Main Factors That Make 3M an Innovative Organization
3M is regarded as an innovative organization owing to the culture cultivated by the management that places innovation at the center of its operations. Since its establishment in 1902, 3M has survived stiff competition in the market through continuous innovations that ensure it remains ahead of both perennial and emerging competitors. One of the main factors that make the firm innovative is its strategy to develop original customer-oriented solutions through elaborate market research.
The development of all products for these different markets has been achieved due to the innovative nature of the firm’s workforce. The company has been able to respond with urgency to these demands by identifying consumer needs. Through innovations, the firm has developed customized products and services. An example of a product developed by 3M based on consumer needs is the WetordryTM sandpaper specifically designed to answer to the demands of an emerging motor car industry (The Times 100, 2012).
Another factor that has made the firm remain innovative is the ability to build a strong competency in developing and adopting new technologies. The company has built within its workforce an unparalleled culture of innovation by predicting and prospecting for emerging consumer demands. Today, the company has developed a widely sought pharmaceutical product involved in tumor control owing to the innovations.
The company has continued to pursue a rich culture based on a former president, McKnight’s principle that holds: “management that is destructively critical when mistakes are made kills initiative. It is essential that we have many people with initiative if we are to continue to grow”(3M, 2012, para. 5). Based on this principle, the company has cultivated a unique relationship and behavior pattern in which the workforce has been given the freedom to seek and explore new concepts and ideas (The Times 100, 2012).
iPad 3 by Apple
The iPad has revolutionized the audio-visual media platforms. The device, which is slightly larger than smartphones, but smaller than conventional laptops, has been described as an innovation of the 21st century. The device offers a platform for accessing books, movies, games, music, periodicals, and web content because it is controlled through a unique multi-touch display. The iPad appears in two different models the cellular and Wi-Fi based.
These models allow different consumers to enjoy using the product in diverse environmental settings. The Wi-Fi model allows for access to both local area networks and the internet. On the other hand, the cellular model relies on a wireless network platform on top of the Wi-Fi connection. The latest version of this product; iPad 3 was launched on March 7, 2012. The third-generation iPad is a modification of previous models that had registered their share of market success since they were launched. The iPad 3 has improved features such as an advanced camera with ultra-modern optics that can capture high definition photo images.
The use of Wi-Fi and 4G connection platforms mean that the new iPad can efficiently connect to the fastest networks worldwide. This enables faster response to user manipulation while maintaining a balance between the incredible and improved power efficiency. It allows for quick download and uploads speeds that have effectively transformed the email platform since large file attachments can now be sent with relative ease (Murph, 2012).
The success of the iPad can be attributed to its multitasking ability. Studies indicate that leading business enterprises have incorporated the use of iPad in their operations. It is also projected that the use of this new mobile platform could become the favorite mode of communication in workplace settings. Already, the device is widely used by lawyers attending to their clients, healthcare professionals to access patient records, and other general communications between employers and their employees. The flight industry has not been left behind with many airlines rapidly replacing paper-based flight manuals with iPads.
In the education sector, the device is gaining favor as the preferred model for homeschooling. Children with autism have also been found to benefit immensely from the use of the device to enhance their communication and interactions. The leisure industry is the leading consumer of iPads. The ability to download, upload, and record music, photos, and videos have created a buzz particularly in the tech-savvy young generation (Murph, 2012).
Importance of the Commercialization Process for Innovative Organizations Such As 3M
The successful commercialization of innovations contributes to the growth of an organization. For such organizations as 3M, the many innovations developed by the workforce need to be commercialized if the firm is to benefit from them. The commercialization process is an integral part of the actualization of ideas into viable projects that guarantee the growth and profitability of an organization.
Companies attach great importance to the commercialization process as it is the interface between production and profitability. The commercialization process is realigned accordingly by observing and considering consumer demands. Established firms such as Google, Apple Inc., and 3M have programs that ensure consistency and continuous improvement of the commercialization process to satisfy the current consumer demands. Such firms use sophisticated and well-crafted tools and techniques to guarantee quality consistency and minimize variations. This is meant to ensure value for their clients (Terziovski, 2007).
The commercialization process is crucial for innovative firms as it creates room for carving a niche in the market. A well-structured process gives the company a chance to establish its brands in the market. A well-developed commercialization process also contributes to creating an effective channel to the market. Through market research, a production firm can identify the most appropriate distribution channel to reach and satisfy the final consumer.
Commercialization of innovation is important in that it eliminates the temptation to take the innovation that is easy to work on and easily get it into production. Most organizations that follow this route may appear to be making progress to investors, but this approach is subject to failure.
There is a need to commercialize an innovation at the appropriate time. Firms such as 3M have clear guidelines followed in the commercialization process to ensure that an innovative product is introduced to the market at the appropriate time. A good commercialization process guides the product development process. This is because all quality or reliability problems of a product or a service are handled professionally through trials on prototypes (Terziovski, 2007).
