3M

Profile of an Innovating Company

Organizational Behavior - II Mar 18, 2012

What s in
3M: The Beginning 3Ms Approach: New Products Policies & Philosophies Internal Practices
Entrepreneurial Environment Internal Restructuring Lehr Jake DeSimone

External Factors Retrospect SWOT Analysis 7-S Framework Analysis

3M The Beginning
1902: Minnesota Mining and Manufacturing 1902 to 1916: Embarkation stage struggle for survival The 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

3Ms Approach: New Products

Entrepreneurial works are more popular 3 approaches to NPD at 3M
Skunk-works
Spearheaded by employees Post-it Notes

Traditional development Pacing programs

promising projects Scotch-Brite

Selected Policies and Philosophies of 3M

15 Percent Option 30 Percent Rule Dual Ladder Career Path Seed Capital Tolerance for failure Reward for success R&D Spending Three-Tiered Research
Business Unit Laboratories (short term) Sector Laboratories (10 Years time horizon) Corporate Laboratories (20 Years time horizon)

Technology Forum Customer Contact

3M and post-it notes

Entrepreneurial Environment
Right mix of
Freedom and discipline Authority and responsibility

Personal freedom: 15:85 time split Natural advantage & Craftsmanship Inquisitive, passionate and self-starting Knowledge sharing Satisfy market needs From 3M
Willingness to listen and reward Support projects though not promising

Internal Restructuring
1937: Central Research Laboratory Not a hi-tech company but a creative company that needs high level of technology Tripod-like stability: Sales, Manufacturing and Production Retain good people: Dual Ladder career track Permitted well-intentioned failures 1944: adhesive division formed a success 1960s: Grow and Divide 30% of revenue to come from new products launched in last 4 years.

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 predecessors
Herzogs motivational style Lehrs ability to bring the best out of individuals Jakes 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 global
Refine 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

Opportunities
Rising healthcare spending in the US Global expansion

Threats
Growth 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 Cooperative Staff 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?