Entrepreneurship: 3M Innovation

7/27/2019 Entrepreneurship: 3M Innovation

1/14

1.0 Introduction

Entrepreneurship is all about creating opportunities as well as identifying them.

Entrepreneurship is not sitting back and responding and reacting to opportunities others

have created or discovered. Corporate entrepreneurship is the twin sibling of innovation

for firms. Corporate entrepreneurship allows firms to create and discover new business

ventures, new products, services; processes while revamping and refreshing business

strategies and competitiveness. It is the totality of a companys innovation and business

ventures.

3M embodies corporate entrepreneurship through their longstanding history of

innovative products and unique internal innovation and cooperative strategies. 3M

Corporation, founded in 1902, the Minnesota Mining & Manufacturing Corporation (3M)

reported sales revenues of $16.7 billion during the year 2000. The company made more

than 60,000 products that year. Nearly 35 percent of its total sales, or about $5.6 billion,

came from products that had been introduced during the prior four

years, and another $1.5 billion came from products introduced during 2000.

These revenues stemmed from 3Ms six business segments: industrial (tapes,

abrasives, and adhesives); transportation, graphics and safety; healthcare (including

medical and surgical supplies and closures for disposable diapers); consumer and office;

electro and communications; and specialty materials. All six business segments wereprofitable in 2000. Asia Pacific, Europe, and Latin America achieved double-digit

volume growth. Non-U.S. business represented 53 percent of total net sales and 63

percent of total operating income.

3M had identified 21 established and new strategic brands. Some of its best-

known brands were Scotch tapes, Scotch-Brite cleaning products, and Post-it

repositionable products. Newer brands included Vikuiti display enhancement,

Volition fiber optic network solutions, Command adhesive, and Nexcare firstaid

products. More than 75,000 3M employees worked to create more than 500 new products

every year. 3M had institutionalized a corporate culture that promoted intrapreneurship.

The company was recognized for its vertical organizational structure, with

businesses established by technologies and markets. Between 1985 and 2000, 3Ms gross

profit margin averaged over 48 percent. During this same 15-year time period, return on

1


2/14

equity for the company averaged 22.2 percent. In Fortune magazines annual survey

of Americas Most Admired Corporations, 3M earned a top-10 ranking in 10 of

the last 15 years.

2.0 Types of Innovation

According to Brassington and Pettitt (2000), product innovation involves an

organisation breaking into totally new ground, where previous consumer experience

cannot be utilised. Product innovation is a risky process as the organisation will have to

overcome ignorance, suspicion and scepticism. Brassington and Pettitt (2000) believe that

product innovation is normally a result of technological breakthroughs. Whilst the

Cambridge MIT institute (2004) explains that product innovation is very important to

organisations in todays market because of this hyper-competitive business climate.

Kuratko danHodgetts, 2004, states are four types of innovation:

2.1 Invention a new product which has not been produce before such as

telephone by Graham Bell.

3MTM Three-M-iteTM Abrasive Cloth became 3Ms first

exclusive product, 12 long years after 3Ms founding in 1902. Thanks to

Three-M-ite cloth and a boost in business from World War I, 3M finally

posted substantial profits and declared its first dividend of 6 cents per share in

the last quarter of 1916. The dividend totaled $13,497 on 224,596 shares

outstanding.

2.2 Extension improvement or additional features added to the existing product

such as the iPhone and Ipad.

In 1930s Richard Drew of 3M saw another customer need. Cellophanewas popular, but there was no attractive way to seal the clear material. He

coated samples of cellophane with 3M adhesive. Scotch Cellophane Tape

was born, and soon hundreds of practical uses were discovered. Coating the

cellophane with 3M adhesive was an improvement to its usage. As the decade

2


3/14

ended, 3M had five diverse and flourishing businesses: abrasives, masking

tape, cellophane tape, roofing granules and adhesives.

2.3 Duplication is a replication process towards the existing product or services.

However it is not 100% duplication, with improvements on the product or

services. For example a handphone with Wi-Fi technology.

Microreplication technology made microscopic changes to the surface of

materials which changed how these materials worked. Borne out of

overhead projectors, microreplication-based products are used in highly

reflective highway signs, laptop computer screens and even 3M's first product

abrasives. A team of 3M scientists developed a new water-based version of

Scotchgard Fabric Protector that contains no solvents. The team leader was

the son of one of the original Scotchgard fabric protector inventors and a

member of 3M's new generation of innovators.

2.4 Synthesis is a combining process of other pats to produce a product or

application such as computer and internet surfing.

