On January 1, 2OO1, 3M announced that W. James
A rnajor milestone occurred in 1925 when
McNerney Jr. was elected the chairman and chief execu-
tive officer of the firm. At the annual shareholders meet-
ing in May 2OO 1 , McNerney announced that "at the top of
rny agenda is a headlong and companyruide implementa-
tion of the Six Sigma approach to process and business
improvement . . . l've seen firsthand how Six Sigma can
energize an organization, increase sales and cash flow,
satisfy customers better, and strengthen management
development."
McNerney initiated a massive training program for hun-
dreds of senior executives. Senior executives were charged
with leading the training effofts for all of middle managers
and coming up with a list of 1O0 key six sigma projects.
According to sorne sources, McNerney had already
"sold" 3M's board of directors on the concept before he
took the position.
Historically, 3M competed primarily on product leader-
ship and quality-and almgst never on price. Many 3M
managers believed that the firm was already a quality
company, with many high-quality products such as Post-it
Products and Scotch tape commanding very high market
shares in their respective markets. However, 3M's finan-
cial performance was "flat" and was not expected to
improve unless some major changes were rnade. The
decision had already been rnade to deploy a Six Sigma
program. The question for the senior management of the
firm was how to use the Six Sigma program as a key lever
for transforming the firm to become more competitive.
HISTORYI
3M was founded in 1902 at the Lake Superior town of
Two Harbors, Minnesota. Five businessmen agreed to
rnine a mineral deposit for grinding-wheel abrasives. But
the deposits proved to be of little value, and the new
Minnesota Mining and Manufacturing Company quickly
moved to nearby Duluth to focus on sandpaper products.
Years of struggle ensued until the company could mas-
ter quality production and a supply chain. New investors
were attracted to 3M, such as Lucius Ordway, who moved
the company to St. Paul in 1 910. Early technical and rnar-
keting innovations began to produce successes and, in
1916, the company paid its first dividend-6 cents a share.
The world's first waterproof sandpaper, which eased
the health problem of sanding dust, was developed in the
1
Source: http://wwvr.3m.com/profile/looking/glance.jhtml, May
1 5, 2001 , and the 3M annual report for 2000.
This case was written by Professors Arthur Hill, Kevin Linderman, and Roger Schroeder of the Curtis L. Carlson School of
Management at the University of Minnesota. The case was prepared as the basis for class discussion rather than to illustrate ei-
ther effective or ineffective handling of a business situation. All of the content for this document was taken from public sources.
Copyright @ 2OO7,2O1O, and 2016. Reprinted with permission.
early 1920s.
Richard G. Drew, a young lab assistant, invented rnasking
tape-an innovative step toward diversification and the
first of rnany Scotch brand pressure-sensitive tapes.
In the following years technical progress resulted in
Scotch'. Cellophane Tape for box sealing. Customers
began to find many additional uses, including consumer
applications. Drawing on expertise in bonding mineral grit
to sandpaper, 3M brought out new adhesives to replace
tacks in bonding upholstery and sound-deadening mate-
rials for the auto industry's new metal-framed cars.
The roofing granule business (ceramic coated bits of
rock) was developed in response to a need to make
asphalt shingles last longer. In the early 1940s, 3M was
divefted into defense materials for World War ll, which was
followed by new ventures, such as Scotchlite'. Reflective
Sheeting for highway markings, magnetic sound recording
tape, filament adhesive tape, and the start of 3M's involve-
ment in the graphic arts with offset printing plates.
In the 1950s, 3M introduced the Thermo-Fax" copy-
ing process, Scotchgard'" Fabric Protector, videotape,
Scotch-Brite'" Cleaning Pads and several new electro-
mechanical products.
In the 1960s, dry-silver microfilm, photographic prod-
ucts, carbonless papers, overhead projection systems,
and a rapidly growing health care business of medical
and dental products were introduced.
Markets were further expanded in the 1970s and
1980s into pharmaceuticals, radiology, energy control,
the office market-and globally to most every country in
the world.
The 1 990s set new sales records of over $ t S billion
annually, and abclut 30 percent of sales came from
products created within the past four years. 3M's growth
has come through a desire to participate in many
markets where the company can make a significant con-
tribution from core technologies, rather than be domi-
nant in just a few markets.
In 2OOO, 3M was a diversified technology company with
leading positions in electronics, telecommunications, indus-
trial, consumer and office, health care, safety, and other
markets. lt had 2000 sales of $16.7 billion, a 6 percent
increase. During 2000, 3M generated $5.6 billion (nearly
35 percent of sales) from products introduced during the
previous four years, with sales over $ t .S billion frorn prod-
ucts introduced in 2000. Under McNerney's tenure, sales
continued to increase, as shown in Exhibit 1. International
sales constituted over 5O"/" of total sales.
-"$ffir$$riiii
 Part Seven Ca,se Stuclics

