Case Study 3

3M Optical Systems: Managing Corporate

Entrepreneurship
Submitted by: Subhabrata Das (A0109984N)

Case Discussion Question 1:

In early, 1992, for Andy Wong the key decision to be made was, should he back the authorization
for expenditure requested by his Optical Systems (OS) team for the proposed computer filter. If I
were at his position, I would evaluate the options available at that time. The options available were
as follows:
1. To postpone or reject the proposal
2. To try to fund it within my unit by
a. Outsourcing a standard frame
b. Cutting inventory
c. Taking incremental approach
3. To try to get divisional funding
4. Take the proposal to one of the mentor for support.
Now evaluating each of the option available:
1. To postpone or reject the proposal
Arguments

Comments

Two previous product Counter argument

have faced market Product has been transformed, after analyzing
failure (FOR)
the market and identifying a need
Exploratory nature of R&D high risk and high
return - 3M has been allowing several years of
research (e.g. post-it notes)
Financial viability is Support-argument
questionable
and
forecasts are over- Price
optimistic (FOR)
Distributor price of similar products
Anti-glare screen: $40.77; Anti-glare + antiradiation + glass: $54 (Average over all such
products available in the market)

Argument
strength

Distributor price for multi-purpose filter = $79

Sales (quantity) There is no basis given in the
case for such optimistic sales (apart from the project
teams belief)
More realistic estimates of price and sales need to
be figured out.
2. To fund it within the unit by incremental approach and operational measures
Arguments

Comments (Support argument)

Argument
strength

The process is slow and Sumitomo Chemical may launch a similar product
there is a fear of losing (though not as good as the one from 3M)
market share to
competitors
(AGAINST)

Requires more cost to

acquire resources on its
own (AGAINST)

3. To try to get divisional funding

Arguments
Less costly to access
existing resources
rather than trying to
acquiring them on its
own (FOR)

Comments (Counter-argument)

Argument
strength

But it is hard to convince and get support from the

top management and other managers of other
divisions, given the history of this unit

4. Take the proposal to one of the senior-level mentors for support

Arguments

Comments (Counter-arguments)

Personal contacts can

be leveraged to get top
management support
(FOR)

It is essential to get support from other divisions

like COSD and DSMD, so support from top
management only will not be suffice
Mentor will be conscious in approving the project
due to profitability concerns

Argument
strength

Evaluating the above options, the following action plan would be set-up by me, if I were at
Andy Wongs place:
1. The team needs to give a better forecast to determine the financial viability of the product
by conducting rigorous market research to find out the appropriate price premium and
expected sales.
2. Needs to build a stronger business case, backed by realistic data
3. Stronger case will help the unit to get support from other divisional managers and top
management
So, I would decide to go for the expenditure authorization request as it is my job to support and
believe in my team. The team believes in the product which comprises of talented and experienced
individuals like Noirjean and Melby. During the review process the product have been beaten on
the head through the 3 phases of review, and the team has a vast market knowledge from their
previous failures. However, I would ask my team to come up with a better forecast of price and
sales with the approval from other departments who would help us in this venture (COSD and
DSMD). This would be necessary given the reputation of the unit and no opportunity to fail with
the product this time.
Case Discussion Question 2:
Key roles of Wong as a front-line manager in 3M were as follows:
1. Recruit and attract experienced and innovative people in the team of Optical Systems (e.g.
Noirjean, Melby)
2. Developing and motivating his team to build the capability and commitment within the unit
and did more with less
3. Encourage manager competence by help
4. Creating and pursuing growth opportunities
5. Keep making progress towards the given goal.
6. Adopting four phase development approach.
7. Demonstrate progress and keep senior management in boat

Case Discussion Question 3:

Paul Guehler knew that he too may have to respond to the request of Wong soon, as an attempt to
revive the privacy screen project after two unsuccessful launches. The issues at his hand were:
1. Low credibility of the Optical system (OS) unit
2. Situation where OS contrasted sharply with other divisions nominated to the Pacing
Program
3. Wong championing two risky proposals

 Privacy screen
Brightness enhancement product
4. Wongs personal evaluations
As Paul, the following options are available to me:
Approve
Since the project passed three-phases of
review Shouldnt be a second-guess now
Cost relatively low ($750K)
OS unit believes in the product and is
committed
Dont want to kill OS unit Big project in
pipeline (Needs 30% new products)

Reject/Send back
Recognize the proposal as well
intentional failure
Will have other high-profile Pacing
Projects
Problems with product, price, marketing
strategy
Lacks internal support
Other managers in division are highly
skeptical
OS losing $3 million on sales of $10
million

Evaluating the above options, if I were at Pauls place I would have gone ahead with the proposal
and supported Wong, as Wong and his team prepared the relaunch of the privacy screen product
by working through the four-phase development process which was instituted by Paul. Secondly,
they passed three phases of rigorous reviews and the launch required low initial investment.
However, I would advise Wong to get the necessary internal support from COSD and DSMD
divisions and re-estimate the price and sales figures to win the support of top management too.
Case Discussion Question 4:
Guehlers role as division president at 3M:
1. Empower frontline manager to find and develop attractive opportunities
2. Coach, nurture and support the frontline managers to develop their confidence and
capabilities
3. Set standards and goals for the development and self-discipline among frontline managers
4. Strike a balance between discipline and support
5. Support the objective of creative and innovative environment
6. Encourage commitment and communication among employees

Case Discussion Question 5:

Andy Wong was really effective as a frontline manager. Andy Wong joined the OS division in
1984. The unit was losing $3 to $5 million per year at that time and the morale was low due to
downsizing. Wong took over as the business manager in 1989. Current products were then
deemphasized as they were not profitable.
Actions taken by Wong as a frontline manager:
1.
2.
3.
4.

