CASE: THREE ROADS TO INNOVATION

Ronald A. Mitsch (Sr. Vice President of R&D, 3M Company, St. Paul, Minnesota
Source! "ournal of #usiness Strate$y. Sept%&ct '((), pp. '*+,'.
-he 3M Company .as /uilt on a culture that not only supports /ut
acti0ely encoura$es inno0ation. Product failures are considered part of
the process. Stren$thenin$ the la/+to+mar1et channel, anticipatin$
mar1et trends, and e2ceedin$ customer e2pectations ha0e fueled the
company3s $ro.th.
4nno0ation is important to most companies, /ut it is our life/lood at 3M. 5e li1e to
1eep inno0ation comin$ from all directions! /y de0elopin$ ne. technolo$ies and ne.
applications for them6 /y assessin$ customer needs, and /y anticipatin$ mar1et
trends in all areas in .hich .e operate.
-hat presents a considera/le mana$ement challen$e. 7o. do you de0elop all those
channels for inno0ation and 1eep them open8 7o. do you turn inno0ation into product
successes8 7o. do you ensure that those processes are $oin$ on, day in and day out,
year in and year out8
&ne thin$ 3M disco0ered is that inno0ation does not 9ust happen unless you ma1e
sure people 1no. it is a top priority + and then pro0ide them .ith enou$h freedom
and resources to ma1e it .or1. 4t certainly is not $oin$ to happen .ithout top
mana$ement:s commitment to inno0ation as a 1ey in$redient in the company:s o0erall
/usiness strate$y and plannin$.
;inally, it .ill not happen .ithout a continuin$ reassessment of the /arriers to
inno0ation that tend to de0elop o0er time, despite mana$ement:s /est efforts. -o
1eep a/reast of the pace of technolo$ical chan$e in the $lo/al mar1etplace, this com+
pany needs to continually enhance the prospects for successful inno0ation.
<ltimately, the $oal of inno0ation must /e continued =uality $ro.th.
&ne of 3M:s /est+1no.n e2amples of =uality $ro.th is also a classic case of ho. the
company nurtures one channel of inno0ation! the de0elopment of ne. technolo$ies and
ne. applications for e2istin$ technolo$ies. 3M scientist Arthur ;ry had the freedom
and found the resources in the company to de0elop Post+it /rand >otes. At the time,
he .as .or1in$ on a /oo1shelf+arran$er tape. 5hile doin$ research for this pro9ect,
he came up .ith the idea for a remo0a/le, stic1y+/ac1ed /oo1mar1er as he .as
sin$in$ in a church choir.
;ry /e$an de0otin$ more of his time to the stic1y+/ac1ed pieces of paper and less
and less time to the /oo1shelf tape, especially .hen he reali?ed that the former
promised to open up a .hole ne. channel of communication. >o one complained,
/ecause 3M has a company policy that encoura$es researchers to use '@ percent of
their time on pro9ects of their o.n choosin$. -he adhesi0e ;ry used .as de0eloped
/y another scientist, Spencer Sil0er, in 3M:s corporate research la/oratories. 4t .as
a technolo$y a0aila/le to ;ry and to any other researcher in the company.
At one point, Post+it >otes faced the possi/ility of an early demise .hen an initial
mar1et test failed. #ut mana$ement sponsors $a0e it a second life. -hey personally
too1 the product into the field to see ho. customers responded.
;reedom, sharin$ of technolo$ies and mana$ement sponsorship are all essential
in$redients of the la/+to+mar1et channel of inno0ation. -hese elements ha0e /een
institutionali?ed in the 3M culture.
4n the company:s formati0e years, 3M:s president, 5illiam A. McBni$ht, esta/lished
policies and philosophies that ha0e .ithstood the test of more than si2 decades. 7e
.as con0inced that ne. product de0elopment and di0ersification .ere important to
the company:s continued $ro.th. McBni$ht esta/lished a practice of promotion from
.ithin, encoura$ed indi0idual initiati0e, and $a0e people room to $ro. on the 9o/.
7e also /elie0ed that failure is not fatal. ;reedom to ma1e honest mista1es is a $ood
$eneral policy, /ut it is particularly applica/le to inno0ation. >o person li1es to fail,
/ut it does happen occasionally .hen a company .ants to $ro. /y sponsorin$ ne.
products and ta1in$ ris1s. -he important thin$ is, one mista1e is not a tic1et to
o/li0ion.
&ut of McBni$ht:s philosophies ha0e de0eloped policies li1e the '@ percent option,
mana$ement sponsorship, and a dual+ladder system of promotion. Aa/oratory
employees can ad0ance up a technical ladder, as .ell as a mana$ement ladder, and
continue .ith their first lo0e + research and de0elopment.
McBni$ht:s philosophies ha0e /een passed on from one mana$ement le0el to another,
from one $eneration to another. #ut more recent mana$ements ha0e also set
strate$ies to reinforce the inno0ation philosophy.
