htm Abstract The case examines the organizational culture at 3M and the way in which it facilitated innovation at 3M. The policies and mechanisms adopted by 3M's management to encourage the spirit of innovation in its employees are also discussed. The case takes a close look at 3M's environment of innovation; the culture of knowledge sharing; and the reward system. It also discusses the steps implemented by the new CEO, James McNerney, to accelerate growth at 3M. The impact of cultural change at 3M on the spirit of innovation is also discussed. Issues: Strategies for developing a culture of innovation in an organization and examine the influence of such a culture on its growth and leadership

Key words: organizational culture, 3M, facilitated innovation, 3M, spirit of innovation, environment, innovation, knowledge sharing, reward system, CEO, James McNerney, cultural change Questions for Discussion: 1. Since its early years, what strategies did 3M adopt to foster a culture of innovation in the organization? How far do you attribute the success of the company to its culture? 2. The top management of 3M launched many initiatives to foster a culture of innovation in the company. Which of these initiatives proved to be critical to the company's uninterrupted success for over a hundred years?

3. Many analysts pointed out that the new initiatives implemented by 3M's new CEO James McNerney would have a negative affect on 3M's culture. Do you think the new initiatives would negatively affect 3M's culture? Justify your stand.

17 Associated Risks . It also discusses about the strategic issues and then provides appropriate recommendations to . 10 Strategic Positioning of 3M . 8 Strategic Decision Making .corporate. It emphasizes on the strategic planning and strategic decision making process in the company .154898 Introduction Name : Instructor 's Name : Course : Date : Table of Content Abstract . 14 Current Strategic Posture .http://www. 15 Alternative Scenarios . 24 Abstract The given paper aims to discuss various strategic issues in 3M .mightystudents. 18 Recommendations .com/essay/%603M%60. 20 Conclusion .case. 9 Strategic Planning . 22 Work Cited . 15 Strategic Focus 3M . 18 Strategic Issues . 4 Strategic Analysis . This paper also describes the SWOT analysis of 3M in order perform strategic analysis of 3M . 2 SWOT Analysis . 2 Introduction .

manufacturing and marketing of products that is underpinned by four core values.. 3M’s structure of seven business companies (consumer and the office. electro and communications. health care. security and protection services. dental products and optical films worldwide . passive fire protection . Within 3M there is substantial inter-company co-operation in research.asp? strAction=GetPublication&PNID=1312 3M Development of a life cycle management approach to improve the environmental performance of 3M’s products. Introduction Minnesota Mining and Manufacturing Company (3M ) is involved in the offering of thousands of products such as laminates . it studies about the current strategic posture and recommend for the future posture . safety. These are to: 1. this paper provides various alternatives to the business in relation to improvement in its strategic position .solve these issues . 2. electrical materials . and transportation) reflects its market presence. display and graphics. It has its laboratories for research and development in 35 countries and international manufacturing operations in 29 countries . adhesives . value and service.000 staff and generating worldwide sales of $20 billion. industrial. manage potential risks and identify opportunities at all stages in the product’s life. provide an attractive return for investors through sustained.. . Its brand names such as Post-ItTM and ScotchgardTM are familiar throughout the world selling in nearly 200 countries. It has worldwide presence through various heterogeneous elements . In the future strategic posture recommendation . It is known for its diversified technology in product and service innovation for serving customers and communities . Through these businesses 3M has companies in more than 60 countries employing over 67. The company 3M is a global technology company.article13. At the same time . 3M offers its products and services through distributors and retailers in more. http://www. It runs its operation in more than 60 countries around the globe . satisfy customers with superior quality. quality

