3M: Profile of an

Innovating Company
Presented by Group 1, Section A.
What is the organizing philosophy
of 3M? How did it evolve?
Traditionally, 3M had strongly focused on fostering a culture of Individual entrepreneurship. Everyone in the
organization was free to come up with and work on new ideas. As a business grew bigger, it was turned into
a separate division with its own lab, sales and business autonomy. However, handling a large number of
divisions was not easy. Moreover, 3M was facing strong competition (both domestic and international) and a
global slump. When Lou Lehr took over as the CEO, he consolidated the 42 divisions and 10 groups into 4
sectors. However, he continued to maintain the entrepreneurial culture. The central research laboratory
concentrated on long term research, the sectoral lab focused on medium term and the divisional labs
focused on immediate innovations. Under, Jacobson, the research focused more towards decreasing the
time to market for new products. The technical audit committee used database of previous projects to
predict success of proposed programmes. As a result, the freedom in labs decreased.
How the organizing logic
evolved (changed) over time?
McKnight followed the logic that to stay ahead of competitors, 3M had to stay innovative. No innovation is small.
McKnight believed that 3M is "a creative company that needs a high level of technology." By fostering innovation,
3M stumbled across several discoveries with cross functional use. At the time Lou Lehr took over, 3M was
battling inflation and global recession. The entrepreneurial culture led to addition of new divisions and product
groups. Mr. Lehr consolidated business units and started centralisation of planning to improve the financial
performance. Still battling a stubborn competition and strong dollar, the reins of 3M were handed over to Mr.
Allen Jacobson. Mr. Jacobson initiated the 'J35' strategy. He targeted reduction in manufacturing labor content
and manufacturing cycle time. He focused on bringing new products to market soon and started filtering
research proposals. Under his command the efficiency of divisions increased but the freedom that labs had
earlier decreased. DeSimone continued on the lines of his predecessor and further consolidated the operations
to 3 sector and raised the revenue goal to 30% revenue from products created in last 4 years.
How did 3M achieve both internal and
external fit while designing the
organization?

Internally McKnight developed a consistent pipeline of innovations which had cross functional
application. As the organization grew, his successors changed the research culture to match the market
expectations more. The individual research focus was substituted by group focus. Externally, 3M
expanded to international markets and created strategic ties to maintain their market position and
tackle competition. In addition, 3M also starred to focus on selling price of its product and introduced
low cost alternatives where required to maintain market position.
What are the key learning
from the case?
Overall, the case teaches us that key success factors change as the organization evolves. It is important
to keep a close watch and change organization Structure and philosophy when required. When 3M was
competing on the basis of quality only, the focus was on research. As the divisions increased and price
competition became a problem, the structure was made centralized to address specific and relevant
business problems
Thank You