EXHIBIT 1 3M sales historv.

25,4

20.0

15.0
e
tt) 10.0
3)

(n
5.0

0.0

Headquartered in St. Paul, Minnesota, the company
had operations in rnore than 60 countries and serued cus-
tomers in nearly 200 countries. 3M was one of the 30
stocks that make up the Dow Jones Industrial Average and
was also a component of the Standard & Poor's 500 Index.
SIX SIGMA
3M was applying many of the standard approaches to
Six Sigrna that had been developed by Motorola origi-
nally in 1985 and then extended to Allied Signal and GE
in the mid-9Os. Since then many other cornpanies had
also adopted Six Sigma, as indicated in Appendix 1.
The 3M approach to Six Sigma included two different
improvement models.
1. For existing processes, the five-step DMAIC model
was used.
2. For new product development DFSS (Design for Six
Sigma) was used.
A typical Six Sigma project lasted six months and was
expected to make significant improvernents both in cus-
tomer satisfaction (internal or external customer) and in
cost savings. The improvements were standardized and
reviewed periodically to insure continuing benefit to 3M.
The savings from the project were also carefully tracked
by the financial organization in 3M.
The second use of Six Sigma was to design new
products using the Design for Six Sigma methodology.
This process started with identification of the customer's
requirements and then translated those requirements
eventually into product specifications. The process
included not only designing the product, but reducing
the inherent risk in the design processes by verifying
the design with potential customers. Various tools such
as Quality Function Deployment and Computer simula-
tion of design characteristics were used during the
design process.

For existing processes Six Sigma was aimed at making

THE SIX SIGMA PROGRAM AT 3M
significant improvement in processes that were strategi-
3M's 2000 annual report included the following para-
cally selected by upper management. After selecting a
graphs praising the virtues of the Six Sigma program:
process for irnprovement and assigning a senior execu-
tive to act as the "Champion," a Black Belt was assigned Proces s lmprovement' Process improvement
to lead a process improvement team. The Black Belt was means nothing if it doesn't lower costs, increase
assigned full-time to project improvement and trained in sales, satisfiT customers, develop managers,
the methods of Six Sigma and Statistics. The project increase cash flow and make the whole organiza-
team, under the Black-Belt's guidance, then worked on tion faster. 3M is quickly moving from multiple
process improvement using the following DMAIC model. quality-management systems within the company
to one: Six Sigma. A uniform, companywide
The Six Sigma "DMAIC" improvement model approach shared by employees, customers and
suppliers will both advance our competitiveness
D Define ,'Requirements, goals, problerns, scope and improve our efficiency.
M Measure Validate problem, inputs, key steps,
: effiCiency data
3M Accelerotion; This initiative targets generating
even greater returns on our over $ 1 billion invest-
A Analyze Develop/validate hlpothesis, identify
root causes, assess process design ment in R&D. The senior management team will be
I lmprove
T:,'.:': '?:l ::1":':l?"1:11':1
applying Six Sigma tools to drive time out of product
development and comrnercialization cycles. Further,
solutions, implement new process
we will work as a team to sharpen our corporate
C Control Establish standard measures and
focus on growth areas with the greatest returns for
reviews to maintaln performance
our investors.