social and environmental issues) is explicitly linked to its values and the company prides itself on employing the right people. be a company employees are proud to be part of. Taking action The LCM is a tool to manage all potential risk associated with a product. There are business processes that monitor life cycle management of products and lead to identifying new products and market opportunities as well as ways to reduce impacts. If. These targets cover reductions in waste – including volatile organic waste. Environmental sustainability is included with 3M’s strategies. solid waste. the risk areas are assessed and a decision is made as to whether to proceed with its further development. C02 emissions and energy use. The matrix provides a means of measuring the LCM by scoring performance in all parts of the product’s lifecycle. The end result is that the matrix identifies what needs to be done (such as further research) and can lead to innovations. Furthermore. 4. The LCM revealed that Post ItTM notes used a solvent base. electrical and mechanical. This is because merely meeting compliance targets does not fulfil the values of the business. the product has achieved a satisfactory score it can continue its development. Part of the LCM approach includes a matrix that is applied to products in development or existing products in review. environmental sustainability has become increasingly important within 3M. The combination of these three drivers together with the need to reduce risks within its product range to maintain and increase its market share led to 3M’s life cycle management (LCM) approach. For 3M it was important to reduce the use of solvent in the manufacturing process of new products for two reasons. whilst identifying opportunities at all stages of its life cycle from research and development. energy. to ultimate disposal. biological. It assesses the impacts of the product in the following categories: environment – air. who share the company’s ethical standards and belief in openness. The matrix overcame the challenge for 3M of needing a practical way of assessing all products without each one undergoing a comprehensive life cycle assessment. for example. water.g. LCM is based on existing literature. ‘3Mers’. This case study focuses on the company’s life cycle management approach to its products. sourcing of materials. In the last three years. Within economic sustainability there are business plans to achieve optimal efficiency in manufacturing and logistics – so saving costs. inhouse experts and 3M’s own experience of benchmarking other companies in this field. resource use. first.3. operations. The period for assessment varies with the complexity of the product and can take several months to complete. on applying the matrix. An example of innovation was the development of the Super Sticky notes as a direct result of the application of LCM to Post ItTM notes. compliance alone is not enough to achieve the tough operational targets which it sets itself over five year periods (e. the safety and environmental risks in manufacturing and sourcing the product. honesty and integrity. safety – chemical. it improves factory safety as it eliminates the risk of explosions . manufacturing. the risks to customers in using the product and the risks both current and future in terms of forthcoming legislation in disposal of the product. The programme has been a driver within 3M for its life cycle management approach as it has demonstrated ways of savings costs through. 3M’s approach to corporate social responsibility and sustainable development (economic. Guidelines and standards for the application of LCM were developed through consultation with all of its seven businesses. respect its social and physical environment. health and safety unit take joint responsibility for LCM development. health – chemical. customer use. If not. The four particular areas of risk that LCM deals with are the potential risk of certain materials in their products. Within 3M the corporate toxicology and regulatory unit and the corporate environment. The matrix was ideal as it allowed a review to identify risks and environmental health and safety (EHS) performance in a relatively simple way. The drivers The importance of environmental sustainability to 3M is demonstrated by its successful 3P (‘pollution prevention pays’) programme that was established 30 years ago. Another driver has been its customers who have told 3M’s sales staff that environmentally responsible products are important for their reputation. 2000-2005). reducing raw material use. since combined they can best represent manufacturing and customer perspectives. physical.

So 3M developed a water-based adhesive for the Super Sticky notes that had the same functionality and performance as the solvent based adhesive. It has helped to improve relationships with customers. The application of LCM has not been without challenges. What next? All new products undergo LCM and 3M has set the objective that by 2010 all 3M products will have had LCM reviews.and fires caused by solvents. a hydrofluoroether based product used for fire fighting. LCM has provided benefits in enhanced reputation and strengthened brand names. For example. “Staff have welcomed the approach as they can see how it can help us in achieving our internal targets as well as demonstrating how we are being true to our values and acting responsibly” said Dietrich Sinnaeve. It has required 3M staff to go through training in technical (EHS) and regulatory areas so that the approach can be consistently applied. In this way it meets 3M’s values and delivers innovation. This product has been developed so that it has zero ozone depletion and global warming potential and replaces 'perfluorocarbon' based products that had significant global warming potential. Ultimately LCM links to sustainable growth and the manufacturing of products that will stay for a long time within the market place. This is because products that could be a long-term risk due to issues such as impending legislation are identified by LCM. it overcomes the issue of recycling/disposing of the solvent 3M From Wikipedia. the free encyclopedia Jump to: navigation. However. Middle East and Africa. In general. Environment. use or disposal that is additional to meeting legal requirements. search . The latter is assessed through scanning of media and relevant websites. Products containing these chemicals are reviewed first. LCM reviews are prioritised based on perceived EHS risk – a risk register is kept for all the products and this is reviewed – and public opinion. http://en. It has led to reducing environmental risks. Lastly. The LCM approach provides actions to improve the environmental impacts of the products either through manufacturing. Data collected from the review process should enable 3M to further revise its environmental targets and will be used to demonstrate to its customers how 3M is tackling issues of environmental responsibility. and secondly. It is envisaged that LCM will help further optimise manufacturing operations. and promoted operational excellence by improving efficiency – a cost benefit to 3M. Why is it CSR? All 3M products are compliant to existing legislation. customers can rely on 3M’s products without the threat of damage to their own reputations.wikipedia. Health Safety and Regulatory Manager for 3M Europe. The business benefits The LCM approach has improved governance within the business as it leads to greater transparency through better communication with its customers. This in turn leads to new market opportunities and sustainable growth as the company makes products that the customer needs in a way that increases commercial longevity. persistent chemicals (those which can accumulate within the environment and in humans) are a fast moving area of science with regular improvements to 3M’s knowledge and understanding of them. Another example of the LCM application has been with the development of 3M’s NovecTM. who tell 3M what product specifications they require. it has been a source of innovation as the LCM reviews have led to new market opportunities for customers and 3M products. Because risks have been significantly reduced. that has led to development of new expertise amongst staff.

