3M: PROFILE OF AN

INNOVATIVE COMPANY
Group 6
The beginning
 The founding philosophy – McKnight
 Competitive Advantage:
 -R&D and experimentation
 -Product Differentiation
 Focus on needs stimulated linear sequential
coupling
- Relaying customer needs to R&D
 Search and attract idea generators( Francis
Okie –”Wetordry”)
 Multiple Sponsoring System
 3M Culture –Environment for Individual
Entrepreneurship

Leveraging and Expanding the
Technology Base
 Gained strong knowledge of materials
technologies and process
 Creation of Central Research Laboratory –
product-market explosion within 3M
 Opportunities
 External Demands
 Expanding product applications leading to new
customer needs
 Internal Capabilities
 Culture encouraging employees to leverage
products, process and technologies

Basis of success of 3M’s
development program under
McKnight
Basis of success of 3M’s
development program under
McKnight
 Technology base
 Value of sharing knowledge
 Formal networks for communication
 Technical Council
 Technical Forum
 Informal contacts
 Product Development
 Objective 25% sales from products created in last 5 years
 Encouraging individual entrepreneurship
 Continuous exchange of ideas –sales, manufacturing ,
research
 Bootlegging -15% time pursuing projects of interest
 Supporting projects irrespective of market potential
 Make a little, sell a little



 Rewards for idea generators
 Appreciation
 Dualladder career track
 Promotion
 Recognition
§ Carlton Society
§ Golden Step Award program
§ Informal recognition –Repeating
stories
 Individual persistence and commitment
 Culture
 Failures not penalized


Structure of 3M
Organizational Model -
McKnight
 Supporting small entrepreneurial units – 7 divisions
with own research lab, production operation and
sales force
 Division GM –full responsibility for operation
 Organic ‘Grow and Divide’ policy
 Project--->Department --->Division---> New Group
 Decentralization along with Tight control over divisional
operations through strong corporate staff and
sophisticated control systems
 International expansion
– International divisions with six subsidiaries
– FIDO principle
– Self-generated self-financed growth

Need for Change
 External
 Economic slowdown
 Foreign competition
 International expansion –more difficult

 Internal
 Less effective product development
capability

Organizational Model – Lou
Lehr
 Major Priorities
– Cross-unit coordination
– New emphasis on formal strategic planning
– Expanding and leveraging 3M’s tech. base
 Need for change – Entrepreneurship; Greatest strength
leading to fragmentation
 4 business sectors – Industrial and Consumer,
Electronic and IT, Graphic Technologies, Life Sciences
 Own lab : Drive medium term growth

 CRL :Long term basic research

 Division lab: Short term growth


 Formalized planning
B o o stin g Te ch n o lo g ica l
structure in ve stm e n ts

– 12 person Corporate In cre a se d b u d g e t fo r R &D –

Strategic Planning Fro m $ 2 3 8 M n in 1 9 7 9 to $
Committee headed by 5 0 7 M n in 1 9 8 5
Vice-president
– Setting up of 20 Strategic G e n e sis p ro g ra m : B a sic
Business Centers re se a rch
– Evaluation of non-
performing products, C ircle o f Te ch n ica l e xce lle n ce –
projects and businesses R e co g n izin g a ch ie ve m e n t
– Removing of businesses th ro u g h p e e r n o m in a tio n
running into losses
‘ C o o p e ra tin g fo r G ro w th ’-
– Challenges
co n ve rtin g sp e cia lize d sa le s
– Initial Resistance to new fo rce to b ro a d -b a se d p ro b le m
format so lve rs
Under Lou Lehr
Organizational Model -
Jacobson
 Increasing Productivity
 Program J35 :– reducing labor content and
manufacturing cycle time by 35 per cent
 Co-labelling strategy:- entering into co-labellling
agreement with foreign companies
 Advantages:
- cut off market access for competitors
- Acquire a strong ally
 Challenges:
 - Remove skepticism and resistance of managers
Disciplined Development
process
 Need to convert R&D into an effective source of Competitive
Advantage
 Need to reduce lead time and bringing new products to the
market
 Action Team
 New facility to facilitate cross functional interaction and
team work
 Moving from inventor to innovator
 Increased discretion in defining, selecting and funding
projects
 Technical audit group :- monitor selection process and
allocate R&D resources among sectors
 Pacing program:- each division selecting handful of
development programs
 Challenges:
- Less motivation and morale
- Less freedom and less fun
Contd…
 Increased Customer Focus
 Resource Sharing
 Quality defined in terms of customer
expectations
 Increased emphasis on ‘Related Selling’
 Major investments in offshore technical
resources and manufacturing capabilities



“Jake” Jacobson
Organizational Model-
DeSimone
 Reorganization of company into 3 sectors
 Faster and efficient product development
 Revised targets:-
 10% reduction in manufacturing costs and
35% reduction in cycle time
 Increased focus on Total Customer
Satisfaction
 Obtaining 30%sales from products
introduced within last 4 years
 Increased R&D funding to $ 1Bn
Tasks for DeSimone
Changing Theme
Individual Entrepreneurship v.
Team Oriented Approach
Individual

 Team Oriented Approach
Entrepreneurship
 Advantage:  Advantage
 Encourages innovation
 Greaterspeed to
 Brings out the best in
the individual market
 Easy to blend ideas  Resource sharing
 Disadvantage:  Disadvantage:
 Reduced time to
transition ideas to  Diminishes the
Operating centrality of
Organization for innovative
implementation
 Less geared towards genius
business needs  Less freedom

leads to less
morale and
motivation
Recommendations
 Mix of individual and team -oriented
approach
 For new product idea generation –
Individual
 For incremental innovation –Team oriented


 Increased authority to divisions and at the

same time monitoring & control through
corporate
 Effective Program Management for
implementation of new ideas