3m_Phylosophy

How 3M (Minesota Mining and Manufacturing) Keeps New Products Coming From Managing Innovation, Henry and Walker, Sage Publications, London, 1991 Jorge Alves GIT 2005-06 1 3M – A company build upon failure • Company founded by 5 Minesotans: A doctor, a lawyer, two railroad executives, one meat-market managers • Bought plot of land to mine corundum • Got financing, bought equipment, hired workers, to produce sandpaper • Started mining, realized there was no corundum, just plain sand Jorge Alves GIT 2005-06 2 3M – a company build upon persistence • Started producing sandpaper, with corundum imported from the East • Difficult times, investors left, 3 of the initial founders remained • They invented a popular abrasive cloth for metal polishing Jorge Alves GIT 2005-06 3 Shaving with sandpaper • Francis Okie, used to cut his face shaving... • ...in 1922 he thought: why use a sharp razor to shave when you could shave smoothly with sandpaper' • He developed and defended this idea for many years • The idea never caught on... but Okie was never discouraged by the company, much less fired for promoting a weird idea Jorge Alves GIT 2005-06 4 Success when and where you least expect it • Okie’s misses were more than compensated by an unexpected success • He had developed a fine grain sandpaper that worked well when wet • The then emerging auto industry needed fine grained sandpaper to polish paint, that should work wet to smooth finish and reduce dust • 3M had tha answer, it was its first real success Jorge Alves GIT 2005-06 5 A question of organizational culture • If management is intolerant and destructively critical when mistakes are made, I think it kills initiative William McKnight, Chairman and CEO, “spiritual father” of 3M Jorge Alves GIT 2005-06 6 Creative spirit alive and well • 3M catalogue of products numbers more than 60.000 products • In 1988, sales reached 10 billion dollars, 30% of which from products 5 or less years old Jorge Alves GIT 2005-06 7 Principles of 3M philosophy • Encourage inventive zealots – The more tries, the more hits • Scarcity of corporate rules – Plenty of opportunities to experimentation – and failure • Salaries and promotions tied to shepherding new products – From inception to commercialisation Jorge Alves GIT 2005-06 8 Principles of 3M philosophy • Divisions are kept small (+-$200 Million Sales) – There were 42 in the beginning of the 90s. 3M is big, but acts small • Constant peer review and feedback – That’s how real control is exerted • Personnel fidelity – They seldom hire from outside, never at senior level – Turnover among managers and professionals lower than 4% Jorge Alves GIT 2005-06 9 Principles of 3M philosophy • 25% rule (for every division) – ¼ of sales must come from products introduced in the past 5 years • Success connectedd to bonuses • 15% rule – Anyone can spend up to 15% of pay time on anything he/she wants • Provided it is product related Jorge Alves GIT 2005-06 10 Principles of 3M philosophy • In-house grants – $50.000 (beginning of the 90s) to carry projects past idea stage – Used when projects do not fit within existing divisions • Share Technology – Technology belongs to everyone (in 3M) wherever it’s developed – Diffusion carried out • informally (now you’ll help me, tomorrow I’ll help you) • formally (technology council made up of researchers) Jorge Alves GIT 2005-06 11 Typical product development strategy • One person comes up with idea – Forms action team • Recruiting full-time members from the inside – Team designs product, figures out how to product and market • Members of the group are promoted and get raises as hurdles are overcome – Eg, person responsible for the project: • Sales over $5Million, “Project Manager” • Over $30Million, “Department Manager” • Over $75Million, “Division Manager” • Scientists who don’t want to manage follow separate track Jorge Alves GIT 2005-06 12 Opportunities for informal exchanges • People are the best investment provided... • ...they have opportunities to interact – Coffee areas are strategically placed – There are many internal meetings and seminars, calling upon people from different divisions • ... but this has to be part of company culture Jorge Alves GIT 2005-06 13