For other uses. Danley Budd Headquarte rs Founded Maplewood. J. Minnesota. Research and Development and CTO)[2][3] Products Adhesives . Cable Founder(s) John Dwan William A. Campbell (Executive Key people Vice President and CFO)[2] Frederick J.S. and President)[2] Patrick D. Minnesota. 3M Company Public (NYSE: MMM) Type Dow Jones Industrial Average Component S&P 500 Component Industry Conglomerate Two Harbors. U.[1] Area served Global George W. (1902) Henry S. CEO. see 3M (disambiguation). Buckley (Chairman.S. U. Bryan Hermon W. Palensky (Executive Vice President. McGonagle Dr.

3 Chief executive officers 5. they produce over 55. With over 76.1 Current officers 5.4 Chairmen of the board • 6 See also . passive fire protection. Contents [hide] • 1 History ○ ○ • • • • 1. laminates.2 Presidents 5.19 Billion Total assets ▲ US$27.85 Billion (FY 2009) [4] Net income ▲ US$3. including: adhesives.1 Billion (FY 2009) [4] ▲ US$ (FY 2009) [4] (FY 2009) [5] (FY 2009) [5] 3M Company (NYSE: MMM). Minnesota.000 products. is an American multinational conglomerate corporation based in Maplewood. dental products.2 Expansion 2 Environmental record 3 Operating facilities 4 Products 5 Corporate governance ○ ○ ○ ○ 5.[6] 3M has operations in more than 60 countries – 29 international companies with manufacturing operations. electronic materials. a suburb of St. electronic circuits and optical films. abrasives.Abrasives List of products Revenue Operating income ▲ US$23.000 employees. Paul. and many 3M products are available online directly from the company. and 35 with laboratories.2 Billion Total equity ▲ US$12. formerly known as the Minnesota Mining and Manufacturing Company. 3M products are available for purchase through distributors and retailers in more than 200 countries.8 Billion Website 3M.1 Founding 1.

[edit] Expansion The company's early innovations include waterproof sandpaper (1921) and masking tape (1925). however. The company began by mining stone from quarries for use in grinding wheels. [edit] Founding 3M was founded by Henry S. 1902 the five went to the Two Harbors office of company secretary John Dwan. Bryan. The founders' original plan was to sell the mineral corundum to manufacturers in the East for making grinding wheels. Minnesota in 1902. 3M's corporate image is built on its innovative and unique products. customers complained that the garnet was falling off the paper. Minnesota. Unable to take the loss of selling expensive inventory. The same year. Danley Budd. which was on the shore of Lake Superior and is now part of the 3M National Museum. Cable. after which sale of sandpapers grew.• • • 7 References 8 External links 9 Additional resources [edit] History 3M started out on the North Shore of Lake Superior in Illgen City before moving to Two Harbors. William A. J.[citation needed] After World War II 3M opened plants across the United States. and then to Saint Paul. with up to 25% of sales each year from new products. and the oil had penetrated the stones. Herman W.92 km2) and has over 50 buildings. on June 13. staying for 15 years before outgrowing the campus and moving to its current headquarters at 3M Centre in Maplewood. the company’s stock was first traded over the counter and in 1946 listed on the New York Stock Exchange (NYSE). Minnesota. John Dwan. In 1951. Dwan and his associates were not selling what they thought. Germany. including an Innovation Center that displays products 3M has taken to market. This was the first instance of research and development at 3M. management supported its workers to innovate and develop new products which developed into its core business. The new campus in Maplewood is 475 acres (1.[7] Failing to make sandpaper with the anorthosite.[8] . they were really selling the worthless mineral anorthosite. and Dr. international sales were approximately $20 million. During the 1950s the company expanded worldwide with operations in Canada. waterproof sandpaper and Scotch brand tapes. and signed papers making Minnesota Mining and Manufacturing a corporation. The founders discovered that the stones had traveled across the Atlantic Ocean packed near olive oil. they roasted the stones over fire to remove the olive oil. McGonagle. The company moved to Duluth. Twelve years after being founded. Other innovations in this era included masking tape. France. In 1914. and the United Kingdom in large part by Clarence Sampair. After selling one load. By 1929 3M made its first moves toward international expansion by forming Durex to conduct business in Europe. the founders decided to import minerals like Spanish garnet. Australia. The company is currently a component of the Dow Jones Industrial Average and of the S&P 500. In reality. Struggling with quality and marketing of its products. Mexico. 3M’s achievements were recognized by the American Institute of Management naming the company “one of the five best-managed companies in the United States" and included it among the top 12 growth stocks (3M). 3M developed its first exclusive product: ThreeM-ite cloth. as well as cellophane "Scotch Tape" and sound deadening materials for cars.

