Innovation at 3M corporation

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Outline

3M Company
Innovation and Improvement in 3M

Lead Users Method Example for Lead User Process

-3M Corporation and infection control

Conclusion

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Case Background
Minnesota Mining & Manufacturing Company (3M) was formed in 1902. Over 50,000 products of high/low technology. 3M markets are Electronics, health care, telecommunications, industrial, consumer and office, safety and other markets. Popular brands such as Post-it, Scotch-Brite and 3M Scotchshield. 3M did not fall under any normal industry classification because of End-user segment for the products are diverse. 3M had institutionalized a corporate culture that promoted intrapreneurship. Recognized for its vertical organizational structure, with businesses established by technologies and markets. Innovation is the USP Core Competency of 3M Innovative technology portfolio. Superior manufacturing process capabilities.

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3M Corporations Financial and Strategic Objectives

To achieve annual growth in earnings per share of 10% or better, on average A return on stockholders equity of 20-25% A return on capital employed of 27% or better Have at least 30% of sales come from products introduced in the past four years

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More Than 35 business Units Organized Into Six Market-Leading Businesses

Health Care Consumer and Office Industrial and Transportation Display and Graphics Electro and Communications Safety, Security and Protection Services

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Evolution of 3M Strategy
1907-09 3M designed customer oriented brand of salesmanship.

1921
1923 1930 1947 1950 1951 1952 1956 1958 1959 1963-67

3M invented a waterproof sandpaper & purchased the patent and removed defects.
3M developed Scotch tape. 3M funneled 45% of its profits into new products & tripled in size. Scotch magnetic audiotapes were introduced. 3M grew almost 20fold. Further innovation of dry-printing photocopy process. Invention of Thermofax. 3M had surpassed the $100 million mark & was employing some 10,000 people. Scotch gard fabric and upholstery protector. Scotch-brite scouring pads. 3M 20th consecutive year of increased sales. It doubled in size, becoming a billion dollar company.
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3M Strategy Cont..
1970 Number of obstacles interfered with its growth & 3M lost the cassette tape market.

1980 1990
1997 1998 2001 2002 2003 2003 2004 2005

Major competitors threatened 3M on all fronts. Innovation was stagnating, most of the innovations were extension of existing product lines
30% of total revenue were generated from products introduced within past four years Revenue and profits both decline Launch of six sigma, a quality control and improvement initiative to cut costs. Out of 75000, layoff of 6500 workers Acquisition of Corning Precision Lens , the worlds leading supplier of optical lenses. Reorganization within the company, split of 3 largest divisions of the company i.e. transportation, graphics and safety. Major realignment of R&D operations. Anemic revenue growth while broader makets had been expanding Realization to generate growth, maintain premium margins and managing company's portfolio

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Strategy- Michael Porter

3M has adopted differentiation strategy as it is Patenting all its product to have the uniqueness in the market.
Entering into New and emerging market to broad market scope.

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SWOT ANALYSIS
STRENGTH
Strong R & D capability Innovative Company Diversified business portfolio Robust industrial business Strong financial performances Strong return on average assets and investments OPPORTUNITY Growing demand for LCDs Acquisition of brands International expansion Rising healthcare spending in the US Global expansion

WEAKNESS
Weak personal care segment Low margins in the US Increasing cost of healthcare segment

THREAT Growth in private labels Higher oil prices Exchange rate fluctuations Threat of New entrants Slowdown in the US and Eurozone8
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Selected policies and Philosophies of 3M

15 % option 30% rule Dual-ladder career path Seed capital Tolerance for failure Rewards for success R &D spending 3-tiered research Technology forums Customer contact

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Evaluate the policies and philosophies of 3M from the standpoint of helping the company implement its strategy, rooted in innovation Soln.: Policies implemented by 3M are: 15 % option: Employees can spend 15% of their work week in pursuing individual projects of their choice which they need not disclose to anyone, not even their managers. This promotes intrapreneurship which in turn enables the company to come up with a range of new products every year. 30% rule: Business unit bonuses are based on how successful a business unit manager is in achieving revenues, with at least 30% of business unit revenues required to be from products introduced in the last 4 years. Dual ladder career path: There are 2 career ladders technical career ladder and management career ladder, both of which allow equal advancement opportunities, thus enabling employees to stay focused on their research and professional interests.

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Seed capital: Product inventors can obtain seed capital within the company by 1st approaching the specific business unit manager. On refusal of funding from the BU manager the inventor can take his idea to other business units for funding. On further refusal of the idea employees can approach the corporate team. After securing the funding the product champion will set up the venture team on his own. Tolerance for failure:

The company culture encourages innovation by not imposing any punishment on failure of a product, instead the employee is guaranteed his previous job. R&D spending: R&D spending of 3M is 6-7% of sales which is twice that of any manufacturing company.

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3 tiered research: BU laboratories: Focus on specific markets, with near term products Sector laboratories: Focus on applications, with 3-10 year time horizon Corporate laboratories: focus on basic research with 20 year time horizon. Rewards for success: When the newly introduced product reaches certain revenue goals, the employee receives raises, promotions and recognition in the form of awards. Also once the revenue from the product exceeds certain target, a separate department for the product is created. Thereafter on crossing of subsequent cutoff revenue targets a business unit is created for the product, with the product champion given the responsibility of heading the business unit. BU managers must know the names of employees under them, thus each employee is entitled to the profit- sharing plan. 3M sponsors 12 global and four US-based award programs to honour individuals who make significant contributions to the company. Each business and staff unit, department, and area also has ways of recognizing and rewarding people.

