a lack of coordination between the businessunits and the consequent duplication of efforts, 3M was not leveraging its broad range ofproducts and technologies in the electronic industry and was observing frequent signs ofcustomer dissatisfaction that often decreases customer loyalty. As another consequence ofthat fragmentation 3M’s brands and products and technology presence within the electronicindustry was also diluted.

One of 3M’s greatest strengths is the autonomy and independence of its some 45 divisions,each able to respond quickly in its business arena, assisted by corporate technology centersand other resources, but not handcuffed by large organizational structure. Over a dozenof these divisions have found the electronics industry to be attractive opportunity for theirproducts, especially due to higher industry growth when compared to some of their otherindustrial market segments. These divisions have thus evolved a very curious and interestingportfolio in electronics, albeit one that grew accidentally, and without purposeful focus onelectronics customers needs. In particular, since business engagement was being managed bybusiness units which were on the average about 25% focused on electronics, most customeractivity received only fractionated attention and very little cross-division partnering tookplace.

In February 1997, the 3M Electronic Markets Center was created to help 3M position inthe electronics industry by driving a one company—one voice initiative in the electronicbusiness. Although the overall growth of the electronic industry exceeds 12% per yearglobally, and some segments are growing even faster at 20–40% per year, 3M growth hadnot kept up with these industry levels. The challenge for this new organization was to helpchange the growth rate of 3M’s sales to the electronic industry from 9 or 10% per year towell over 20% per year, with a goal of achieving a US$ 10 billion 3M sales volume to theelectronics industry in 2006.

In this context, the EMC was designed to put in place processes to achieve the establishedgoals through three main strategies:


1. Leverage 3M’s broad product portfolio in key accounts to accelerate growth of existingand modified products. This “sell what we’ve got” portfolio management strategy focuseson making it easier for customer decision makers to access and use the rich broad selectionof 3M products.

2. Identify through close key account involvement, opportunities to leverage 3M’s breathin technologies to sponsor and improve the probability of success of products new tothe world which address real customer problems. This strategy emphasizes deep under-standing of customer needs by segment and linking those needs to potential solutionsfrom multiple 3M technology sources.

3. Identify gaps in 3M’s product and technology portfolios, with respect to industry needs,and drive alliances/acquisitions to fill them.

In order to drive 3M to the desired growth objectives in the electronics industry initia-tives were focused in four industry segments which are growing rapidly and which offeropportunities for a majority of the divisions related with the EMC. Those segments were:storage systems, semiconductors, display systems and printed circuit board fabrication andassembly. These segments each offer significant growth, key accounts running similar man-ufacturing processes, needs for technology solutions and they each exhibit opportunitiesacross a number of 3M division.

3M’s business in electronics spans a wide variety of products including:

• Board and cabinet interconnect: copper, Co–Ax, fiber.• PC and flex circuit component interconnect, sequencing tapes, EMI control.• Flip-chip, MBGA, micro-interconnect to chip.• Chip and wafer processing; micro-abrasives, specialty chemicals, static control, electro-

optic packaging.• Vibration control, special tapes and adhesives.• Brightness enhancing films, optical films.• Packaging and labels at all integration levels.• Micro- and macro-filtration products.

About 60% of 3M’s sales to electronics are outside the US and are supported very heavilyby 3M’s global organization. Divisions are headquartered in the US; 5 in Austin, Texas andthe remaining 40 in St. Paul, MN. These divisions are headed by General Managers whohave global P&L responsibility for their products. For the past 50 years, 3M has beenbuilding a strong international organization, with wholly owned subsidiaries in over 80countries, structured to support those global divisions with local logistics, sales/marketing,manufacturing and technical organizations driving country-specific customer satisfaction.This is a complex task, handled by a complex organizational structure, but the traditional“think global—act local” approach has worked well for 3M over the years.

As the EMC was created, the need for global emphasis was forefront, as the electronicsindustry is made up of a complex shifting pattern of technology and manufacturing regionalstrengths and competencies. Thus, regional EMCs were put in place for Europe, Japan andthe southeast Asia region, with directors reporting to the global EMC in Austin, Texas.

Addressing the challenge of better focusing 3M on electronics, and building understand-ing and intimacy with the industry, the EMC was structured to provide that leadershipfor 3M. An industry marketing organization was put in place to provide, for 3M, overall


industry insight, market segmentation and industry consortial involvements. In each selectedsegment, technical marketing teams provide segment insight and foresight through technol-ogy and process roadmapping, leadership participation in segment industry and standardsorganizations, and overall 3M portfolio management strategies and priorities. In addition,in each selected segment, strong technical sales leaders have been assigned as key AccountManagers for each major customer to provide a single point of presence for both existingproduct access and technology problem solving for the accounts.

One of the strongest elements of the EMC approach is the identification of a number ofcorporate strategic accounts. These make up the top 20 electronics OEMs in the world. Eachof these have assigned to them a Strategic Account Director or Manager responsible for:

Providing a single channel for these most important customers.Promote 3M’s total capabilities.Align 3M’s major programs to customer’s present and future business needs.Deploy 3M global resource to support customer’s global operation.Present 3M’s value-add solution package.

These account leaders have put teams in place to ensure that all engagement ranging fromdaily support of purchasing and logistics issues all the way to management of joint tech-nology development programs are managed smoothly and coordinated across all of 3M.