In the mid-1970s. largely under the "3M bookshelf game series" brand. 3M traffic signals installed in Shelton. The Model 131's "programmability" was achieved via masking a clear glass lens with aluminum adhesive tape. skewed intersections. Standing off-axis from the intended viewing area. these signals are invisible to adjacent lanes of traffic in daylight. the game line was taken over by Avalon Hill. the Model 131. with easily learned simple rules but complex game play and depth and with uniformly high quality components. 3M published a line of board games. These games were marketed to adults and sold through department stores. As such. (A faint glow is visible at night) The same two signals above. from business and sports simulations to word and abstract strategy games.In the late 1960s and early 1970s. in 1969 3M introduced its first and only traffic signal. After three years of testing. such as left turn signals. they are the ancestors of the German "Eurogames". the signal had the unique ability to be "programmed" so it was visible from certain angles. [2][3] It was the first of its type and one of only two of the design in history. 3M sold these signals for special-use applications. The games covered a variety of topics. or dangerous intersections where a very bright indication is needed. Washington. Special light-diffusing optics and a colored fresnel lens create the indication. The signals are very heavy (roughly 55 pounds per signal . taken in the signal's intended viewing area (a single lane of northbound traffic). Labeled a "programmable visibility" signal. They were a major publisher at the time for influential American designers Sid Sackson and Alex Randolph.

1976). After drawing on the experience of that prototype recorder. with such items as character generators and several different models of video switchers. 3M also marketed and sold a retrofit kit for 12-inch (300 mm) conventional signals using modified M-131 optics. 2008.head) and expensive to maintain. from models of audio and video routers to video mixers for studio production work. 3M later introduced in 1979 a commercially available digital audio recording system called the "3M Digital Audio Mastering System" [5]. Another division of the Health Care business. Its worldwide sales are over $20 billion. the Americas. The Drug Delivery System division continues to contract manufacture inhalants and transdermal drug delivery systems and has now taken on manufacture of the products whose licenses were sold during the divestiture of the pharmaceuticals business. 2010. In 1980 the company introduced Post-it notes. which still has a following today. 3M announced a major partnership with Roush-Fenway Racing. 3M's Mincom division introduced several models of magnetic tape recorders for instrumentation use and for studio sound recording. 3M follows a business model based on "the ability to not only develop unique products. on February 19. a Model 130 Programmable Visibility pedestrian signal (a M-131 with pedestrian signal indications). one of NASCAR's premier organizations. and removal is frequent in some areas. and the remainder of the world. a car care products company that was family-owned for over a century. 2006.[10] Today. the company's data storage and imaging divisions were spun off as the Imation Corporation. The company has 132 plants and over 67. The pharmaceuticals businesses were sold off in three deals. 3M Mincom was involved in some of the first digital audio recordings of the late 1970s to see commercial release when a prototype machine was brought to the Sound 80 studios in Minneapolis.[9] On September 8. with international sales 58% of that total."[11] On October 13. Imation has since sold its imaging and photographic film businesses to concentrate on storage. 3M completed acquisition of Arizant Inc. 3M announced that it would become the title sponsor of the 3M Performance 400 at Michigan International Speedway for at least the next three years. and a few bi-modal modifications of the M-131. after 100 years. 3M announced its intention to sell pharmaceutical non-core business. Today 3M is one of the 30 companies included in the Dow Jones Industrial Average (added on August 9. In addition to the 3M Model 131 traffic signal. Drug Delivery Systems remains with 3M. On April 4.000 employees worldwide. which consisted of a 32-track digital audio tape recorder and a companion 4-track digital recorder for final mastering. 3M no longer manufactures the signals but has continued to supply parts. On December 20. with sales offices in over 200 countries. with few employees residing outside their home country. a retrofit kit for eight-inch (203 mm) conventional signals using a smaller version of the M-131 optical assembly. 2005. The vast majority of the company's employees are local nationals. 3M Mincom was also involved in designing and manufacturing video production equipment for the television and video postproduction industries in the 1970s and 1980s. in Europe. and is ranked number 101 on the As of 2006[update] Fortune 500 listing.[12] . 3M announced an agreement to acquire Meguiar's. As of 2007. An example of the latter is the model M79 recorder [4]. but also to manufacture them efficiently and consistently around the world (3M). In addition. 2006. In 1996. 3M later designed and manufactured several other commercially available models of digital audio recorders used throughout the early to mid-1980s. In 2008 the company will sponsor Greg Biffle in the NASCAR Sprint Cup Series as he drives the #16 Ford Fusion.

