Case: 3M: Profile of an innovating Company

Name :Arnab Sanyal

Roll: 17P128

Q.1. What is the design philosophy of 3M?

Answer. The case described here speaks about the role of William L. McKnight in creating
legacy of technological innovation, market responsiveness and institutionalized
entrepreneurship. However, it required the adaptation from its next generation CEO to the
company`s unique culture with the changing environment.

The major portion on which they focused on was the innovative and the entrepreneurship
culture. For example, they used to encourage employee to spend up 15% of their time on
projects of their own choosing. By this way, they used to encourage initiative and climate of
creativity. Once the employee understands their own style preferences, they could approach
the challenging tasks in the organization.

Other than that the culture of the organization was quite informal. The use of Technical Forum,
where the major purpose is to represent the concerns of the scientific community to top
management. In this way they allowed communication for the different perspectives in an
informal way. They believed that innovation is social activity that involves many people share
ideas and perspectives and hence tried to keep the topic as informal as possible. Along with this
they created an environment of sharing among the people as well. For this they organized the
Annual Technology Fair – an event that was organized to know the company`s latest
development directly from their colleagues Conducive learning environment at work place is
essential in the process of knowledge management in order to stimulate people`s idea and
motivation. Not only this the mistake was also valued as a learning process. According to the
word’s of McKnight “mistakes will be made, but if a person is essentially right, the mistakes he
or she makes are not as serious in the long run as the mistakes management will make if it is
dictatorial and undertakes to tell those under its authority exactly how they must do their job”.
This showed that they valued mistakes as a learning process as innovation is the creation of
new value through some intersection of business and technology that require risk taking to
accept the failure.
Case: 3M: Profile of an innovating Company
Name :Arnab Sanyal
Roll: 17P128

Q.2. How do you compare the design of 3M under Lou Lehr, Jacobson and DeSimone?

Answer. All the three people joined the role of CEO when the company was facing different
crises. Lou Lehr became CEO when there was an outbreak of inflation and global recession
following the second “oil shock”. Most of his goals were short term as he had his priorities
straight. The major reorganization he made during his tenure is allowing more cross-unit
coordination, a new emphasis on formal strategic planning and leverage of 3M’s technological
base.

The first design change he brought in was providing more entrepreneurship roles to all the
divisions of his company. The primary objective was to facilitate the development and diffusion
of technologies across closely related divisions and supporting each sector by giving them their
own laboratory. The major purpose it served was creating a fully integrated, self-sufficient
divisions. In a number of businesses, particularly those which face price pressures. Stand alone
manufacturing divisions were created to concentrate scale and to focus on productivity and
quality improvements. Along with that he also bought the concept of formalized planning
where they formed the bottom-up approach i.e. the lower divisions made plans in response to
the broad corporate strategies. To provide additional strategic perspectives at group levels, 20
Strategic Business Centers were created. They encompassed all the effective business of 3M
and provided them in planning process and performance measures.

Not only this, the third step taken by Lou Lehr was boosting investment on technology and
R&D. He doubled his spending on R&D from $238 million in 1979 to $507 million in 1985. He
also authorized the establishment of Genesis Program to provide $50,000 seed money to
support further research on any promising idea. A circle of excellence was also created to
recognize achievements by peer nomination.
Case: 3M: Profile of an innovating Company
Name :Arnab Sanyal
Roll: 17P128

After his 5 years in the tenure Lou Lehr was followed by “Jake” Jacobson. Since the stint of Lou
Lehr was a stunned phase with slow growth rate and flat revenues. Therefore Jacobson had to
bring huge changes during his tenure. He decided to increase its spend more on
competitiveness and productivity. He initiated a program called J35 that was mostly looking
after the 35% percentage reduction in the cost manufacturing labour and the cycle time
reduction. Along with that there have also been a change in the selling price and raw material
cost. Both these two factors combined resulted in the change of the mentality of the
management where they started to learn how to compete. Other than that he developed a
more disciplined development process where he decided to convert the more high investment
in R&D to a matter of further significance. High focus on customers and markets. He was more
focused on meeting the customer expectations and increase the effectiveness by promoting
resource sharing. He also looked for the area of international marketing that enhanced his
company’s chances of high improvement.