Identified micro replication as the core technology of the unit

Used formal & informal channels to recruit specialists
Streamlined processes and emphasized operating realities.
Developed a manufacturing strategy that reduced costs by 50% and increased quality of
product.
5. Recognized that they had the ammunition but not an aiming device
6. Sought a professional marketing manager to address the situation and was asked to give up
a technical position in exchange
7. Hired Rob Noirjean through internal recruitment to focus the technology on the right
products
The above actions taken by Wong during crunch time of OS unit proves he was an effective
frontline manager and the trust bestowed upon him by Ron Mitsch was correct.
Case Discussion Question 6:
1. Empower frontline manager to find and develop attractive opportunities
2. Coach, nurture and support the frontline managers to develop their confidence and
capabilities
3. Set standards and goals for the development and self-discipline among frontline managers
4. Strike a balance between discipline and support
5. Support the objective of creative and innovative environment
6. Encourage commitment and communication among employees
Paul Guehler replaced Rob Mitsch as divisional vice president. Guehler's approach to managing
the OS unit was Give and Take strategy. He was willing to offer support and invest in the
business, but he also took resources away and forced them to meet their financial objectives. He
opted to focus on three key opportunities: Computer filters, Electronic display enhancement and
Automotive optics. He empowered the frontline managers to develop attractive opportunities. He
was a great coach and supported the managers under him to enhance their technical and
communication skills. He introduced the four-phase development process for effective evolution
of new creative and innovative projects. He was able to strike a balance between discipline and
support and set standards for performance. Overall, through this key traits, Guehler was an
effective division president at 3M.

Case Discussion Question 7:

3M was founded in 1902, which started mainly as a mining company and then shifted to
sandpapers. The business is highly diversified extending from micro-interconnection, digital
imaging to transdermal drug delivery. The company has a $14 billion sales with 3900 profit centers
located within 47 divisions and sold through its organizations in 57 countries worldwide. Initially,
the company had two basic products, waterproof sand papers and adhesive tapes. These two
breakthrough products were developed when the company faced a bad first quarter century during
which it evolved from a mining company to a sandpaper manufacturer. These two products were
developed by two innovators which made use of companys coating and adhesive know-how and
from then the management developed a commitment to build core technologies and also create
creative and innovative environment to help innovators to create new products. This helped 3M to
develop 100 technologies by 1990s, which comprised of different product lines like, adhesives,
abrasives, coating processes, etc. The company was committed to support its research and
development wing and they funded at a rate of 6-7% of their sales towards R&D efforts. To
enhance the creative and innovative environment the company formulated a 15% rule according
to which the employees were allowed to allocate up to 15% of their working hour on innovative
ideas that they believed to become a valued product for the company. The company funded the
projects incrementally and were guided by mentors to only select ideas which had high potential.
The project which survived the rigorous review process later became departments, which later
spun off as new divisions, which later worked independently to fund their new ventures. By this
was the company followed the principle of grow and divide. But, the products belong to divisions
but technology remained to the company. However, there remained a high demand for
performance standards as each division was expected to contribute to the corporate objective of
sales growth of 10%. A vital component of the 3M organization is its structure and culture which
helped in linking the vast knowledge base and expertise. The company encouraged informal
networking between managers, engineers and scientists to improve the innovative environment.
By this way, it is clear the management of 3M understands the importance of an innovative and
creative environment and thus provide the support required for it. These decisions helped the
company to have such high innovation records.
Case Discussion Question 8:
This culture can certainly drive innovation in 21st century. The key factors that drive the 3Ms
entrepreneurial capabilities are as follows:
1. Technology Drivers
2. High Focus on Innovation
Portfolio of large number of products
25% of sales from last 5 years products
R&D 6-7% of sales
Pacing Program

3. Organizational Culture
Employees devote 15% time on non-program activities
Products belong to divisions but technology to the company
Extensive informal networks
Cross-divisional transfers
4. The 3Ms growth process which involves
Creative developments
Project teams
Departments
5. Extensive Management Support
Commitment not to damage careers of project champions
Balance between discipline and flexibility
Committed to create an entrepreneurial environment

Divisions

The transferable features of the 3M company

Feature
High Focus on Innovation

Comment
- A strong Innovation focus
can be developed
- Increased R&D spending
Organizational Culture
-Difficult to replicate the
strong informal, crossdivisional network
- Huge amount of time
needed to develop a strong
organizational culture
3M Growth Process
- Unique process
Extensive
Management -Leaders with an uncanny
Support
ability to identify creative
projects that can add value

Transferable
Yes

No

Difficult
Yes

From the above discussion it is clear that if a new venture follows the culture of 3M they will be
able to replicate their success, however just copying the development process wont bring success.