[21] Perfluorochemicals do not break down or degrade in the environment. corporate research laboratories. PFOA. the former primary American producer of PFOS. which were pumped into the nearby Mississippi River.[23] In 2008."[17] The restoration plan is to be based on an analysis of the company property and surrounding lands. and certain division laboratories are located in St. 3M states the area will be "cleaned through a combination of groundwater pump-out wells and soil sediment excavation. announced the phase-out of PFOS.[19] The on-site water treatment facility that handles the plant's postproduction water is not capable of removing the PFCs.[18] The clean-up cost estimate is $50–56 million. the U. Minnesota. 3M has nine sales offices in eight states .[17] In 2002.[16] PFCs produced by 3M were used in non-stick cookware and stain resistant fabrics. and PFOS-related product production in May 2000. built by 3M at Target headquarters in Minneapolis. 3M ranked 70th on the Political Economy Research Institute's (PERI) list of the top 100 corporations emitting airborne pollutants in the United States. spanning approximately half of the river's total distance. 3M created the Renewable Energy Division within 3M’s Industrial and Transportation Business to focus on Energy Generation and Energy Management. Environmental Protection Agency (EPA) began investigating perfluorinated chemicals (PFCs) after receiving data on the global distribution and toxicity of PFOS. Paul.S.[17] The Cottage Grove facility released PFCs from the 1940s to 2002.[edit] Environmental record The Target Light System.[13] In 1999. In the United States.[18] In response to PFC contamination of the Mississippi River and surrounding area. PERI ranked 3M at 98th place on the list.[15] 3M.[14] the former key ingredient in Scotchgard.[24][25] [edit] Operating facilities 3M’s general offices.[22] In March 2010. which will be funded from a $147 million environmental reserve set aside in 2006.[20] The search area for PFCs in the Mississippi River now extends to five states.

It has 539 employees and was established in 1969.[26] 3M owns substantially all of its physical properties. Internationally. 3M’s physical facilities are highly suitable for the purposes for which they were designed. 3M has 148 sales offices. The Company operates 93 manufacturing and converting facilities in 32 countries outside the United States. It has 370 employees and recently there was an investment of £4.and operates 74 manufacturing facilities in 27 states. Kentucky. Because 3M is a global enterprise characterized by substantial intersegment cooperation. UK factory producing respirators for workers safety. using laser technology.5 million ($9 million). USA factory producing Post-It notes (672 SKU) and scotch tape (147 SKU).[27] Selected factory detail information: • Cynthiana.[29][30] [edit] Products • • • • • • • • • • • • • • • • • • • • • • • • • 3M High Visibility Signals: a line of traffic signal devices. with the flagship being the Model 131 12" vehicle signal head. County Durham. Produced from 1969–2007 ACCR Aearo Avagard Hygiene Range Bondo Cavilon Chrome & Metal Polish Clarity Coban Command Adhesive Comply Steam Indicators 3M Purification DI-NOC Dual Lock Durapore Dobie Dynatel FastBond Adhesives Filtrete Fluorinert Hookit sandpaper Littmann Stethoscopes Littmann Model 3200 Electronic Stethoscope with Zargis Cardioscan Medipore Micropore Hypoallergenic Skin Tape . properties are often used by multiple business segments. [28] • Newton Aycliffe.

its early years were certainly rough. 3M has specialized in making things rough. and occasionally sticky. or smooth. they were mining the wrong substance.• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Microfoam Nexcare O-Cel-O Post-it note Reddot ECK Electrodes Reston SandBlaster Scotch Tape Scotch Magic Tape Scientific Anglers Scotch-Brand Masking Tape Scotch-Brite Scotchcal Film Scotchgard Scotchlite Scotchcast Fibreglass casting Scotchprint Graphics Scotch-Weld Adhesives Steridrape Steristrip Stikit sandpaper Super 77 Classic Spray Adhesive Tartan Tegaderm Thinsulate Velostat[31] VHB Vikuiti Wetordry sandpaper Microtouch Touch Screens http://wiki. but hardly ever smooth. The Minnesota Mining and Manufacturing Company got its start as a mining concern. and what they had was worthless. Appropriately enough. sticky. digging for minerals used to make sandpaper. as it turned out. But the founders had bad luck right from the Company Description It's surprisingly easy to boil down a company known for thousands of products that permeate everyday life: Since its earliest days.fool. When they tried to import another kind of .

perhaps you should write them on a Post-it and stick it to your monitor.abrasive mineral from Europe. A Struggle Between Efficiency And Creativity How CEO George Buckley is managing the yin and yang of discipline and imagination Not too many years ago. introduced in 1980 after a 3M engineer devised a bookmark that would stick to a particular page.S. making it nearly useless for sandpaper. One of his most highly regarded followers. but easily unstick itself. 3M would probably thank you. In addition to the sandpaper that gave the company its start. the company also specializes in building materials and medical supplies. and the humble Post-it note. Former CEO Jack Welch was the high priest. was quickly snatched up by 3M after falling short in the closely . with more than $24 billion in revenue and more than $4 billion in profits. Thinsulate insulating fabric. James McNerney. and his disciples spread the word to executive suites throughout the land. 3M is now best known for Scotch brand adhesive tape. the invention of new and useful products has been 3M's bread and butter. The company helped pioneer magnetic audio and video tape (a business spun off in 1996 as Imation). Depending on the source you consult. between one-fourth and one-third of 3M's revenue each year comes from new products. and more than 60 countries worldwide. 3M operates in 27 states throughout the U. Scotchgard stain protection for fabrics. Among many other products. If you think you might have trouble remembering those statistics. and protection At 3M. the company founded a research and development department to make sure such a blunder never happened again. security. it arrived saturated with the olive oil with which it had been shipped. But this apparent misstep ultimately put the company on the right track. It ranked 327th on the 2008 Fortune Global 500 list of the world's largest companies. Since 1916. the temple of management was General Electric (GE ). After clever engineers roasted the mineral to get rid of the oil. Divisions 3M maintains six operating segments: • • • • • • Consumer and office Display and graphics Electro and communications Health care Industrial and transportation Safety.A. and created the synthetic fabric used in the soles of Neil Armstrong's boots when he became the first man on the moon.

