Innovation, ideas and solutions

for a modern world

1 Introduction A Century of Innovation

3M is a global diversified materials science company and a powerful,
diverse and integrated enterprise. Although 3M identifies its core
competency simply as applying coatings to backings, the companys
operations extend far beyond this. 3M, famous for its consumer brands
such as Scotch Tape and Post-it Notes, also creates thousands of
industrial products used by manufacturers and service providers to create
their own products.
From its beginnings in 1902 as Minnesota Mining and Manufacturing, 3M
has grown to achieve sales revenue of $US25.3 billion and an operating
income of $US3.5 billion in 2008. The company has over 79,000 employees
with approximately 13 percent employed directly as technical staff. As
a truly global presence, 3M services almost 200 national markets, and
operates subsidiary companies, such as 3M Australia, in more than 60
countries. Almost 64 percent of 3Ms entire sales revenue originates from
international operations.

With a vision to be the most innovative enterprise and preferred supplier

in the markets we serve, 3M prides itself on its history of innovation
reinforced through its brand promise, practical and ingenious solutions
that help customers succeed.
Key values underpinning 3Ms continual success include its commitment to:
Satisfy our customers with superior quality and value
Provide investors with an attractive return through sustained, highquality growth
Respect our social and physical environments
Be a company employees are proud to be part of.
3M has 45 core technology platforms ranging from adhesives,
biotechnology and films through to nanotechnology, optoelectronics
and wound management. The 60,000 products developed through
these technology platforms satisfy consumer needs in six marketfocused businesses.

New product development and innovation are the cornerstones of

3Ms continued success. According to the Australian Bureau of Statistics,
innovation is: The process of introducing new or significantly
improved goods or services and/or implementing new or significantly
improved processes.
3M celebrates its long history of innovation by turning innovators into
company legends. In 1925, Dick Drew famously visited a customers auto
production plant and discovered that the growing demand for two-tone cars
meant that workers needed a solution to create cleaner paint lines. After
some research, and testing, a new product masking tape was born.
Product development occurs when investment in research and development
leads to new and innovative products. This usually involves phases
such as idea generation, testing, engineering, prototype creation,
commercialisation, manufacturing and marketing. It can take many years
for a product to reach the market and product development also represents
significant capital investment; hence 3M uses the term, patient money.
3M adds 500 innovative new products every year to its 60,000+ productline. Many of these products are ground-breaking, newly-invented products,
unique in the marketplace and protected by patents.

2 What is innovation?
3M prides itself on being a customer-focused organisation. We understand
our customers expectations and make sure that we exceed their
expectationsLoyal customers stay with you, are more receptive to new
products and recommend you to others.
The customer-focused organisation is an important part of continuous
improvement and Total Quality Management (TQM). A TQM organisation consists
of a number of interdependent internal stakeholders or customers. These
individuals, groups, departments and units supply to, and rely on, another
individual, group, department or unit within that same organisation. These
internal customers combine to improve quality throughout all processes and
create better quality output for the end-users; the external customers.
$13 billion of sales revenue was generated through sales
of pressure sensitive adhesives across 24 divisions.

3Ms six businesses

Consumer and Office: Adhesives and wovens such as
Scotch brand, Scotch-Brite , Post-it and more.
Display and Graphics: Films for electronic displays, touch
screens, reflective materials for highway safety and more.
Electro and Communications: Electrical tapes,
copper and fibre-optic cabling and more.

This philosophy of 3M applies equally to internal customers, demonstrated

through the interdependence of its 45 technology platforms and diverse global
operations; as well as to external customers.
Each of the three broad categories of innovation applies to 3M.
1. Innovation in goods and services occurs when
new and improved goods and services are
developed or where new uses are found for
existing goods or services.
2. Innovation in operational processes occurs
when organisations implement significant
positive change in their methods of production
of goods and/or services.
3M describes the four fundamental reasons
driving innovation as; personal satisfaction,
competitiveness, growth and survival. New products
are the lifeblood of 3M and the company builds
innovation into all of its operations. 3Ms innovation
is the deliberate 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 also no accident that 3M, a company driven by cuttingedge technological innovation, believes that successful innovation is in reality
accomplished by its people.
3Ms senior management empowers employees to work with determination
and imagination to create innovative solutions. Customers are consulted so that
they can provide input and feedback to the process of innovation and product
development. This commitment to inclusive leadership resulted in 3M ranking
No. 1 on Chief Executive magazines 2008s Best Companies for Leaders list.

