INNOVATION AT 3M

Rubini, Nikunj & Madhuvanthy

“IF THE OUTER APPEARANCE OF THINGS MATCHED THEIR INNER NATURE, THERE WOULD BE NO POINT TO SCIENCE”

- GALILEO

2

Facts

Company: Minnesota Mining and Manufacturing Company (3M)

Formed in 1902 Nature of business: Conglomerate

Tape products Abrasive products Automotive and chemical products Connecting and insulating products Consumer and office products Health Care products Safety and personal care products Other products

3

Facts contd …

Operates in 60 countries Highlights of the company:

– Places heavy emphasis on R & D (7% of every sales dollar spent on R & D)

– Has nearly 6500 scientists, engineers and technicians (figures as of 1997)

– Revenue – $ 15.07 Bn*– Operating Income - $2.7 Bn*

* Figures as on 1997. Half of the revenue and operating income comes from overseas.

4

Facts…

The case discusses:– New methodology for customer needs

research Lead User Research

– The market research teams’ idea of upstream containment and the feasibility of implementing the same

5

Innovation at 3M

Technical individuals were behind making new products. Process engineers involved for feedback on manufacturing capability

Market input- – Current customers – Customer evaluation of

currently marketed products– Sales representatives– Focus groups- Market researchers at 3M– Market research firms– On site visits by 3M scientists & technologists

6

The need for new mode of customer needs research

Disadvantages– Information was not necessarily proprietary– Focus groups failed to give clues on market

needs, 5 to 10 years down the road– Customers – Blind about own needs, no new

insight on revolutionary products– The product developers never assumed

ownership for understanding customer needsErgo, a need for a new method to understand the

latent demand arose

7

The lead user research for Medical Markets Division

Premise: “Certain consumers experienced needs ahead of other consumers and that some of the former would seek to innovate on their own- Lead users”

The lead user method benefits– Richer and more reliable information– Better product and service concept– Acceleration of the product and service

development process

8

Mandatory elements for the success of this approach– Supportive management– Use of a cross disciplinary team of highly

skilled people– A clear understanding of the principles of the

Lead User Research

9

Lead user research stages

Stage 1- Project planning (4-6 weeks)– What

Identify the type of markets and the new products of interest and the desired level of innovation

– HowInformally interviewing industry experts, customers, suppliers, internal company managers

10

Stage I @ 3M

Team met 4 hours each week Discussed questions like ”What do you know about

this market? What don’t you know? How about reimbursement policies? How important is the skin itself as a source of infection?”

Findings:– 30% of infections occurred from the

patients own skin– This highlighted the need for good surgical

drapes

11

Stage I

Trends or needs Identification (5-6 weeks)– What

Identify specific need related trends to focus upon for the remainder of the study

– HowDigest information collected in stage 1Helps in understanding major trends, helps the team in framing a customer need that can be addressed by a product or service

12

Stage 2 @ 3M

5 day workshop Developed parameters for a breakthrough

product– It should conform to the body– Prove more effective than the current products– Should be easy to apply and remove

MASH unit: Was considered a potential lead user– Reason: It has needs for portable, inexpensive and

flexible products

But MASH was not a Lead User

13

Stage III

Preliminary concept generation (5-6 weeks)Having selected the area of focus, the team

– Starts generating preliminary concepts– Informally assess business potential product/service

being conceptualized– Continues interviewing lead user experts– Meets Key Managers to confirm that identified needs

and initial concepts fit well with important interests

14

Stage III @ 3M

Realized there was more potential in developing countries than in developed countries

2 groups of product developers traveled to visit potential customers.

Fact finding trip lengthened stage 3 duration Visits yielded invaluable information but it did not turn up to

be experts on lead use in terms of product efficacy Team found no single lead user who proposed 3M

specifications that the breakthrough product would need

Challenge: To pool together the combined knowledge and talent of this diverse array of knowledge to develop product concepts

15

Stage IV

Final Concept Generation (5-6 Weeks)The team Takes the preliminary concepts developed in

Stage III towards completion Alternatives product concepts are generated Evaluation of concepts- technical feasibility,

market appeal and mgmt priority Finally arrive at the most commercially promising

concept and develop recommendations

16

Post-Workshop- Refining preliminary concepts based on

the knowledge Presentation of the proposed

products/services covering design principles and justifying why customers would pay for it.

1 Member of the Lead User Team remains involved for the further steps

17

The new Business Unit Manager believed in traditional market research

He had a mandate to “stop the hemorrhage of profits and reconsolidate the division”

By reducing one member from the Lead User Team, he made his opposition clear

Stage IV @ 3M

18

Challenges faced by Group-Members and Facilitators

1. Lack of structure in many corporate meetings

2. Introverted and Extroverted Participants3. Finding ways to marry very creative ideas

with technical feasibility4. Navigating a sea of facts

19

Metrics for evaluation of product development concepts

Customer preference for the new product Creation of new growth for the division & Creation

of new businesses and industries that could change the basis of competition for the business unit

Higher growth for the rest of 3M through incorporation of proprietary 3M technology with patent protection

20

Recommendations

The team ended up with 3 product recommendations

1. The Economy Line2. The Skin Doctor Line3. The Antimicrobial “armor” line4. Evolution or Revolution

21

4. Evolution or Revolution

Include upstream containment of infections

This requires sophistication like combining technologies from more than one core area(s)

Asks for combining technology from medical surgical division with diagnostics

MSD- Core; Diagnostics- Area which lacks depth

22

Market Research Aspect

Various forms of market research have been discussed in this case– Data from sales representatives– Focus groups– Current evaluations of currently marketed

products– Site visits by 3M scientists and technologists– Data on risk factors for diseases

The case also discusses other ways that can be used in market research– Lead user research

23

HR Aspects

Change Management– The case talks about getting the support of the team

members and the management (Post lead user method implementation)

Need for a structure in meetings to enhance proper communication

Increased presence of introversion among participants

Need for a proper succession planning- Wrong selection of BUM

24

Our recommendations

1. Develop the fourth recommendation into a structured concept, patent it and sell it to other health care companies. Advantage: A possible source of revenue

2. Continue with the existing 3 recommendations that came out of the meeting

3. Do not solely depend on the lead user method, supplement it with the other traditional market research methods

25

Other Learnings from 3M

By-passing purchasing agents to understand customer needs

Motivated innovation by giving grants and awards (15 % time on innovation)

Dual-ladder Inclusion of process engineers to under

the feasibility

26