The mere mention of his name made everyone richer. I'm getting behind on invention. erratic. Thinsulate. Now his successors face a challenging question: whether the relentless emphasis on efficiency had made 3M a less creative company. so I'm going to schedule myself for three good ideas on Wednesday and two on Friday. and sluggish." McNerney declined to comment for this story. McNerney axed 8. 2000. But those old hits have become distant memories. Those results are not coincidental. today that fraction has slipped to only onequarter.) company in its 100-year history. as they did at 3M. McNerney abruptly left for a bigger opportunity. and the company's stock jumped nearly 20% in the days after Dec. 3M is the birthplace of masking tape. who has dialed back many of McNerney's initiatives. Paul (Minn. That's not how creativity works. At the company that has always prided itself on drawing at least one-third of sales from products released in the past five years. a breakthrough innovation is something that challenges existing procedures and norms. He had barely stepped off the plane before he announced he would change the DNA of the place. 5. Efficiency programs such as Six Sigma are designed to identify problems in work processes—and then use rigorous measurement to reduce variation and eliminate defects.watched race to succeed Welch." says current CEO George Buckley. 3M's board considered McNerney a huge prize. After all. and tightened the purse strings at a company that had become a profligate spender. His playbook was vintage GE. Then. That's a vitally important issue for a company whose very identity is built on innovation. Thousands of staffers became trained as Six Sigma "black belts. When these types of initiatives become ingrained in a company's culture." The plan appeared to work: McNerney jolted 3M's moribund stock back to life and won accolades for bringing discipline to an organization that had become unwieldy. intensified the performancereview process. and the Post-it note. It is the invention machine whose methods were consecrated in the influential 1994 best-seller Built to Last by Jim Collins and Jerry I. the top job at Boeing (BA ). It has been a long time since the debut of 3M's last game-changing technology: the multilayered optical films that coat liquid-crystal display screens. After all.000 workers (about 11% of the workforce). creativity can easily get squelched. well. when his selection as CEO was announced. four and a half years after arriving. McNerney was the first outsider to lead the insular St. "You can't put a Six Sigma process into that area and say. "Invention is by its very nature a disorderly process. PROUD CREATIVE CULTURE The tension that Buckley is trying to manage—between innovation and efficiency . Porras. He also imported GE's vaunted Six Sigma program—a series of management techniques designed to decrease production defects and increase efficiency.

design-obsessed economy. to September. While process excellence demands precision. Shares are up 12% since January. 2000. There is no doubt that the application of lean and mean work processes at thousands of companies. the metrics that are needed. [the more] it is going to hurt breakthrough innovation. Buckley seems to have satisfied many skeptics on the Street. and serendipity. The company explicitly encouraged risk and tolerated failure. innovation calls for variation. 3M's creative culture foreshadowed the one that is currently celebrated unanimously at Google (GOOG ). which may have sacrificed creativity but made up for it in consistency. Perhaps all of that made it particularly painful for 3M's proud workforce to deal with the hard reality the company faced by the late '90s. with charisma to spare. the onus shifts to growth and innovation. the very factors that make Six Sigma effective in one context can make it ineffective in another.S. are fundamentally different. Profit and sales growth were wildly erratic. and more efficiency. in the way of a tenured professor. He's tall and athletic. an informal demeanor. It was one of the pillars of the "3M Way" that workers could seek out funding from a number of company sources to get their pet projects off the ground. In the office he prefers checked shirts and khakis to suits and ties. the capabilities that are needed." adds Vijay Govindarajan. in short. But what about when there are few facts to go on—or you don't even know the nature of the problem you're trying to define? "New things look very bad on this scale. Traditionally. who has worked with 3M on innovation projects that he says "took a backseat" once Six Sigma settled in. In 2007. In Buckley's first year. That all sounds great when you know what outcomes you'd like to control. Buckley's Street cred was hard-won. but two quarterly earnings misses and a languishing stock made it a rocky ride. Buckley. Indeed. The stock sat out the entire late '90s boom. and a scientist's natural curiosity. consistency. Buckley is of average height.—is one that's bedeviling CEOs everywhere. Investors liked McNerney's approach to boosting earnings. "The mindset that is needed. budging less than 1% from September. Profits grew. and repetition. McNerney could play the President on TV. has been one of the most important business trends of past decades. manufacturers have shaped up and become profitable global competitors. on average. is just the kind of guy who has traditionally thrived at 3M." says MITSloan School of Management professor Eric von Hippel. 22% a year. with a slight middle-age paunch. The flexibility and lack of structure. it uses rigorous statistical analysis to produce unambiguous data that help produce better quality. It bungled operations in Asia amid the 1998 financial crisis there." The exigencies of Wall Street are another matter. "The more you hardwire a company on total quality management. But as once-bloated U. convincing them he can ignite top-line growth without killing the McNerney-led productivity improvements. lower costs. He's bookish and puckish. especially in today's idea-based.4 billion. sales approached $23 billion and profits totaled $1. Official company policy allowed employees to use 15% of their time to pursue independent projects. which . a management professor at Dartmouth's Tuck School of Business. 1997. He's nowhere near the management rock star his predecessor was. the whole culture that is needed for discontinuous innovation. often through programs with obscure-sounding names such as ISO 9000 and Total Quality Management. failure.