This localisation of innovation is demonstrated through 3Ms diverse research and

development centres; optical manufacture and testing in Poland, electronics in
Japan, water filtration in India and dental products in the UK and other markets.
3M provide locally-based product development resulting in customised solutions
that subsequently result in global replication through the entire company.

Industrial and Transportation: Abrasives, specialty

adhesives and tapes, as well as automotive, aerospace
and marine industrial products and more.

3M first used microreplication technology back in the 1960s to improve overhead projector
lenses and in doing so learned more about optics and optical lenses. Over the next 40 years the
results of this innovation flowed on to all sorts of areasin traffic lights, lane markers, X-ray
scanning, LCD film, electronics and more.

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Benchmarked the businesss performance.

A further strength of 3Ms organisational structure is that 3,000 of their 10,000+

technical employees are located outside the USA. These technical employees
work in research-based laboratories in 34 countries or in Customer Technology
Centres in 30 countries. The result is a highly-skilled global workforce uniquely
positioned to create proactive solutions in response to specific customer needs.

Health Care: Medical, surgical, pharmaceutical and

dental products and more.

Safety, Security and Protection Services: Respiratory

protection systems, anti-counterfeiting
security films, cleaning products and more.

Ask your customers

what quality is
then never let the standard slip.

To support innovation, 3M allocates 6-7 percent of its entire sales revenue

($1.4b in 2008) to research and development. This heavy investment also
means that staff can devote 15 percent of their work time to self-directed
projects. It is no surprise that the company was ranked Worlds 4th Best
R&D Company in 2007.

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processes including adhesives, vapour coat processing, optics, moulding and

specialty materials.

Empowerment
Back in the 1940s McKnight said, Hire good people and leave them alone, and
this philosophy is still paramount. 3Ms management believes that employees
need freedom to achieve their goals. Empowered employees are given both
responsibility and accountability for key tasks. The company trusts employees,
provides direction, support and resources, with minimal interference. This
collaborative management style is effective when dealing with intrinsically
motivated and highly-qualified professionals.

In the early 1980s, the practice was to adhere a photograph of the passport
holder to the data page and cover it with a security laminate. While best practice
at the time, it was open to the risk of fraudulent photo substitution. DFAT, in
partnership with 3M, innovatively applied advances in digital printing technology
to issue a passport with a colour facial image and signature digitally printed
into the passport, a world first in passports. This evolution occurred over three
phases, Dawn I, Dawn II and Dawn III.

Communication
3M feels that successful people need to work with others. Management
communicates the vision, employees communicate opportunities to management
the dialogue extends into multiple channels throughout the organisation.

In 1941, 3M executive William McKnight developed a progressive,

employee-focused philosophy supporting risk-taking and innovation
that still permeates the companys workplace culture today.

Mistakes will be made, but if a person is

essentially right, the mistakesare not as serious
in the long run as the mistakes management will make
if it is dictatorial
As our business grows, it becomes increasingly necessary
to delegate responsibility and to encourageinitiative
Management that is destructively critical when mistakes
are made kills initiative. And it is essential that we have many
people with initiative if we are to continue to grow.

3M use technical forums, trade fairs and conferences to encourage networking

and ideas sharing. Staff use part of their 15 percent self-managed time to help
people from other areas. Networking occurs internally across platforms and
externally through customer feedback and joint ventures. Staff can be transferred
locally and globally and apply their particular expertise on projects. This adds
value by sharing both expertise and the experience of 3Ms diverse global culture.
Rewards and recognition
3M believes that the most effective type of reward is recognition through
technical and corporate awards and promotions. 3Ms celebrated Innovator
Award is given to individuals who use their 15 percent self-directed work time to
develop a new product or technology. The highly prestigious Circle of Technical
Excellence honours extra effort, motivation and creativity.
3M have a dual career structure that maintains parity between technical and
corporate staff. Outstanding technical employees can be promoted into positions
such as Corporate Scientist or they can move into management with the same
opportunities for salary, benefits and other privileges. This encourages top
performers to stay with the company.