In 1995, 3M announced it would launch its printing and publishing, data

storage and imaging systems businesses as an independent, publicly owned

company. At the same time, 3M began realigning into market-centered groups

to focus on building customer loyalty by providing superior quality, value and

service. The innovation products of data storage and imaging system

businesses are synthesis from the computer edge.

3 Innovation Impact

Product innovation is important to organisations because as described by

Brassington and Pettitt (2000), it gives them an opportunity to educate the market and

to a certain extent dictate demand. Brassington and Pettitt (2000) illustrate that the

underlying reason why product innovation is considered by many organisations to be

important is because if a product is successful, a company will achieve high levels of

respect and a great reputation as a market leader. Further, successful product

3


4/14

innovation could lead to the organisation gaining a better relationship with its

shareholders and further there is scope and potential for the company to achieve

better and larger investment proposals. Also, it is more likely that successful product

innovation will enable a company to employee the best possible staff and thus

continue to be successfully innovative. So, innovation can provide companies with a

competitive edge but an organisation must ensure that innovation is likely to be

successful.

At 3M, building and sustaining innovation is a better thing to do, or a batter way

to do it, that increases an organizations ability to achieve its goals. This does not

mean change for changes sake. Innovation has also been defined as Creativity +

Change. To qualify as an innovation, a change must be visible to others and must

offer a lasting impact. Innovation can occur and should be encouraged at all levels

within a company from top level executives to lower level managers and individual

contributors. Thus an innovation may be a product, a process, a method or a system,

but it is more than an idea. It has to be converted from idea into action.

In the continuously and rapidly changing world of business, innovation is a key to

success. In 3M, they learn more about what stimulates and drives it, and how to

manage it, that how they are able to deliver more and better innovation. Sustaining

Innovation requires approaches that have structural impact-deliberately creating an

environment in which Innovation is integrated into every process and developed

within every individual.

Generally, there are two levels at which innovation needs to be managed, the

organizational level and the operational level. At the organizational level, 3M has

ensured that there is a culture that passionately embraces innovation; there exist

strategic alignment of innovation initiatives with business goals, policies and

processes; and that there is an organization wide focus on the customer and markets.

At the operational level of managing innovation, 3M has recognised the risk

acceptance and an understanding that inevitable mistakes and even failures are often

the basis for future success; an emphasis on, and tangible support for, exploratory

4


5/14

thinking; solid interpersonal relationships and internal teamwork, with a climate of

mutual commitment and support; and finally a cross-functional, cross-discipline

communication, collaboration and teamingwithin the organization and with

external partners. In our paper we would like to lay down the path to incorporate

innovation into the strategy development, as well as day to day operations in a

growing organization.

Level of Impact

Product or service innovation: refer to innovations that relate directly to the needs

of customers. Products or services that cater to customers developing needs can be

considered as innovations. This is the type of innovation that captures the most the

popular imagination. The 3MTM Three-M-iteTM Abrasive Cloth is a good example.

Process innovation: represent process or production improvements that lead to

greater efficiency and lower cost. In the late 80s and early 90s, process innovation

was all the rage. The ongoing emphasis at 3M was on quality continuous

improvement in every aspect of its businesses, focusing on customer requirements.

This is when a 3M scientist used an adhesive that didn't stick to create "temporarily

permanent" book markers and a whole new product category. Post-it Notes

became a worldwide best seller.

Business Model innovation: refer to innovations that relate directly to the design of

operations to respond to customer needs. This type of innovation was very popular

during the late 90s with the advent of the Internet. Several different business model

innovations were introduced based on the new capabilities of the Internet. This type

of innovation is strongly advocated by Hamel (2000). A typical example is in 3M is

its printing and publishing, data storage and imaging systems businesses as an

independent, publicly owned company. At the same time, 3M began realigning into

market-centered groups to focus on building customer loyalty by providing superior

quality, value and service.

5


6/14

Product (or service), process and business model innovations are not competing

notions but rather complementary in that they interact one with the other and are

essential to each other. What is meant here is that an entity using a new business

model to deliver existing products or services to customers can deliver product or

services innovations that will further enhance the business model.

In summary, process improvements in 3M are commonly driven by new product

demands or new business models, while new business models can arise out of new

product or process developments.