3M Initiatives2
Under the direction of our new Chairrnan, Chief
Executive Officer, W. Jarnes McNerney Jr., 3M has
begun the task of implementing initiatives that will
lead 3M to provide a better service to its customers.
Today's changing and demanding world demands
the best of each element in 3M, always keeping in
rnind our real reason for being, our customers.
These initiatives are focused towards long-term and
short-term competitiveness because we are inter-
ested in making our clients think of us as the agile
company that we are, always willing to provide the
best products and seruices.
Six Sigma-lmplemented in our company, it
strengthens all aspects of our business. Pursuing
quality improvement under one single program, Six
Sigma, 3M has been an excellent supplier to the
various markets in which we participate by providing
new and innovative products. Our customers
demand and deserve that we do it even better
and faster through 3M Acceleration.
E Productivity-The future of commercial activities
through electronic media is already present. We are
changing the way we work to be rnore efficient,
productive and to render better service as suppott
to our custorners. To achieve this we must have
the tools to be better connected, and this allows
us to be ready in the rapidly growing "new" way of
doing business.
Supply-lf we purchase in smarter and more sys-
tematic ways we will obtain cost reduction for 3M.
Taking this in mind, our presence and strength in
product purchasing will be translated to the genera-
tion of accessible and beneficial products for our
customers.
lndirect Costs-Good management of costs is criti-
cal for a sound and successful business plan, espe-
cially in critical times. At 3M, now and in the future,
we seek adequate indirect cost reduction on many
levels to be able to still be the preferred supplier to
our customers.
JEANNE O'CONNELUS TALK TO THE CARLSON
SCHOOL OF MANAGEMENT
In a talk that Jeanne O'Connell, Director of Six Sigma
Operations at 3M, gave at the Carlson School of Man-
agement in November 2OO 1 , she provided the following
definition of Six Sigma at 3M:
Six Sigma is a methodology for pursuing continuous
quality improvement and reducing inherent variability.
2 Sou rce : httpi/www. 3 m.com/i ntl/mx/e ng Ii shve r/m exi co/q
htm, September B, 2001 . end of year 2AO1.
Tlre Evitlntirn of Lecm Si.l Sigrna at 3!vl, Iru:.
It requires a thorough process and product under-
standing and is clearly focused on customer-driven
expectations.
She went on to share the following ideas:
Six Sigma Has a Focus on Processes
Six Sigma is an orderly and consisfent approach to
a recurring significant business activity. Exarnples
of a significant business activity inc'lude new
product introduction, lab experiment, handling
a customer call, approval of documents, manufac-
turing a product, filling an order, etc. All of our
business activities involve a process-recognized
or unrecognized, efficient or inefficient. The better
our business processes, the better able we are to
consistently and reliably keep our promises.
Excellent business processes are essential for
sustainable growth.
Ms. O'Connell described 3M's method for selecting
processes for irnprovement as follows:
. Processes selected rnust be linked to the Strategic
Business Plan.
. Selection is prioritized based on value to the busi-
ness, resources required, and timing. Factors consid-
ered in selection include groMh, cost reduction and
cash savings.
. All improvement processes are approved by
management.
. They are formally tracked for savings and defect
reduction.
. The team leader and management are held
accountable.
Exhibits 2 and 3 show slides that 3M uses to cornmu-
nicate their simple approach to Six Sigma. Exhibit 2
emphasizes that a strategic perspective drives project
selection. Exhibit 3 suggests that the right results are a
function of getting the previous steps right.
In answer to the question of "why Six Sigma," Jeanne
O'Connell responded with the following four reasons:
. Common approach with common goals.
. Institutes a common language.
. Develclps transferable skills.
. Most effective way to increase and accelerate our
business performance and customer quality.
Ms O'Connell noted that 3M is moving aggressively
to drive process improvement across the company.
We started at the top with 3M senior leadership and are
building on 3M's commitment to irnprovement. More
u i en es. than four thousand people will have been trained by
 Part Seven Ca,se Srudies
EXHIBIT 2 31\4's simple approach to Six Sigma.
Process Input:
Strategic and annual business objectives and targets
Select the Select and
right projects train the
right people
EXHIBIT 3 3M's simple approach to Six Sigma.
The Right Froject
+ The Right People
+ The Right Roadmap and Tools
+ The Right Support
= The Right Results
At one point in her talk, she said that "we want to
change the DNA of the organization" and she even
hinted that they plan to make it a requirement for all
executives to be black belts.
THE SKEPTICS
Six Sigma was off to a good start at 3M. After four years
of irnplementation, 3M had 3O,OO0 employees trained
and all salaried employees had completed Green Belt
training. Ove r 1 1,000 projects were completed and
12,000 more were underway. The 2003 annual report
credited Six Sigma with increasing operating income by
$SOO rnillion in 2OO2, and an additional $4OO million in
2OO3 with a similar projection of $400 million for 2OO4.
McNerney said, "3M is in the midst of a transforma-
tion . . . Six Sigma, 3M Acceleration and our other corpo-
rate initiatives are now integrated into every business,
every function and every subsidiary of 3M, and we
expect they will generate both productivity improve-
ments and revenue growth for years to come."3
However, Some cornpanies have not embraced the
Six Sigma approach. Skeptics in these companies point
to the following issues in using Six Sigma.
. We can't afford to improve our processes to 3.4 parts
per million defects as implied by Six Sigma. Also, our
customers don't need this level of quality.
3
Press Release, February 1 B, 2005.
Develop and Manage for
inrplement excellence in
improvement opcrations
plans
Process Output:
Make the numbers
. Six Sigma is too complicated and involves too rnany
statistics for our people.We need a simpler approach
to process improvement.
. Six Sigma doesn't work very well for service pro-
cesses or transaction-based processes that have in-
tangible outputs and are difficult, if not irnpossible, to
rneasure. Six Sigma is better suited to manufacturing.
. Six Sigma is just the latest quality fad-it too will pass.
LEAN SIX SIGMA
ln 2OO4 3M expanded its program to Lean Six Sigma
The expanded program was documented in a 2OO-
(LSS).
page manual used for training purposes.a The idea behind
the LSS program was to bring four approaches together
that tearns could use to improve processes. Teams were
encouraged to choose among these approaches based
on choosing the right approach, for the right project, at
the right time. Each approach had its own purpose, tools
and outcome. The four approaches are:
. Six Sigma: This approach is best suited to reduce
variation in the process and improve the yield while
reducing the cost. The process is flowcharted and of-
ten, but not always, sophisticated statistical tools are
used for the analysis.
. Lean is used to eliminate nonvalue added activities
from the process. lt improves the speed of the process,
the throughput time, and often reduces inventory. Lean
uses value stream mapping, Kaizen events, visual con-
trol and the 55 tools for process improvement.
. Process and Product Understanding (PPU): This
approach is based on the need to gain a deep under-
standing of the custorner and the process. lt begins
with a need to understand customer requirements. lt
then proceeds to flowcharting, measurement analysis
4
httpl I nr u lti m ed i a. 3 m.co m/mws/m e d i a/6 3 00 8 0 O/l e a n-s x-s g m a-
i i
g u d e b o o k. p d f ? &fn =
i L ean %2O Six%2 0 S g m a o/"2O Guid e b o o k. p d f
i