The EMC initiative is clearly a departure from the typical 3M approach of product drivendivisions moving into new markets leveraging niche applications from earlier served “homemarkets”. That traditional approach was not working until the EMC addressed specificallythe challenge of enabling 14 divisions working together to leverage 3M’s broad technicaloffer in electronics, to be closer to the market and to deal with the customer with one singleface. Table 3 lists the divisions involved. The challenges of totally gaining that leveragewhile maintaining division autonomy and ability to act are not easy to overcome!

Attempting to accelerate the technology commercialization process through customerforesight driven compelling business cases only works easily if control is centered in asingle business unit, not dispersed among several. Integration of the efforts of these businessunits in electronics is well underway.

Table 33M business units in the EMC

AdCer: Ceramic ProjectAdhD: Adhesive Systems DivisionASD: Abrasive Systems DivisionBSD: Bonding Systems DivisionEH&PD: Electronic Handling and Protection DivisionELPD: Electrical Products DivisionEPD: Electronics Products DivisionFPD: Filtration Products ProjectITSD: Industrial Tape and Specialties DivisionOSD: Optical Systems DivisionPMD: Performance Materials DivisionPSD: Packaging Systems DivisionS&SSD: Safety and Security Systems DivisionTSD: Telecom Systems Division


4. Conclusions

The EMC initiative exemplifies 3M’s efforts to maintain its innovation leadership throughchanges in its organizational structure and strategy. Drawing from the strengths of its cultureand organization a new unit, EMC, was created to coordinate 3M’s response to pressingmarket needs in a growing sector. The point we would like to stress is that there was a needfor some higher level of coordination (beyond the division level) to achieve 3M’s intendedintegrated response. While the strategy behind the establishment of highly responsible andautonomous divisions has shown to be sound and effective, the identification of a verylarge growth opportunity in the global electronic industry could not be addressed with thefragmented divisional market approach.

This 3M case study illustrates that organizational change to enhance innovation andcreativity does not necessarily go in the direction of creating smaller and more fragmentedunits. Often it is more important to enhance the networks and connections among existingorganizational units to provide a more coherent firm-wide response to market needs.

References

Carbonara, C., 1998. Creative and Innovative Management (mimeo), Class Notes for the Masters Program inScience and Technology Commercialization. IC2 Institute, Austin, TX.

Chandler, A.D., 1962. Strategy and structure. History of the American Industrial Enterprise. MIT Press, Cambridge,MA.

Chandler, A.D., 1980. The Visible Hand: The Managerial Revolution in American Business. MIT Press,Cambridge, MA.

Chandler, A.D., 1990. Scale and Scope: The Dynamics of Industrial Capitalism. Harvard University Press,Cambridge, MA.

Conceição, P., Heitor, M.V., 2001. Towards a university agenda on engineering policy and the management oftechnology. International Journal of Technology Policy and Management 1 (2), 195–227.

Coyne, W., 1997. “3M”. In: Moss Kanter, R., Kao, J., Wiersema, F. (Eds.), Innovation—Breakthrough Thinkingat 3M, DuPont, GE, Pfizer, and Rubbermaid. Harper Collins, New York.

Figueroa, E., Conceição, P., 2000. Rethinking the innovation process in large organizations: A Case Study of 3M.Journal of Engineering and Technology Management 17 (1), 93–109.

Flamm, K., 1988. Creating the Computer: Government, Industry, and High Technology. Brookings Institution,Washington, DC.

Griliches, Z., 1998. R&D and Productivity—The Econometric Evidence. University of Chicago Press, Chicago.Hannah, L., 1998. Survival and size mobility among the world’s largest 100 industrial corporations, 1912–1995.

American Economic Review 88 (2), 62–65.Hannah, L., 1999. Marshall’s ‘trees’ and global ‘forest’: were ‘giant redwoods’ different? In: Lamoreaux, N., Raff,

D.M.G., Temin, P. (Eds.), Learning by Doing in Markets, Firms, and Countries. The University of ChicagoPress, Chicago and London.

Mansfield, E., 1984. R&D and innovation: some empirical findings. In: Griliches, Z. (Ed.), R&D, Patents, andProductivity. University of Chicago Press, Chicago.

Mathews, J., 1996. Organizational foundations of the knowledge-based economy. OECD, Employment and Growthin the Knowledge-Based Economy. OECD, Paris, 1996.

Peters, T., 1997. “Foreword”. In: Moss Kanter, R., Kao, J., Wiersema, F. (Eds.), Innovation—BreakthroughThinking at 3M, DuPont, GE, Pfizer, and Rubbermaid. Harper Collins, New York.

Porter, M.E., 1988. Competitive Advantage: Creating and Sustaining Superior Performance. Free Press, New York.Rosenberg, N., 1972. Technology and American Economic Growth. M.E. Sharpe, White Plains, NY.Rosenberg, N., 1982. Inside the Black Box: Technology and Economics. Cambridge University Press, Cambridge

and New York.


Rosenberg, N., 1994. Exploring the Black Box: Technology, Economics and History. Cambridge University Press,Cambridge and New York.

Schumpeter, 1950. Capitalism, Socialism and Democracy, 1st Edition. Harper Row, New York.Teece, D., 1986. Profiting from technological innovation: implications for integration, collaboration, licensing,

and public policy. Research Policy 15, 285–305.Tidd, J., Bessant, J., Pavitt, K., 1997. Integrating Technological, Market, and Organizational Change. Wiley, New

York.Usselman, S.W., 1993. IBM and its immitators: organizational capabilities and the emergence of the international

computer industry. Business and Economic History 22, 1–35.Weber, M., 1997. Theory of Social and Economic Organization. Free Press, New York.

Conceicao 3M Case Study

Documents

Transcript of Conceicao 3M Case Study