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The Carlton Society honours employees for outstanding career scientific achievements, their contributions to new technologies or products, and high standards of originality, dedication, and integrity.
Circle of Technical Excellence & Innovation Awards recognize employees who have made exceptional contributions to 3M's technical capabilities. Pyramid of Excellence Awards recognize the top performing administrative employees for their exceptional achievements. Quality Achievement Awards recognize employees for individual and team outstanding quality improvement efforts.

Innovation

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Technology forums: 3M supports various forums for sharing knowledge. Scientists from different laboratories are part of the technical council which meets to discuss progress on different technology projects. Other ways of technology sharing include email directories, technology sharing in annual in-house trade show, etc. Customer contact: Scientists frequently obtain product feedback from customers. Customers can also participate in sessions aimed at generating product ideas.

Innovation

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Controls for differentiated strategies

R&D Organization

Individual creativity

Tension from control system

Performance

Reduce creativity

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R&D Organization
R&D Activities
Improved product, process system, concept

Non-repetitive activities

control system choice

Influence Effectiveness of goal setting, planning Desired ends, actors, control implementation and tools

Uncertainty

4 Key elements of MCS

Uncertainty

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Desired ends
Desired end

Direction(Where to go)

Yardstick(Measure progress)

The desired ends refer to the expected ends or the final destination of an action at the end of an operational cycle. If tangible and physically quantifiable, are used a measurement criteria where the comparison process can take place. Therefore, the desired ends may only contain the direction to guide the action and cannot be used accurately to measure the performance quantitatively. The 3M Company has various policies and philosophies that support the use of direction as its desired end such as the Dual-Ladder Career Path, Genesis Grants and the Carlton Award.

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The Dual-Ladder Career promote without sacrificing their research or professional interests.

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Genesis Grants is a policy to provide internal funds up to $50,000

for researchers to develop and market test prototypes, and The Carlton Award is given to employees as recognition of outstanding and technical contribution within the company. 3M encourages its employees toward innovative behavior as a direction by allowing 15 percent of their workload to be used on individual projects of their choice, and combined with the dualladder career path to allow them to stay focused on their research or professional interests. Considering that the desired ends are dominated by a directional characteristic that is difficult to measure quantitatively, 3M may adopt a policy that has tolerance for failure.

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Actors
The element of actors refers to individuals or groups of individuals within a system as the objects being controlled. Five aspects are embodied in the element of actors:behavioral

motivation ACTORS

domination

decision space

power

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The behavioral aspect refers to behavior that is preferred by the system where the actors operate, as indicated by its policy of the Genesis Grant and the Carlton Award.

Domination refers to the ability to influence others in making decisions, and power refers to the degree of strength of the influencing capacity
An individual within the organization may have an ability to dominate others, however, the strength of the dominating ability will relate to the degree of power the individual has in hand.

The existence of these aspects seems to be considered by the 3M Company in the use of the Dual Ladder Career that separates the technical and bureaucratic authority, so domination between the two can be avoided.

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Decision space refers to the degree of autonomy given to an individual to act within the system such as job description or job specification, and amount of time or funds allocated. An example of the use of this aspect can also be seen implemented by 3M in its 15 percent option policy.
Motivation is another important aspect in the element of actors. The MCS should be able to identify potential factors to motivate the actor being controlled to remain within a preferred behaviour. This can be seen in the Carlton Award policy of 3M Company. As the operation of a R&D facility depends greatly on the individual abilities and dedication of its personnel, the actor dimension is a very important part of the MCS. Without the abilities and dedication of the personnel the facility will not function.

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Control Implementation
Control implementation Control types (Formal & Informal)

Implementation stages.

The formal control type will be carried out with regard to written norms. The informal control type is an implicit process to influence actors in making decisions and will be implemented with regard to norms and values that form a belief among individuals within an organization. The accumulation of norms and values may emerge from two sources that construct two types of informal control: surveillance and cultural control. Surveillance control may come from written norms and values that have been internalised by the actors.

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Cultural control is the accumulation of norms and values that are originated from common norms, beliefs, and shared values among the actors in a group without having any relationship with written norms. The use of cultural control can be seen in the use of a Technology forum by 3M.This forum allows technical people to present papers and exchange ideas and findings. Cultural control is very relevant to a R&D situation where the scientists and engineers are linked by shared values relating to research and innovation. Stages of control implementation. Firstly, input control which is carried out during the selection and the provision of input that will be used for an operation. The second stage is process control that is performed during the operation to monitor how tasks are performed, and the Third is output control that is carried out to measure the outputs achieved.

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Control tools
Instruments that are used in performing the control function concerning the desired ends. The relationship between the desired ends and the control tools occurs during the three important functions of the MCS: monitoring, evaluation, and performance measurement. The MCS will use the control tools to monitor, measure, and evaluate the action by reference to the desired ends. With regard to the yardstick, the MCS will measure and evaluate how far the action has achieved the expected outputs. Whereas, with respect to the directional dimension, the MCS will function to ensure that the actions are in the correct directions for achieving the desired ends.

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To the outside world, what we do looks a little like magic. We create entirely new product categories and breathe new life into markets crying for reinvention. Its been called the 3M effect. Harnessing innovation for your benefit thats the practical magic behind 3Ms success. George W. Buckley, 3M Chairman, President and CEO

Thank for your attention