>urturin$ >e. Products
-o ensure that the company:s early pattern of $ro.th throu$h inno0ati0e ne.
products continues, a =uantifia/le ne. products tar$et has /ecome part of 3M:s
financial $oals. -he company aims to achie0e at least ,@ percent of its $ro.th each
year throu$h ne. products de0eloped .ithin the last fi0e years. C0ery operatin$ unit
and its people are e0aluated on their a/ility to reach this $oal. -o encoura$e
inno0ation, 3M, in the past decade, has increased the ratio of spendin$ on R&D from
D.E percent of sales to E.@ percent.
3M continues to e2pand and /uild on t.o do?en core technolo$ies, .hich pro0ide a
rich source of ne. products. ;rom the company:s non+.o0en technolo$y ha0e come
oil sor/ents6 from adhesi0es, a ne. class of foam+/ac1ed tapes that can replace
mechanical fasteners6 from fluoro+chemicals, a ne. line of carpet stain release
treatments6 and from the company:s oldest technolo$y, a/rasi0es, a line of micro
a/rasi0es for finishin$ and polishin$ hi$h+tech components.
3M does research and de0elopment on three le0els. Di0ision la/oratories de0elop
products and technolo$ies for specific mar1ets, doin$ shorter+term research for
the most part. Sector la/oratories .or1 on technolo$ies and applications the
di0isions .ill need three to ten years from no.. Corporate la/oratories conduct /asic
research that may not lead to products for ten to t.enty years.
Sharin$ technolo$ies and these la/oratory resources across the company is of prime
importance. 5hereas products /elon$ to indi0idual operatin$ units, technolo$ies
/elon$ to anyone in the company .ho needs them. #oth formal and informal forums
allo. technical people from all of the company:s di0isions and corporate and sector
la/oratories to share information.
4nno0ation is reco$ni?ed in many .ays. -.o e2amples! -he Folden Step pro$ram
honors cross+functional teams that introduce successful ne. products. -he Carleton
Society, a hall of fame for 3M scientists, honors those .ho ha0e made lon$+ran$e
contri/utions to 3M:s product and technolo$ical leadership. All of these steps
nurture the la/+to+mar1et channel. Get, the la/+to+mar1et channel is only one route
to inno0ation from .hich the company deri0es its $ro.th. C=ually important are
assessin$ customer needs and anticipatin$ mar1et trends. All three are increasin$ly
intert.ined and essential to inno0ation.
;rom 3M:s standpoint, one of the critical issues facin$ the company is to continually
focus acti0ities throu$hout the corporation to produce =uality $ro.th. Cach of our
operatin$ units is encoura$ed to spend more time in plannin$ and settin$ priorities
for product de0elopment /ased on customer needs and e2pectations. -he =uestion is,
7o. do .e /alance priority settin$ .ith a climate of freedom8 Prioriti?in$ and
pro0idin$ freedom to inno0ate cannot /e tradeoffs6 /oth are needed.
Contrary to .hat one mi$ht thin1, .e ha0e found that prioriti?in$ not only enhances
producti0ity and the flo. of the products /ut also affords indi0idual researchers
more time for pro9ects of their o.n choosin$.
&nce the priorities are in place, the second critical challen$e is to de0elop the
products and /rin$ them to mar1et as =uic1ly as possi/le. -he idea is to o0ercome
time+consumin$ delays and road/loc1s /uilt into traditional ne. product de0elopment
schedules. Product de0elopment often has mo0ed from la/oratory to mar1et in
se=uential order. Process de0elopment, mar1etin$, manufacturin$, pac1a$in$, and
other functions /ecome in0ol0ed step+/y+step. #ut /y ha0in$ all functions in0ol0ed
from the start, de0elopment time can /e compressed dramatically.
After priorities are esta/lished, cross+functional teams are empo.ered /y
mana$ement to desi$n and de0elop a product that .ill meet customer e2pectations.
Se0eral 3M di0isions ha0e set up cross+functional action teams to address their most
important ne. product challen$es.
-he &ccupational 7ealth and Cn0ironmental Safety Di0ision cut its product
de0elopment time in half throu$h this process. 4t su/stantially increased the num/er
of ma9or ne. products introduced throu$h action teams consistin$ of la/oratory,
mar1etin$, manufacturin$, en$ineerin$, =uality, pac1a$in$, and financial people. Cach
team is led /y a product champion, someone .ho /elie0es stron$ly in the 0alue of the
pro9ect and is committed to ma1in$ it successful. Cach team also has a mana$ement
sponsor .ho ser0es as a cheerleader, helps $et access to needed resources, and
helps teams stay on trac1.
A third critical issue for the '(()s is the need to satisfy customer e2pectations.
Stayin$ close to customers is a 3M tradition that dates /ac1 to McBni$ht. 7e
/elie0ed in $oin$ into the /ac1 shops of factories to see ho. the company:s products
.ere /ein$ used and to $et ideas for ne. products. -he 0ertical or$ani?ational
structure he set up has made it easy to 1eep 3M operatin$ units small enou$h so that
people, from top mana$ement on do.n, $et to 1no. their customers.