Impacts of Organizations on Innovation

The different types of innovation presented in the previous section expose the double-

edged nature of innovation. Although innovation can be a critical force for a

companys high level of performance (and survival), it is at the same time sowing the

seeds of the potential annihilation for its creator. The shortening of product life

cycles, the ever increasing efficiency of processes and growing originality of business

models that are being generated are contributing to what Emery and Trist (1965)

labeled as turbulent fields. As Emery and Trist farsightedly discussed in the Causal

Texture of Organizational Environments, the actions of organizations are both

persistent and strong enough to induce autochthonous processes in the environment,

deepening interdependence between economic and the other facets if the society,

increasing reliance on R&D to achieve the capacity to meet competitive challenge

Traditional Innovation 3M ways in 1990

Product team comprise technical individuals, involve process engineers ensure the

particular product under development could be efficiently

made provided feedback about 3Ms manufacturing capabilities Face no risk if

an idea turned to failure and go on to other project

o Allowed for technical employees to take matters in their own hands.

6


7/14

o Marketing input traditionally came from current customers and

sales representatives.

o Product developers focus on finding new angles or twists on the early trends.

Not only the change in the environment is causing organization to adopt new trends,

such as increased spending in R&D, to be able to meet the competitive imperative,

but these trends also contribute to an increase in the uncertainty. From a systemic

perspective, the consequences of these actions can be amplified beyond expectations

by the interrelatedness of the elements leading to the conclusions that the very

consequences of organizational actions are increasingly unpredictable.

This apparent paradox (double edged word) of innovation is usually a typical

indicator of complex systems at work. In this case, the use of innovation to enhance

the chances of survival of the firm such as 3M, by attempting to control its

environment, ends up exacerbating further the environment rendering it more chaotic.

This increased uncertainty leads to multilevel (economic, social, technological, etc.)

instability with direct consequences: both new threats and new opportunities for

companies.

Increasing the turbulence in an environment does not mean inducing change in all

dimensions continuously at the same time. Environments usually change continuously

in some dimensions, haphazardly in other dimensions and remain stable in others.

These changes in the environment can be perceived as uncertainties for some

organizations and hence create threats. However, these changes can also be planned

to bring opportunities for the organizations that created them. As Mintzberg (1994)

delightfully summarizes it - turbulence may often be no more than serious

competition from organizations in full control of the marketplace. This is what

Morgan (1983), calls the challenge of the theory of autopsies, to understand how

organizations change and transform themselves while at the same time changing and

transforming their environment, and to devise tools to encourage organizations in

this quest of open ended evolution.

7


8/14

4 ConclusionInnovation is not just about having good ideas; it is about managing new ideas,

improving old ideas, understanding and anticipating markets and technologies. This is

reinforced by a quote from Gerbeau, Professor of the Open University that Innovation is

risky, but in business you need to take risks to survive. Research and development takes a

lot of time and money, but without innovation a company will not have much of a long-

term future. This quote gives an underlying reason as to why product innovation is so

important to organisations.

A Century of Innovation is a celebration of the values and innovative thinking

that makes 3M unique. Perseverance, ingenuity and creativity have made 3M's first

100 years a century of success. For years, people around the world have looked to 3M

for products and ideas that solve problems and make their lives easier and better. Ourachievements are the foundation of a proud past and the bright future of many

innovations to come.

3M has a history of investing in the communities in which they operate by

providing jobs for local residents and supporting education, the environment, and

social and economic development. 3M also is recognized as a leader in environmental

protection and a pioneer in pollution prevention. Much of 3M's rich culture comes

from the principles that William L. McKnight, former President and Chairman of the

Board, set forth. McKnight believed "management that is destructively critical when

mistakes are made kills initiative. It's essential that 3M have many people with

initiative if we are to continue to grow." It is this growth that continues to make 3M a

leader in the 21st century.

(Source: http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-

innovation/)

8
http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/


9/14

References

1.0 Couger, D., Higgens, L.F. and S.C. McIntyre (1990)

Differentiating Creativity, Innovation, Entrepreneurship, Intrapreneurship,

Copyright and Patenting for IS Products/Processes. Proceedings of the Twenty- Third

Annual Hawaii International Conference on System Sciences. pp. 370-379.

2.0 A Century of Innovation: The 3M Story, St. Paul, Minn.: 3M Company, 2002

3.0 The Cambridge MIT Institute. (2004) Managing Innovation Strategically.

(Internet), Available at http://asp2.miuk.com/cmilive/documents/Managing

%20Innovation%20Strategically%202004.pdf, cited 25/10/2011

4.0 http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-

innovation/

5.0 Gladwell, Malcolm (2000) The Tipping Point: How Little Things Can Make a Big

Diference, Little Brown

9
http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=205281http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=205281http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=205281http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=205281http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/century-innovation/


10/14

Appendix

Years of Innovation at 3M

10


11/14

11


12/14

12


13/14

13


14/14

14

Documents

Entrepreneurship: 3M Innovation