During his 5 years at the role of a CEO, he had increased the sales growth rate to 10% along
with 25% sales of his new products and international expansion. He also had been able to
reduce his labour content, cost of quality and manufacturing cycle time that ha d helped him to
extend his lead over the others.

Simone joined the position of CEO after the departure of Jacobson. His main idea was to
accumulate the ideas of his three predecessors and then bring out the best in his employees .
He quickly moved to re-organize the business sectors from 4 to 3. The most critical challenge
taken by him was to bring on the more efficient product development. He concluded of
achieving the 25% of sales from the products introduced within past five years. The major
problem that he faced was the economic slump for the first three years at 1990’s where the
sale grew at a rate of 5%. In 1992, the return on equity was 18.8% which had fallen far below
the 205 target rate for two years. Thus the tenure of Simone was most about maintaining the
challenges of a diverse company that had become difficult to handle.
Case: 3M: Profile of an innovating Company
Name :Arnab Sanyal
Roll: 17P128

Q.3. How 3M achieved to balance between technology, product development and customer
focus? 

Answer. 3M had always positioned themselves as an innovative company with technology

rather than being a tech-based company for the people. So the major focus was to bring 25% of
the revenues from the products that had been launched in the last five years. McKnight on this
regard felt the idea of continuous exchange of information between the employees in sales,
manufacturing and research to give the company a tri-pod like stability. Salesman were told to
share their information along with the production people, plant engineers and technologists.
One of the major idea as formulated by the plant head was a person can spend 15% of his time
on the project that he/she like thus providing more autonomy for the user.

The manager always used to support his sub-ordinate’s projects even if it did not have any
viable potential markets. This was because that niche market is profitable and the products
which are being developed now can go and become future best sellers. For example, a non
woven material which was originally launched as a niche decorative ribbon product eventually
spawned 19 other divisions. So providing high freedom to the employees always worked out as
that resulted in development of innovative products.

For retention of this people, 3M followed a policy of “Dual Ladder” in which the people who
wanted to develop in research or engineering or marketing to progress their personal interests.
The awards was both in terms of promotion and personal recognition. The Carlton Society
which was a group of members for the scientists who had made exemplary achievements in the
field of science, used to honour the employees with membership in case of any good deeds.
Even the informal recognition that was provided to the employees that converted the mortals
into semi-legendary figures. Thus the use of technologies for product development and
customer focus ran hand in hand for the employees of 3M.
Case: 3M: Profile of an innovating Company
Name :Arnab Sanyal
Roll: 17P128

Q.4. What is "grow and divide" philosophy? How is it similar to different from umbrella entity of
Johnson and Johnson?

Answer. The major problem that was seen in case of a sizeable division is that when the division
reaches a certain volume it spends too much time on established product markets and lesser
amount on new products and business. So to overcome such problems, they used to break their
team into small units where they had new management team for new products. This would
have resulted in the high growth of the new divisions and simulate the existing division to find
other new products that could have been needed to mark its growth objectives. After 1960’s
the organization decided to cluster related divisions into groups . This helped them to
understand that the promising product developments would grow into departments, which
would again be spun into divisions and the large divisions would result in formation of new
groups.

The major positives that the “grow and divide” philosophy brought was the decentralization of
sales, production and development to the operating level. A strong target was set that was
regularly monitored by the senior management through strong corporate staff and
sophisticated control system.

The major similarity between the 3M and the J&J is that both of them focused on
decentralization. The decentralization in case of 3M was the “grow and divide” philosophy that
allowed them to expand while in J&J they had a separate departments for each of their
products. The difference in both their strategies was that in case of 3M the project team had to
prove that they are capable enough to become a division again and then again a group
member. While in case of Johnson and Johnson, the umbrella company was given the sole
responsibility of starting a business if they find that opportunity is good enough.