and showed them how to track data and create charts and tables on a computer program called Minitab. which originated at Motorola (MOT ) in 1986 and became a staple of corporate life in the '90s after it was embraced by GE. The black belts fanned out and led bigger-scale "black-belt projects. analyze. which explained DMAIC and DFSS. Thousands of 3Mers were trained as black belts. McNerney arrived at a company that had been criticized for throwing cash at problems. Nearly every employee participated in a several-day "green-belt" training regimen.4 defects per million). Six Sigma seeks to remove variability from a process. clearly you can squeeze costs out. But on a basic level. hovering over $1 billion a year. After a couple of months on a research project. and 11% more to a trough of $677 million in 2003. At 3M. a Stanford Graduate School of Business management professor. familiarized workers with statistics. So McNerney had plenty of cause to whip things into shape. Six Sigma quality has come to be accepted as no more than 3. which stands for: define. The first and more traditional version is an acronym known as DMAIC (pronounced "dee-may-ic"). Paul. a PhD who had worked as a researcher at 3M for 32 years before his job was eliminated in 2004." such as improving the order fulfillment process. As a percentage of sales. the R&D function at 3M was systematized in ways that were unheard of and downright heretical in St. Others explain it as a tool for analyzing a problem (high shipping costs. and increase predictability (technically speaking. At some companies.had enabled the company's success. McNerney also held research and development funding constant from 2001 to 2005. which purports to systematize a new product development process so that something can be made to Six Sigma quality from the start.1% in 2001 to just 3. In that way you avoid errors. its main value to corporations now clearly is its ability to save time and money. had also by then produced a bloated staff and inefficient workflow. These five steps are the essence of the Six Sigma approach to problem solving. measure. improve. "The question is. The term is now so widely and divergently applied that it's hard to pin down what it actually means." says Charles O'Reilly. Steven Boyd. for instance) and then using data to solve each component of it. GREEN-BELT TRAINING REGIMEN One of his main tools was Six Sigma. capital expenditures dropped from 6. or DFSS. This Six Sigma drive undoubtedly contributed to 3M's astronomical profitability improvements under McNerney.7% in 2003. what's the long-term damage to the company?" Under McNerney. They also often oversaw smaller "green-belt projects. he would have to fill in a "red book" with scores of pages worth of charts and tables. McNerney introduced the two main Six Sigma tools. from $980 million to $763 million. he slashed capital expenditures 22%. an honorific awarded to experts who often act as internal consultants for their companies. While Six Sigma was invented as a way to improve quality. or defects. Six Sigma is plainly a euphemism for cost-cutting. In his first full year. "If you take over a company that's been living on innovation." such as increasing production speed 40% by reducing variations and removing wasted steps from manufacturing. Some employees found the constant analysis stifling. was one of them. even though the guidelines would have looked familiar at many other conglomerates. control. The other flavor is called Design for Six Sigma. operating margins went from 17% in 2001 to 23% in 2005. analyzing everything from the .

