Question

From inception, 3M has been an innovator, bringing a stream of new products and services to market, creating value for customers, having sustainable advantage over competitors, and delivering sizable returns for investors. Thanks to the predecessor, 3M had lower costs, was highly efficient, and much more profitable. But it no longer ranks among the most innovative firms in the world. In fact, the use of Six Sigma procedures appears to be inversely related to product innovation. If that’s the case, should 3M continue to focus on using Six Sigma procedures to reduce costs and increase efficiencies, or should it strive again to encourage its scientists and managers to focus on innovation? Which of these will make 3M more competitive in the long run?

When people think of innovation, they tend to think of game-changing advances that render current products obsolete, for example, comparing the iPhone to text-based “smartphones.” Innovation, however, also occurs with lots of incremental changes over time. What are the advantages and disadvantages for 3M of each approach (experiential and compression), and when and where would each be more likely to work?

Finally, some companies innovate from within by successfully implementing creative ideas in their products or services. Sometimes, though, innovation is acquired by purchasing other companies that have made innovative advances. For example, although Google is generally rated as one of the most innovative companies in the world, most people have forgotten that Google bought YouTube to combine its search expertise with YouTube’s online video capabilities. Over time, how much should companies like 3M rely on acquisitions for innovation? Should 3M acquire half, one-third, ten percent, or five percent of its new products through acquisitions? What makes the most sense and why?

If you were in charge at 3M, what would you do?

Answer 1

Numerous individuals realize the Minnesota Mining and Manufacturing Corporation by its progressively regular name 3M. Established in 1902, 3M is otherwise called an innovator in tapes and channels with its top-selling center brands like Scotch, Scotch-Brite, Command, Post-It, and Filtrete (3M). In any case, as a steady worldwide pioneer in development with 112,403 licenses (starting at July 2017), 3M is explicitly a global science organization that utilizes 90,000 individuals, all through workplaces in more than 70 nations, and comprises of 46 innovation stages and 12 subject matters including:

•   Automotive

•   Commercial arrangements

•   Communications

•   Consumer

•   Design and development

•   Electronics

•   Energy

•   Health care

•   Manufacturing

•   Mining, oil and gas

•   Safety

•   Transportation

With such a various portfolio, stock costs in the $230's (starting at 12/26/2018), and predictable deals of over $30-billion every one of the most recent four years, 3M's way of life of development situated them as a worldwide juggernaut (3M). In 1995, 3M was even laureate of the U.S. government's top honor for development, The National Medal of Technology and Innovation (USPTO). 3M's usage of intraorganizational procedures and thoughts laid out in A Century of Innovation: The 3M Story, for example, "The 15 Percent Rule, motivated by 3M innovator Drew," which conceded workers "authorization" to use 15 percent of their time on new undertakings, and in 1977, "Challenge '81, a program planned for accomplishing 25 percent of all deals from items under five years available," later raised to, "30 percent and the complete years diminished to under four" helped give the organization center around its center of advancement (40). As enormous and fruitful of a company as 3M may be, they are not without their entanglements. Issues related with authoritative development came about which ended development; be that as it may, by concentrating on their center of advancement and increasing new items through acquisitions of different organizations, 3M came back to the organization it was initially known for.

One issue that caused a stagnation in 3M's development originated from issues identified with authoritative advancement. As 3M developed into a bigger organization with bigger incomes, the income expected to arrive at the 30 percent objective developed alongside it. For example, if 3M has incomes of $5 billion, to arrive at their objective of 30 percent, $1.5 billion is required from items under 5 years of age; in any case, when income increments from $5 billion to $10 billion, the 30 percent income required from new items increments alongside it to $3 billion. To meet the objective of 30 percent today with incomes besting $30 billion, a faltering $9 billion should be created by new items!

Another purpose behind the bullish period is that science organizations, for example, 3M must keep on developing so as to keep up predictable development and incomes. With generous market shared characteristic, items continually having structure rivalry and mechanical substitutes, it is basic that 3M's innovative work is completely resourced to make development streams in every one of their different businesses. In 2001, when James McNerney was selected CEO to help 3M recapture speculator certainty and development, the Six-Sigma process he actualized worked brilliantly. Benefits rose, spending was cut, and 3M turned out to be increasingly proficient; thus, 3M was floating away from its center abilities. As 3M's income from new items declined from their objective of 30 percent to 21 percent, McNerney fell into the flawed activity phase of authoritative decay. The best possible financing and imaginative condition were no longer provided by the executives. An article distributed in Fortune 500 incorporated a statement from Craig Oster, 30-year 3M engineer, that clarified the impacts of cost cutting: "The proficiency gains included some significant pitfalls. Researchers and specialists complained that McNerney, a MBA, didn't comprehend the imaginative procedure. Six Sigma rules stifled those working in the labs. "It's extremely hard to plan innovation" (Gunther). While the Six-Sigma forms were working for the present moment financials, the drawn out hierarchical advancement was in effect unfavorably influenced.

3M's innovative work (R&D) are the underlying foundations of the whole association. The Six-Sigma forms were not without warrant, as observed by a 35 percent expansion in benefits, by and by they had their cutoff points. Financing cuts ought to be restricted with regards to a R&D division like 3M's. The fate of the firm lays on the opportunity of the people who participate in the gradual and experiential development. David Powell, 3M's VP of promoting expressed, "Yearly interest in R&D in great years—and awful—is a foundation of the organization. The consistency in the terrible years is particularly significant" (The 3M Story 18). McNerney's Six-Sigma forms are legitimately still set up at 3M, only not in the science division (Gunther). Advancement can require significant investment, regularly years, and when it is the foundation for the achievement of a firm, inordinate cuts can handicap results.

Indeed, even with a solid center, when global organizations, for example, 3M become languid and are encountering an absence of development, procuring different organizations, especially ones that are developing, can have enormous upside. Expending different firms can dispense with rivalry, extend markets, and give the devouring organization access to basic items and innovation. 3M should take over the same number of firms that fit into their corporate methodology, regardless of whether that implies half of every single new item originate from acquisitions. The basic work force and foundation 3M can pick up from getting an organization can likewise open greater open door for advancement once incorporated.

Whenever named CEO of 3M, adhering to the center by concentrating on development and the future would be of most extreme significance. The assets must be caused accessible to gain by key acquisitions to assist with augmenting the association's portfolio before the opposition does. 3M's present CEO, Inge Thulin, shares a similar mentality, as he said in 2016, more than $10 billion might be spent on acquisitions through 2020 (Clough). A remark on which he made valid with their second biggest acquisition of Scott Safety for $2 billion prior this year. Speculators need to sink cash into development organizations. While there are dangers engaged with acquisitions, expanding the capability of making the following predominant plan can have to an extreme degree an excess of upside to overlook.