4n the '(()s, 3M is addin$ some ne. t.ists to this practice. -he company:s di0isions
are doin$ more in0ol0ed mar1et research to pinpoint present and future customer
needs. -he $oal is to reemphasi?e a lon$standin$ tradition of re$ularly sendin$ la/
people into the field to help 1eep research focused on hi$h+priority pro9ects that
meet customer e2pectations. Cross+functional teams .or1 closely .ith customers.
;or e2ample, many of 3M:s carpet treatments and many of its tape closures for
disposa/le diapers .ere de0eloped either in 9oint efforts or in close consultation
.ith carpet+fi/er ma1ers and diaper ma1ers.
A recent addition to 3M:s line of data cartrid$es for off+line stora$e of computer
data illustrates ho. inno0ation occurs in response to chan$in$ customer needs and
e2pectations.
-he company:s Data Stora$e Products Di0ision found that .ith e=uipment and usa$e
chan$in$, one computer ma1er needed a cartrid$e that operated in en0ironmental
temperature e2tremes, another .anted to reduce friction in tape handlin$, and a
third needed /etter acoustic noise properties. A multifunctional team de0eloped a
ne. line of cartrid$es that not only met those challen$es /ut also operated at hi$her
speeds. &ther data cartrid$e users, as .ell as the three customers see1in$ special
features, are /enefitin$ from this ne. product line.
Another ma9or channel of inno0ation + anticipatin$ mar1et trends + also re=uires the
or$ani?ation to stay close to the customer. Studyin$ industry trends and tal1in$ to
customers of our H+ray films made it clear that electronic dia$nostic e=uipment .as
the .a0e of the future. -hat 1no.led$e prompted the de0elopment of one of the
company:s most recent ne. products + the 3M Aaser 4ma$er for electronic medical
ima$in$.
-he Aaser 4ma$er I.ritesI di$ital si$nals from CA- scanners and other electronic
dia$nostic e=uipment onto a proprietary 3M film. 4t $i0es doctors a hi$h+=uality,
hard+copy ima$e of the scanner information that they had ne0er had /efore.
De0elopment of the Aaser 4ma$er dre. on e2istin$ 3M ima$in$, materials, and
hard.are technolo$ies. -he hi$h+priority effort e0entually /rou$ht to$ether a team
from fi0e different la/oratories from the <nited States and a/road, as .ell as
outside optical suppliers. -he pro9ect .as initiated /0 mana$ement, /ut it .as the
persistence and dili$ence of the team that pro0ed, to /e the dri0in$ force once the
pro9ect /e$an.
;ailure is >ot ;atal
4f .e $ain a lot from each successful pro$ram at 3M, .e also learn as much or more
from e0ery failure. ;or e2ample, .e tried to mar1et a line of suntan lotions that
adhered to the s1in .ithout /ein$ stic1y6 it protected the s1in e0en after a 3)
minute s.im. -here .as nothin$ .ron$ .ith the product:s performance! ho.e0er, .e
.ere not successful in the mar1etplace. -he suntan lotions .ere competin$ a$ainst
the products of .ell+esta/lished competitors .ho offered /road lines of .ell+1no.n
s1in care products.
-he e2perience reinforced our traditional .isdom that 1eepin$ one foot in a
Jcomfort ?oneK ena/les us to compete more successfully. So .e try to le0era$e our
e2istin$ mar1etin$ stren$ths as often as .e can .hen .e em/ar1 on ne. products.
#ut .e also learned not to $i0e up too easily. Some astute la/oratory 1ept .or1in$ on
the suntan lotion technolo$y and came up .ith a successful insect repellant.
;ailures often turn into successes. A fe. years a$o, a $roup of researchers .or1in$
on adaptations of 3M3s non+.o0en fi/ers disco0ered that .hen 0ery lar$e fi/ers .ere
made from poly0inyl chloride in a particular .ay, the end result is 0ery curly fi/ers.
-he pro9ect seemed doomed. #ut a fe. researchers continued thin1in$ of potential
uses for this fi/er. Someone thou$ht of puttin$ a /ac1in$ on the fi/ers6 someone
else reali?ed curly fi/ers trap dirt and can /e easily cleaned. -he team e0entually
de0eloped the line of >omad floor mats, a 0alua/le addition to the company3s line of
/uildin$ maintenance products.
So .e continue to le0era$e our cultural and technolo$ical stren$ths .hile $i0in$ a ne.
emphasis to settin$ priorities, assessin$ the importance of indi0idual pro$rams, and
focusin$ on those .ith ma9or impact on the /usiness.
5e .ant each of our operatin$ units to ha0e a 0ia/le technolo$y and product 0ision of
the future. #ut .e also .ant to 1eep those products comin$ that arise out of the
curiosity and s1ill of our researchers.
QUESTIONS FOR DISCUSSION
'. 5hat are the 0alues of 3M3s culture8
,. 5hat are the main .ays in .hich 3M tries to create a culture that supports
inno0ation8