3N With 40,000 global patents and patent applications, 3M, maker of Post-it note

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3N With 40,000 global patents and patent applications, 3M, maker of Post-it notes, reflective materials (Scotch lite), and 55,000 products in numerous industries (displays and graphics electronics and communications, health care, safety and security, transportation, manufacturing. office products, and home and leisure), has long been one of the most innovative companies in the world. 3M codified its focus on innovation into a specific goal, "30/5." which meant that 30 percent of its sales each year must come from products no more than five years old. The logic was simple but powerful. Each year, five-year-old products become six years old and would not be counted toward the 30 percent of sales. Thus, the 30/5 goal encouraged everyone at 3M to be on the lookout for and open to new ideas and products. Furthermore, 3M allowed its engineers and scientists to spend five percent of their time, roughly half a day per week, doing whatever they wanted as long as it was related to innovation and new product development 3M's growth lasted only for a while. A decade ago, the Boston Consulting Group ranked 3M as the most innovative company in the world. In subsequent years, it dropped to second, third, and then seventh. Today, 3M doesn't even crack the top 50. Dev Patnaik, of Jump Associates, an innovation consulting firm, says, "People have kind of forgotten about those guys (3M). When was the last time you saw something innovative or experimental coming out of there? So, what happened? When the company's predecessor became CEO ten years ago, he found a struggling, inefficient, oversized company in need of change. He cut costs by laying off 8,000 people. Marketing and research and development funds, which had been allocated to divisions independent of performance (all divisions got the same hike each year), were now distributed based on past performance and growth potential. Poor performance would affecet the funds negatively Likewise, with U.S. sales stagnating and Asia sales rising, management decreased headcount, hiring, and capital expenditures in the United States, while significantly increasing all three in the fast-growing Asian markets. Six Sigma processes, popularized at Motorola and GE, were introduced to analyze how things got done, to remove unnecessary steps, and to change procedures, which caused defects. Thousands of 3M managers and employees became trained as Six Sigma "black belts" and returned to their divisions and departments to root out inefficiencies, reduce production time, and decrease waste and product errors. And it worked incredibly well, in part. Costs and capital spending dropped, while profits surged 35 percent to record levels. But, product innovation, as compared to the 30/5 goal sank dramatically, as only 21 percent of profits were generated by products that were no more than five years old. So, what should 3M do? 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

Explanation / Answer

1. In a world where technology is evolving at a pace similar to that of light and where competition is growing tremendously, a company focusing on becoming cost effective can thrive for some time, swim in the ocean of competition and drown to its competitors. Innovation and out-of-the box thinking is the need of the hour. Innovation helps a product to maintain its competitive edge in the market. 3M had a niche for innovation and out-of-the box thinking, but in recent years, it had been out of league. 3M needs to adopt its previous business model, focused on innovation and bounce back in the market. As consumers had a knack for innovative products from 3M, they will readily accept 3M products. The Six Sigma approach needs to take a back foot now and let innovative business model do the talking.

2. 3M was known for its experiential innovation in the past. It had even launched an initiative, 3M Brand You in the past based on experiential innovation. Experiential innovation occurs by enhancing a feature in the existing product so as to make the consumer experience memorable. Experiential innovation can happen through innovation, high level of value addition and through focused attention. 3M should imbibe this mantra in its business model as it has experience in dealing with the experiential innovation. Hence it will have a better hold of business with regards to experiential innovation.

3. 3M can rely on acquisitions for innovation. Acquisitions usually happen of small companies which have been doing good and have an expertise in their field. Also they have been portraying extraordinary product development, so the other businesses find them profitable and acquire them to gain competitive advantage. In case of 3M, it can devote 10% of its production to deliver products through acquisition. This will be following the 70-20-10% model where 70% comes from core business, 20% from the daughter businesses and subsidiaries and 10% from acquisitions. This will be a balanced approach and will not make the company totally dependent on third-party companies for innovation.

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