3m_in_India

Case 2: 3M India: In India for India 1. How has 3M built structural and contextual ambidexterity into the organization' How do the various elements of the system support innovation at 3M' 3M is today’s one of the most innovative organization in the world. 3M was founded by a doctor, a lawyer, two railroad executives and a meat-market manager in a small town called Two Harbors in Minnesota in the year of 1902. The organization’s 45 technology platforms that form the foundation for 3M products develop more than 50,000 products that met unique needs in the market. The company’s various characteristics such as the philosophy of decentralization, tolerance for failure and et cetera enabled the company’s success. Likewise, the various elements of the system supported to innovation at 3M. The first element is the unique ‘structure’ of the organization. The organization structure at 3M had evolved in such way to support innovation. The three elements of the structure were the following: small size of each business or administrative unit, research and development laboratories with each business division and organizational roles to support innovation. With diversity of products and technologies, it was difficult to manage the operations. Thus, when a product group was to thrive and reached significant sales, it would be separated as a new division. The divisions were kept small because the bigger the organization the more centralized and bureaucratic it will turn which then will hinder innovation. Furthermore, the divisions all had their own research laboratory, production operations and sales force. The goal of the division laboratories was to work on new products and process. Despite the efforts to keep bureaucracy to a minimum, organizational role was essential to support innovation. The executive champion or a ‘mentor’ would protect and nurture the new idea, so idea generators’ efforts won’t be killed so easily. The second element is the ‘process’. 3M is most famous for its ‘15% rule’. A former 3M CEO, Livio D. Desimone allowed the employees to spend 15% their working time on pet projects which was also called as ‘boot-legging’. This rule was historically proven to be effective in which many products produced by 3M today were born from it. In order to encourage the employees, the task was to be simple and if the idea was convincing, they would be provided with the freedom to build a project team and receive funding. Even though the management did not support all the ideas, they made sure that employees would learn from a failure and to gain new experience for the future. This was 3M’s tolerance for failures. With patents protecting the ideas and knowledge-sharing network, the employees were able to share new ideas and have a monthly meeting through a technical council. The third element is the ‘reward’. 3M had rewards for heroes. The product champion and the team were celebrated. Salaries and promotions were related to individuals who successfully came with a new product, which then ultimately became the CEO of the independent division. However, in order for 3M to achieve all of the elements stated above, they needed the ‘people’ which is the last element. 3M needed unique people who dared to think differently. And 3M also preferred those who were loyal. 3M offered a ‘dual-ladder’ career so that people could continue pursuing career in research, engineering or marketing. 2. Why did 3M not provide a thrust for innovation in 3M India until 2011' What has promoted the change in strategy' The Indian subsidiary of 3M was formed in 1988 as a joint venture between Ashok Birla Group (40%), 3M Corporation (40%) with a 20% of public share. It took time until 3M became the majority shareholder holding 76% of the stake and in 2002, the company changed the name to 3M India Ltd. After almost 20 years of healthy growth, 3M India only contributed about 1% towards 3M’s global revenues and even less in profits. The technical operations of 3M India started with the inauguration of the Customer Technology Support Centre in 1990 to provide technical support to products that were manufactured outside the country. 3M India realized that by interacting with the customer and being physically present in the market they needed to find the unique requirements of the Indian market. With the strategy called “In India for India” which is a growth strategy for India to accelerate development of products in India, for India, through cutting-edge R&D capability, 3M India has decided to expand the market. The focus was on developing products for India by the R&D team in India and they hoped to obtain 40% of their revenues from new products developed in India and 20% from existing products with localization. To support these targets and goals, 3M India invested 2.5% of its revenues on R&D. The new strategy saw the opening up new branch offices, new R&D centers shaping up in Bengaluru and Gurgaon, a big boost in local product development with the new tape production line at the Ranjangaon plant and new product launches specifically for the Indian market. India, being a consumer driven economy with a specialized manufacturing base, offered an environment that provided tremendous opportunity for 3M India to expand its solutions for India’s key growth engines such as automobile, health care, infrastructure, construction and retail. Many existing products had to be localized following two dimensions: value for money and localization for Indian conditions and usage patterns, in order to satisfy the needs of the Indian market. To match the India’s price-sensitive market, the price had to be brought where it met its market needs. In India, the over-designed products could be the right-designed products if the functional requirements met at a reasonable price. The Vice President of 3M Asia Pacific, Jay Ihlenfeld said, “India-style innovation – good quality at a low cost – is what the world is discovering.” 3. What are the challenges that 3M India has faced or is likely to face in entrenching the 3M innovation culture in India' How should it address them' 3M India tried to adopt the structural elements and philosophies from the home 3M to encourage innovation. For instance, 3M India executed the ‘15% rule’ and allowed their employees to spend 15% of their time on the pet projects in order to support innovation. Moreover, they adopted the dual-ladder career progression system to give the employees the choice to choose engineering, research or marketing. However, the management of 3M India was concerned of the challenges and difficulties they will face while introducing innovation culture from US to the operating system in India. The challenges were: (1) would the scientists in India become inventive in the 15% rule' (2) would they be able to maximize the opportunity of intrapreneurship' (3) who would prefer a technical ladder to a managerial ladder in ‘dual-ladder’ career' In order to use the best of ‘15% rule’ and maximize intrapreneurship in 3M India, they should make a good use of knowledge-sharing network internationally and also holding meetings through online councils. To entrench such innovative structure, it would be the best to form a group of experts from a successful 3M subsidiaries to come and mentor the employees in 3M India. Being educated in a different culture of India, the employees might lack creativity compared to the western countries. However, I believe that with the right guidance and mentoring from previous ’15% rule’ heroes, the scientists in 3M India will also well likely show great potential. Through this, they will also be able to overcome the ‘fear of failure’ by realizing that there are lots to learn from failures. Likewise, as for the concerns for the ‘dual-ladder’ career system, just like Ashish Khandpur (senior executive director R&D of 3M India) stated, it already proved itself to be a successful system in other countries. In order to keep balanced number of technical and managerial personnel, appropriate reward for technical employees should be guaranteed. This will be able to solve the imbalance of preference towards managerial ladder. The only problem is what happens next. Overcoming the “respect for hierarchy” in a country with Caste system might be the greatest challenge of all. It is true Caste system is being criticized even today but it still rules over the Indian culture. It is important that 3M India HR team hire the right people with different and unique views of the society who can adapt to the new environment in 3M. Employees who strongly believe in the hierarchy of ranks and the Caste will harm the innovative philosophy of 3M.