3M Case Analysis

Profile of an innovating company

Group 4:
Akshada Arora
Anmol Sethi
Gaurav Sahay
Kirti Jain
Neha Srivastava
Tanya Gera
ABOUT THE CASE
● The case discusses the evolution of 3M as a company
● It was with the establishment of a laboratory to solve product issue that the technological driven
culture in 3M began
● High exposure in R&D- 6.5% of sales
● Continues to expand and build on 2 dozen core technologies
● A knowledge-creating organization- innovation going on at all levels and in all areas
 HISTORY OF THE COMPANY

● Five specialists established 3M in two Harbors, Minnesota, in 1902.

● It was initially a mining adventure, the objective was to mine corundum, however this fizzled in light
of the fact that the mine’s mineral possessions was anorthosite, which had no business esteem.
● This procedure was difficult as following 14 years in misfortunes(1916),3M made its first benefit.
 THE TECHNOLOGY DRIVEN ORGANIZATION

● At an early stage, 3M developed a culture of individual entrepreneurship within the organization

● The role of intrapreneurs was critical for the success of organization\
● The technology driven culture was complimented with efficient communication in 3M
● The value of shared knowledge was instrumental in the success of 3M
● The initial goal of 25% sales from new product set the standards for technological innovation in 3M
 FOCUS ON TECHNOLOGY

● The focus on niche market was emphasized due to instances where small developments in one area lead to
breakthrough in other field
● The “bootlegging activity” was also focused on technology driven growth
● The formal and informal recognition of intrapreneurs was also part of the innovation centric policy of the
company
● A major role played in growth of the company was the usefulness of “failed technologies”, which could be
used to knowledge sharing
 FORMATION OF ORGANIZATIONAL STRUCTURE

● As the organization expanded, organizational structure changed keeping in mind the innovation driven culture of the
company
● Initially, a divisional structure developed with decentralization under a “grow and divide” policy
● The organizational expansion internationally was cautious by 3M
● 3M did not capitalize on the copyright and patent advantage it had internationally
● It was only when the partner in international operations disoluted, 3M began its own venture internationally
● Even the international subsidiaries had to start from scratch as part of the ‘make little sell little’ principle and
decentralized divisional structure
 EVOLUTION OF ORGANIZATIONAL STRUCTURE

● Lehr was the first to reintegrate the wide array of divisional structure that had developed in the organization
● Reintegration of business divisions improved the efficiencies in the organization
● However, the integration of processes like planning reduced the independence which facilitated the innovation culture
in 3M
● The need for efficiencies and market share prompted CEO Jacobson to further centralize the operations. Although, the
expenditure on R&D was increased, the innovation driven growth was not as much as before
● However, the company succeeded under Jacobson policies by exploiting competitive advantage
 3M UNDER DESIMONE

1. DeSimone went back to the innovation driven organization by setting about an organizational goal of
30% of sales through new product

2. The magnitude of change was such that it altered the organization innovation policy which existed
since early times

3. The performance of the organization was dismal in times of recession and change in the policy with
ROE rates well below the target
 PROBLEM ANALYSIS

● 3M went back to the innovation driven organizational structure in 1990 under DeSimone and were immediately faced

by the slump in performance.

● Team oriented approach compromised freedom and flexibility

● Too large and too diverse with 47 divisions and 90,000 employees making it difficult to manage
SOLUTIONS

● Organizational change by DeSimone was a step in the right direction.

● In order to sustain in the highly competitive industry, it was imperative for 3M to go back to
innovation based organizational structure.
● The need for 3M is to reintroduce and promote individual entrepreneurship which would enable
innovation and product differentiation.
● 3M should look at the long term goals and not be impacted by the short term difficulties in
bringing yet another transition.
● Create ambidextrous structure with features of organic and mechanistic
organization
● Allow freedom to product divisions for innovation