just a few minutes south of the corporate campus and pops into the office regularly to help with colleagues' projects. Tushman.000 to 6. and others fiddled with the idea for several years before the product went into full production in 1980. (Mucci has alleged in a class action that 3M engaged in age discrimination. The goal was to speed up and systematize the progress of inventions into the new-product pipeline." REINVIGORATED WORKFORCE Buckley. But the most notable attempt yet. can have serious side effects. to the size of the market. "You're supposed to be having something that was going to be producing a profit. Early during the Six Sigma effort. while those not based on prior work dwindled.. For a long time. a 3M scientist who's now retired. "What's remarkable is how fast a culture can be torn apart.potential commercial application. 3M had allowed researchers to spend years testing products. The DMAIC questions "are all wonderful considerations." says Michael Mucci. after the quality push. Traditionally. but are they appropriate for somebody who's just trying to. The impact of the Six Sigma regime. according to Boyd and other former 3Mers. incremental work took precedence over blue-sky research. I think he could have. who lives in Maplewood. it better be the quarter after that. You have to go through 5." says Fry. Innovation. for example. 3M had been a place where researchers had been given wide latitude to pursue research down whatever alleys they wished.develop some ideas?" asks Boyd. Minn. disagrees. The two professors analyzed the types of patents granted to paint and photography companies over a 20-year period. the DMAIC process was laid over a phase-review process for innovations—a novelty at 3M. before and after a quality improvement drive. In fact.000 raw ideas to find one successful business. because he wasn't here long enough. Its inventor. a PhD chemical engineer by training. who worked at 3M for 27 years before his dismissal in 2004. is "a numbers game. Consider. after a meeting at which technical employees were briefed on the new process. to possible manufacturing concerns." Boyd says. "[McNerney] didn't kill it." Six Sigma would ask. he places the blame for 3M's recent lack of innovative sizzle squarely on Six Sigma's application in 3M's research labs. Art Fry. he says. After the arrival of the new boss.. the company says the claims are without merit.) There has been little formal research on whether the tension between Six Sigma and innovation is inevitable.. the Postit note inventor. suggests that Six Sigma will lead to more incremental innovation at the expense of more blue-sky work. why not eliminate all that waste and just come up with the right idea the first time? That way of thinking. patents issued based primarily on prior work made up a dramatically larger share of the total. seems to recognize the cultural ramifications of a process-focused program on an organization whose fate and . if not next quarter. But Fry. "we all came to the conclusion that there was no way in the world that anything like a Post-it note would ever emerge from this new system. says Fry. was that more predictable. But if he had been here much longer. by Wharton School professor Mary Benner and Harvard Business School professor Michael L. Their work shows that. the Post-it note. Defenders of Six Sigma at 3M claim that a more systematic new-product introduction process allows innovations to get to market faster.

In fact. 3 in 2006. the centerpiece to a burgeoning pharmaceuticals business. That may be appropriate in an operations context—at the end of the year. and down to No. 1 on Boston Consulting Group's Most Innovative Companies list (now the BusinessWeek/BCG list). That is another departure from McNerney's priorities. acquisitions. a business director in 3M's radio frequency identification division: "We feel like we can dream again. says "[Buckley] has brought back a spark around creativity. it's easy enough for a line manager to count up all the money he's saved by doing green-belt projects. to No. The overall R&D budget will grow 20% this year.history is so bound up in inventing new stuff. I think. In 2004. 3M was ranked No." Buckley says. "Perhaps one of the mistakes that we made as a company—it's one of the dangers of Six Sigma—is that when you value sameness more than you value creativity. Quietly. "In some cases in the lab it made sense. "You cannot create in that atmosphere of confinement or sameness. 7 this year. the process get in the way of doing the actual invention. but in other cases. the McNerney legacy is being revised at 3M. managing associate of innovation consultancy Jump Associates. Buckley is opening the money spigot— hiking spending on R&D." Adds Bob Anderson. there were metrics established across the organization and quite frankly. many workers say they are reinvigorated now that the corporate emphasis has shifted from profitability and process discipline to growth and innovation. "Since [McNerney] was driving it to the organization. the director of strategic business development. In January. 2 in 2005. you know." says Dev Patnaik. Buckley sold the pharma business for $2 billion. 45 in all. some of them did not make as much sense for the lab as they did other parts of the organization." says Wendling. Timm Hammond. Larry Wendling. What sort of metrics? Keeping track of how many black-belt and green-belt projects were completed. It dropped to No." In recent years. But what 3Mers came to realize is that these financially definitive outcomes were much more elusive in the context of a research lab. from abrasives to nanotechnology to flexible electronics. He's funneling cash into what he calls "core" areas of 3M technology. people were going around dreaming up green-belt programs to fill their quota of green-belt programs for that time period. "We were letting. I think you potentially undermine the heart and soul of a company like 3M. and capital expenditures. a vice-president who directs the "R" in 3M's R&D operation. There was perhaps a one-size-fits-all approach to the application of Six Sigma as the initial implementation got under way." Wendling says.5 billion. While there is no doubt the former CEO brought some positive change to the company. for one. to $1. it's not uncommon for Six Sigma to become an end unto itself." . the company's reputation as an innovator has been sliding. "People have kind of forgotten about these guys. "When was the last time you saw something innovative or experimental coming out of there?" Buckley has loosened the reins a bit by removing 3M research scientists' obligation to hew to Six Sigma objectives." To help get the creative juices flowing. he told BusinessWeek in 2004 that the 3M product with the most promise was skin-care cream Aldara. Even more significant than the increase in money is Buckley's reallocation of those funds. says Dr.

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