Introduction
Innovation is a key driver of success in most business enterprises. Organizations can adopt innovative approaches to their services and products at any level of their operation. Innovation has numerous advantages, such as enhanced productivity, reduced cost of production, improved customer satisfaction and profitability, high brand recognition, and greater sustainable competitiveness in the market. Evaluating the development and growth of 3 M’s culture of innovation is vital to understanding how the latter contributes to business progress.
Nurturing Entrepreneurship and Innovation Culture and Entrepreneurial Institutionalization at 3M
3M used various approaches to nurture entrepreneurship and innovation and entrepreneurial institutionalization from McKnight to the DeSimone era. The company invested heavily in Research and Development (R&D) to consistently offer new ad competitive products to the customer. Five percent of the total annual was allocated to R&D to support the development of new lines of products and improve the existing ones. McKnight’s 15% rule supported the commitment to this share, where researchers were allowed to use 15% of their time to develop new and beneficial ideas (Hill, n.d.). The establishment of a central research laboratory in 1937 was another move that nurtured innovation and facilitated entrepreneurial institutionalization (Hill, n.d.). The laboratory is used to conduct long-run basic research to supplement the work of the product divisions.
Further, the company established the 3M Technical Forum in 1951 during McKnight’s to DeSimone’s era to promote sharing of ideas, discussion, and effective problem-solving mechanisms among researchers at the central laboratory and others at various divisions. The forum facilitated the production of unique marketable products. The way the company provided capital seed to the researchers also nurtured innovation and entrepreneurship. The firm established Genesis Grant to give a capital seed of up to $100,000 without demanding any detailed business plan from the researchers (Hill, n.d.). Moreover, 3M provided different reward and recognition programs to nurture entrepreneurial innovation culture. For example, the Circle of Technical Excellence and Innovation Award recognized individuals who exceptionally contributed to the company’s technical capabilities. Likewise, the organization accentuated dual career tracks, an idea that allowed researchers to concentrate on advancing their technical professional interests without any perception of losing financial gain for not opting for management positions.
3M’s Organizational and Cultural Strengths and Potential Weaknesses
The leadership, financial incentives, mentorship, flexible working, innovation, diversity and innovation, and employee resource networks were fundamental strengths for 3M during the McKnight to DeSimone era. McKnight and other leaders emphasized investing more in R&D to leverage and develop new technologies to effectively exploit existing and new product markets. Hiring the right talents, such as scientists Carlton, Okie, and Drew, who contributed significantly to innovations and product diversification, was key organizational strength during the error (Hill, n.d.). McKnight also established a central laboratory and mechanisms such as 3M Innovative Properties (3MIPC) and 3M Technical Forum to help accelerate growth.
The company offered mentorship programs to all employees to promote personal and professional development. The approach helped the company attract and retain the right talent. Flexible working culture and diversity allowed the employees to visit their customers, learn about their needs, and share new ideas, leading to the development of new and improved products (“3M’s Culture”, n.d.). Resources such as the 3M Technical Forum stimulated employees to collaborate and improve their skills (Hill, n.d.). The 15% culture encouraged employees to dedicate a portion of their work time to proactively research and pursue innovative ideas that interested them and with potential benefits to the company.
Potential weaknesses during the era were failure to produce blockbusters, patient money philosophy, and decentralization. Due to the Pacing Plus Program, the organization could not invest in developing a large and highly sustainable technology (Hill, n.d.). Instead, 3M spread resources thinly over numerous and small programs. The patients’ money may have contributed to the failure of projects and loss to the company. Decentralization may have contributed to duplication, as it was in the case where customers received calls from different sales and purchasing teams.
Related and Unrelated Diversification at 3M
Wetodry, sandpaper, and masking tape are examples of related product diversification adopted by 3M. This type of diversification positively expanded the products the company offered to its existing customers, supporting Oladimeji and Udosen (2019) and Le (2019) findings that diversification promotes organizational growth. The masking tape was a weak abrasive that the customers used after wet-dry sandpaper during painting to prevent paint from running onto parts not to be painted (“3M Products”, n.d.). An example of unrelated diversification is Post-it Notes for office use and building materials as roofing granules for the construction industry. The unrelated diversification helped the organization increase its customer base and stabilize its source of revenue.
Other examples of related and unrelated diversification used by 3M are liquid and stain repellants, corrosive protection coatings, abrasive wheels, and Nexcare. The related diversification for liquid and stain repellants and corrosive protection coatings positively impacted 3M growth since it attracted various industries such as construction and transportation. The unrelated diversification for abrasive wheel and Nexcare further allowed the company to expand the global market by selling products in one of the largest industries, healthcare. The firm did nothing incorrectly regarding the two diversifications because it first invested in R&D to ensure that the products it offered solved a particular customer’s problem.
Conclusion
In conclusion, 3M is one of the largest and most diversified organizations globally, offering thousands of products to different industries. A considerable investment in R&D and the culture of innovation and entrepreneurship have been the fundamental drivers of the company’s growth and competitiveness. Some of the firm’s approaches to nurturing the culture of innovation include the establishment of a central research laboratory, 3M Technical Forum, and different reward and recognition programs.
References
3M Products. (n.d). Web.
3M’s Culture. (n.d). Web.
Hill, C. 3M: The Innovation Engine [Ebook]. (n.d). University of Washington
Le, H. (2019). Literature review on a diversification strategy, enterprise core competence and enterprise performance.American Journal of Industrial and Business Management, 09(01), 91-108. Web.
Oladimeji, M., & Udosen, I. (2019). The effect of diversification strategy on organizational performance. Journal of Competitiveness, 11(4), 120-131. Web.