and control of the improved process. Using this
approach the process should be made statistically
capable of rneeting customer requirements.
. Business Process Redesign (BPR). This approach is
used when the process is cross-functional and com-
pletely broken. A swim-lane process flow chart is
used to identify disconnects across functional bound-
aries. The current "as is" process is defined and then
the ideal "to be" process is designed. Often pro-
cesses are completely redesigned as a result of this
approach, with the old process thrown out and a new
process designed that stretches across multiple func-
tions in the organization.
At 3M all four of these approaches use the DMAIC pro-
cess originally defined for Six Sigma. After defining a
project charter and assigning a project owner, the proj-
ect improvement team follows the steps of define, mea-
sure, analyze, improve and control. Only the tools used
and the reasons for process improvement vary across
the four approaches.
Lean Six Sigma recognizes that not all processes are
alike in their deficiencies and the extent of improvement
needed. The Lean Six Sigma program continues to be
implemented at 3M until the present time.
THE McNERNEY ERA TO THE PRESENT
After taking over as CEO in 2001 , McNerney not only
aggressively implemented Six Sigma but also made
other major changes. Coping with the recession of 2OO1
and lagging profits, he laid off 8,OOO workers (about
11"/" of the workforce) and slashed capital expenditures
from $geO million to $677 million by 2003. During his
tenure, sales grew to $Zt billion in 2005 and profits
grew at an average of 22"/" per year. Wall Street liked
McNerney's initiatives and the stock price increased.
In 2OO5 McNerney left 3M to become the CEO of
Boeing. The Board of Directors hired George Buckley,
former CEO of Brunswick, to be the new 3M CEO in
December 2005. Buckley has taken a different approach
to improvement at 3M. He continued Six Sigma in the
manufacturing and administrative areas, but reduced it
in R&D. He also invested more in R&D and new manu-
facturing plants. Under Buckley, encouraging risk taking
has renewed innovation and creativity. His mandate is to
bring back the legendary innovative spirit of 3M, while
preserving the operating efficiencies that McNerney
created. By 2012 Buckley had increased sales to
$2g.0 Billion and Net Income to $4.3 Billion.
In Feb 2012 Buckley retired from 3M and was
replaced by Inge Thulin as the new CEO. Thulin, a
native of Sweden, joined 3M in 1979 in marketing and
sales, but spent considerable tirne in international oper-
ations. According to Reuters, Feb 8, 20 12, Thulin said,
The Evolutiut of Lecm.Sr.r-Sigrrru at 3M, Inc.
"The company is doing very well. Sales outside the U.S.
grew frorn less than $tO billion in 2003 to $20 billion
or over 65"/" of 2012 sales. We would like that to con-
tinue noting that pursuing acquisitions, funding product
creatioh, dnd venturing deeper into emerging markets
will remain key priorities." Thulin told Reuters that Buck-
ley had squarely focused the company on innovation,
pointing to the increase in the percentage of revenue
generated from new products from 2O"/" of sales to
30% during Buckley's tenure. Thulin said he plans to
continue to boost 3M's "innovation machine" in the
coming years.s
IS SIX SIGMA ENOUGH?
There have been vigorous discussions in the media and
Internet about whether Six Sigma is enough at 3M and
other companies.6 The argument is about whether Six
Sigma tends to block innovation, creativity, and the
development of new products. For example, some claim
that during McNerney's tenure at 3M, innovation suf-
fered because Six Sigrna was emphasized over innova-
tion, particularly in R&D. McNerney denied this and
claimed that Six Sigma did not stifle innovation or
replace creativity.T These qualities are still required to
develop breakthrough new products. Still there are
those who point to the lack of innovation when Six
Sigma is implemented because it tends to focus on
reducing defects and variance, while innovation requires
risk, creates possible inefficiencies, and can increase
variance of processes.
The argument is now taking two sides. One side claims
that innovation and improvement cannot coexist in the
same organization. Others, such as O'Reilly and Tushman,
argue that indeed an ambidextrous organization is
required to achieve both innovation and improvement
through balancing.s Balancing might be accomplished by
establishing separate departments or teams, some which
are charged with innovation and others with improve-
ment. Even then, top management must also be ambidex-
trous and carefully balance allocation of resources, team
assignments, and investment for both innovation and
improvement to occur in the firm. The debate is still raging
as to which is the right perspective. Does Lean Six Sigma
stifle innovation and is Lean Six Sigma enough?
5
Source. Reuters February B, 2O12 article "3M CEO Buckley to
retire; Thulin to succeed hint."
6Forbes/Reufers 51 13104, isixSigma.com 611 lO4, Business-
Week 611 1lO7 .
7 http://www. isixsi g m a.comil i b ra rylcontent/cO4 06 1 7 a. as p.
8 C. A. O'Reilly, and M. L. Tushrnan, "The Arnbidextrous Organi-
zation," Horvord Eusrness Revreur 82 (4) April 2OO4,74-81.
 Part Seven Case Studies

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CHALLENGES AT 3M 3. Do you agree with any of the points made by

As the firm went through this major transformation, many skeptics about the original Six Sigma program at
questions went through the minds of 3M managers. 3M? Explain why they believe that skepticism is
warra nted.
1. What are the benefits and costs of a Lean Six Sigma 4. How will Lean Six Sigma affect the innovative
program and how should they be tracked? culture at 3M, and is Lean Six Sigma enough?
2. How should the various functional areas in the 5. How does Lean Six Sigma in 3M differ from
organization be included in the Lean Six Sigma traditional TOM programs?
initiative, and what role should senior and middle
management play in this change initiative?