4 Creating innovative applications

3 Developing a culture of innovation
One of the most celebrated aspects of 3Ms entrepreneurial workplace culture
is the 15 percent rule that encourages employees to explore and work together
to generate ideas. Product development is driven by the cross-fertilisation
of ideas and new technologies shared across the entire company. Products
belong to divisions, but technologies and ideas belong to the company. 3M has
developed six principles of innovation to support this culture.
Build a Vision
Effective leadership means that employees understand the importance of
achieving 3Ms vision. Innovation is a cornerstone of 3Ms self-image and
the company prides itself on a culture of success stories by celebrating the
achievement of its people. The importance of innovation is communicated
and reinforced which replicates success.
Foresight
It is vital to, anticipate the structure of the future before it arrives. 3M can
solve articulated needs, whereby the customer knows and communicates what
they need; as well as unarticulated needs, whereby 3M proactively provides a
solution for a problem that the customers dont yet realise they have!
Going beyond
3M sets goals to challenge their people to strive for significant improvements.
One objective is to generate 30 percent of all sales from new products
introduced in the past four years. However 3Ms commitment to stretching

The Australian passport is the most widely held identity document used in the
Australian community. Over many decades the Australian Government, through
the Department of Foreign
Affairs and Trade (DFAT)
has built a reputation for
producing high quality,
innovative passports that
are recognised as being
amongst the most secure
in the world.

Dawn I was designed to create a passport with a laser printed machine readable
zone (MRZ) and was successfully introduced in 1985. It was the first passport
in the world to achieve 100 percent reading accuracy in the MRZ and set a new
standard. A patent was lodged on behalf of the Australian government to cover
what became known as reverse imaging technology and 3M were engaged to
commercialise the technology.
Dawn II used the reverse imaging technology to directly image a black
and white photograph into the reverse side of the laminate, a world first for
DFAT and 3M.
Dawn III built on the technology developed in the preceding phases of the
project and culminated in the first passport with the holders facial image and
signature digitally printed in full colour being issued on the 4th May 1994. The
3M laminate also contained new covert security features including images of
the Australian Coat of Arms, which were visible under coaxial light, and three
stylised kangaroos securing the signature label and a corner of the facial image.
These innovations were another world first for DFAT and 3M and significantly
reduced the security risk of photo substitution and data alteration.
In 2003, the next generation of 3M laminate allowed DFAT to add the first
floating image technology seen on passports. Lasers were used during
manufacture to create images of kangaroos and emus within the laminate
that appear to float above and sink below the surface as the page is viewed
from different angles.
In 2009, the 3M laminate was redesigned and enhanced to incorporate a
continuous Australian wave pattern visible only under UV light. Today, this is one
of the key features used by border control authorities to validate the integrity of
the passport.

Since the early 1980s

3M has worked
collaboratively with
DFAT to deliver a series
of unique laminates
that secure the data
page against fraudulent
alteration. The data
page contains the
holders personal details,
signature and facial
image. To manufacture
security laminates, 3M
leverages a range of
core technologies and

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5 Conclusion
3M has emerged as a global leader in providing practical solutions and is
home to some of the worlds most recognisable brands.
Although a technologically-oriented company, 3M feels that its success
stems from the quality of its people. 3M has a diverse global workforce of
naturally inquisitive and highly-trained technical specialists that is supported
throughout the entire corporation by a progressive and people-centred
management philosophy.
3M delights both in reinforcing the principles laid down by some of its key
early executives and also celebrating the ongoing success of its current staff.
With a continual emphasis on innovation and product development 3M is
committed to finding solutions for its diverse group of customers. Management
is also committed to encouraging and supporting staff in their pursuit of
excellence. The company attributes much of its success to the 15 percent rule
which allows staff to search for proactive solutions for difficult problems.
For a company whose core competency might be described as making things
stick, 3M has developed an innovative entrepreneurial workplace culture that
its stakeholders seem more than happy to be stuck with.

GLOSSARY
Brand promise The set of benefits associated with an organisations
products. The brand promise is developed and reinforced through the
organisations ability and commitment to deliver satisfaction for its
customers.
Commercialisation The process of transforming the results of research
projects into marketable products or services. Commercialisation is a
component of the broader innovation process.
Customer-focused organisation An organisation that emphasises
customers as its most important stakeholder and often focuses on both
internal and external customers as stakeholders.
Innovation A new and creative idea, product or service. The process
of converting knowledge and ideas into better ways of doing business
or into new or improved products and services that are valued by
the community. The innovation process incorporates research and
development, commercialisation and technology diffusion.
Product development The process of developing new products or an
aspect of the product management process whereby a product is changed,
enhanced or modified to better align with the needs of the market.
Values The beliefs a company stands for, often including what behaviours
are expected from employees.
Vision The statement of an organisations current and future
business goals.
Workplace culture The practical day-to-day demonstration of those
formal or informal values and behaviours within an organisation that
originate from its corporate culture.

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The Australian Financial Review and Australian Business Case Studies Pty Ltd. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors or omissions in this Case Study.

goals is demonstrated through an additional objective; to cut the time for new
products to reach the market by a further 50 percent.