THE
3M WAY TO INNOVATION
3M's
visionary model of innovation has drawn accolades from the business community
for decades. What
is most consistently critical to the creation of value for commercial
enterprises is innovation, as honest profit is earned most readily when new
products and customers view services offered as new and desirable. With that, it
is even more imperative for innovation to be institutionalized throughout
organizations. 3M is one of the most innovative companies in the world today and
a thorough analysis of its workings provides learning points on how the company
has come to deserve this accolade.
3M Company (formerly
Minnesota Mining and Manufacturing Company) is an American corporation with a
worldwide presence that has produced over 55,000 products overtime, including
adhesives, abrasives, laminates, passive fire protection, dental products,
electrical materials, electronic circuits, optical films, pharmaceuticals, and
supply chain management software. 3M was founded in 1902 at the Lake Superior
town of Two Harbors, Minn. Five businessmen set out to mine a mineral deposit
for grinding-wheel abrasives. But the deposits proved to be of little value, and
the new Minnesota Mining and Manufacturing Co. quickly moved to nearby Duluth to
focus on sandpaper products. William L.
McKnight, 3M’s President in the 1920s, was a huge driving force behind 3M’s
innovation success story. He instituted many basic management policies that
still guide the company. In fact, the emphasis and belief in employee management
can be said to be the key behind 3M’s innovation success story.
The
company’s outstanding gift lies in its skill at nourishing an overall working
climate in which a wide variety of innovative factors converge and support each
other. 3M’s definition of Innovation is “ New Ideas + action or
implementation which results in an improvement, gain or profit.” Adhesives and
Post-it Note Pads, portray 3M’s innovation system.
There
are three distinct types of innovation. Type A (New Market or Industry) has been
done in the past with coated abrasives, Scotch tape, magnetic recording tape and
reflective signage. The second type
of innovation, Type B, create a new competitive position within an established
field. Type C is a line extension, which produces an incremental advance.
Offering 3M`s Post-it notes in multiple shapes and colors industry is a simple
example of extending a products life and market. The five openings to innovation
include: To build an incremental bridge beyond previous accomplishments,
association, stimulation from an outside source, reversal of previous
assumptions and combination of technologies. Innovation can take place at
different levels: Original, Adaptation, Organizational, Customer Relations and
Regulatory Environments.
3Mers
have adopted the word “inventorpreneur” to describe outstanding innovators
who invent or create a new product that fulfills a defined need; promotes
the new opportunity or product; manages, organizes and assumes many risks in
establishing a new business based on that product.
3M being more than 100
years old still manages to stay one of the most innovative companies in the
world. The reasons of its success can be contributed to various factors. From
the chief executive to the last employee the company is committed to innovation.
3M spends a high amount on R&D.
And of the R&D outlay, a fifth goes to basic research or pursuits that have
no immediate practicality. Currently the company invests UKP 464.82 million
which works out to an intensity of 3.8 percent. 3M has 69, 315 R&D workers
[2006] and ranks 103rd in the world in R&D investment.
There
are three elements to 3M`s R&D strategy:
Investing in technical capabilities where the customers are and that
increasingly is outside of the US, continuing to nurture 3M's entrepreneurship,
and keeping pace with external sources of technology.
The
corporate culture is actively maintained though 3M has had a new CEO every five
years on an average over the past 40 years, the philosophy of William L.
McKnight, its inspirational leader from 1929 to 1966, is passed along to every
new scientist or engineer. In a nutshell: "Hire good people and let them do
their job in their own ways. And tolerate mistakes."
Innovation is impossible
without a broad base of technology. 3M has a leading know-how in 42 diverse
technologies. A key aspect of 3M's
innovation growth has always been and continues to be that the new products
often come about as a result of a combination of technologies from different
areas-this also can include a combination of manufacturing capabilities as well.
That allows researchers to take an idea from one realm and apply it to
another. For example, 3M scientists have used a technology behind layered
plastic lenses to make more durable abrasives, more reflective highway signs,
and golf gloves that allows to get a tighter grip without squeezing as hard. So
it is important not to remain one-dimensional.
Management at 3M has
encouraged networking among its researchers. The scientists formed an
organization called the Technical Forum in 1951. It invites all of the company's
9,700 R&D personnel to an annual symposium, where everyone can see what
everyone else is working on. Labs also host their own conferences and Webcasts
and elect representatives to a governing body to set policy. The formal
structure enables researchers to get to know one another informally, as well, so
they know whom to call for advice or to team up with on a project.
3M
has a number of programs geared to support and grow innovation among its
researchers. These include:
The
15% option:
Many employees can spend up to 15% of their workweek on projects of their own
choice that might benefit the company. They often don't have to inform their
manager of the project or even justify it.
Seed
capital: If
researchers create a new technology or idea, they can request seed capital from
their business unit managers to develop it further. If that funding is denied,
they can take it to any other 3M-business unit. Failing even that, they can
request a corporate.
Genesis
Grant for
independent R&D awards of up to $100,000-about a dozen of these are granted
each year.
Dual
career path:
Researchers can choose to follow a technical career path or a management career
path, with equal advancement opportunities. This option is offered successfully
by a number of technology firms, allowing researchers to more fully develop
their technical professional interests without being penalized financially for
not going into management.
3M tallies how much of
its revenue comes from products introduced in the past four years to judge
whether its R&D money is being spent wisely. That way management assesses
which lab is hitting its mark and which may be falling short. Research is tied
to the customer. Employees spend a lot of time with customers to understand what
their needs are so that they can go back to the labs to come up with valuable
products. The Post-it Photo Paper came out of such research.
3M has made several
initiatives over the years that exemplify their push for constant improvement.
The most recent one is their Six Sigma Initiative.
3M
Acceleration is
another initiative undertaken by the company. In this initiative, each R&D
program is evaluated for the potential impact it has from the overall corporate
viewpoint. The top programs, which represent the most critical market needs, are
then fully supported by the company and closely tracked to ensure that they are
executed quickly and successfully. The overall result of this initiative is to
generate greater returns on 3M R&D investments and related expense
investments.
Another
tool is termed 2X / 3X. 2X means to set objectives for two times the number of
new products that were introduced in the past. 3X sets a business objective of
three times as many "winning" products as there were in the past.
Setting objectives is easy, obtaining acceptable results to those objectives is the real measure of the organization. And the 3M provides the means for obtaining those results. All of the tools combined - the 15% rule, 3M Acceleration, DFSS, 2X / 3X - all work together as enabling mechanisms for successful innovation. 3M is dedicated to innovation and its "3R's" stand for risk, reward, and responsibility. The company is dedicated to taking risks, has numerous reward programs, and has an infrastructure that defines its responsibility.
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