Managing innovation and successfully commercializing it contributes to the ability of the entrepreneurial organization to compete favorably in a mature business environment. In a firm such as 3M that produces many innovations, an elaborate commercialization process allows management of the various phases of innovation which guarantees the continued release of various products into the market at different times. This contributes to developing a sustained competitive advantage (Terziovski, 2007).
Key Performance Indicators
Key Performance Indicators (KPIs) are measurements that act as a guide in helping an organization achieve its set goals. Majorly KPIs provide both internal and external stakeholders with metrics from which they can easily access and customize formats to facilitate enhanced efficiency in operations. KPIs also act as indicators that can generate information concerning the strategic performance of an organization. Organizations need to use appropriate indicators to measure performance.
KPIs provide a system of standardized activities that give adequate data on performance. With continued measuring of performance, an organization can adjust or make improvements that are of integral value in the management. Measuring organizational performance through KPIs is one sure way of creating a gauge upon which the organization can make changes in management or general operations. KPIs act as a source of information regarding process, product, and/or service from which the organizations can now make an informed decision.
This information affects a great number of the organization’s parameters including employees, processes, time management, and relationship with external partners such as suppliers and distributors. Without well-structured KPIs, an organization cannot establish its performance effectively in both qualitative and quantitative terms. An organization’s performance is determined only if prior goals are set. To determine if these goals are met, an elaborate system of indicators has to be applied.
The performance indicators mainly referred to as KPIs have gained popularity in many organizations. In an overly competitive business environment, an organization should be able to determine its level of performance on many fronts. KPIs help informs the organization whether the situation is in financial or otherwise needs to be reviewed or maintained. For instance, an organization such as Toyota may have a goal to reduce the defects rates in its production lines from 6% to 2%.
As such, to enable Toyota to identify whether the production department is achieving that goal, a Key Performance Indicator known as defect rate is assigned. Such a KPI would be used to measure the number of defects identified before and after implementing a decided-upon change. It is only the use of the KPI that can precisely help the firm determine if the improvement in the process has yielded or not (Parmente, 2012).
The overall performance of a business can be established by formulating the appropriate KPIs. As such, with such indicators, it is possible to obtain a glance at the overall performance of an organization. In the ever-changing business trends, the management of an organization needs to be able to give real-time data on business performance. The most crucial key performance indicators should continually be reviewed to ensure that the progress of the organization is on track.
These also avail essential data that can be used in making quick decisions concerning the appropriate direction of operations. KPI measurement is believed to promote learning within an organization. The compiling of data and its analysis triggers vital conversations concerning the performance of the organization and as such may be considered educative. This is because the personnel learns to interpret the measurements. KPIs are also essential in ensuring the continuity of an organization.
They promote or facilitate the achievement of goals established by the management. This is because, through them, the organization is triggered to keep measurements consistent. Though organizations are constantly changing goals for one reason or another, the measurement of key performance indicators in most cases remains consistent. Therefore, this makes KPIs remain strategic pillars in a firm’s realization of its laid down plan and vision (Parmente, 2012).
Toyota, a leading car manufacturer, has set key performance indicators that guide the performance of various departments. These include the sales, service, parts, body shop, and business management departments. The sales department is concerned with making profits from the sale of vehicles. The gross profit made is the sales minus the cost of sales. Different economic situations have an impact on the gross profit margin, and in some cases, it may be in the negative.
The firm uses a KPI known as Annualized sales per salesperson. This is based on unit sales per annum. The KPI is used to measure the average quantity of units sold by a designated salesperson per year. The statistic is used by the company to determine the performance of a sales team and that of individual salespersons. This provides data to the company through which it can gauge the strengths and weaknesses of individuals and teams.
The company has set one hundred and fifty as the general benchmark in car sales annually for a new salesperson and two hundred for the established salespersons. When sales drop down in years of the financial crisis, the company adjusts its sales strategies. This is aimed at retaining the gross profit through the continued sale of new vehicles. This is as far as KPI is concerned. Another KPI of importance in Toyota’s sales department is the stock turn.
This measures the annualized unit sales per unit in stock. It provides information on the car stock turnover annually. The importance of this KPI is ensuring efficient monitoring of stock flow. Through it, the dealer can also monitor profitability trends and the resultant speed in the circulation of funds. When the KPI indicates a continued decline in sales, efforts are made by the firm to reverse the trend. Some of the measures Toyota has adopted to boost sales include retraining the salespersons and marketing advertisement (Velimirovića, Velimirovićb & Stankovića, 2010).
In the service department, Toyota uses a KPI called productive ratio that measures the ratio of productive staff about the non-productive staff. The company has set the acceptable ratio at 3:1, and when results indicate a decline in this ratio, the management takes corrective measures. This KPI is gauged mostly by analyzing other related KPIs such as technical efficiency and labor utilization. The technical efficiency element determines the relationship between the hours sold per the number of hours in which the technicians have worked.
The company continually reviews its services department functionality to achieve the established benchmark. This is done basing on the Industrial, European technical efficiency average of approximately 115%. Some measures adopted when a workshop cannot achieve this target include a review of the technicians’ skills level and analysis of the condition of the equipment used in the workshop.
This is followed by management implementing a raft of measures such as organizing for the training of the technical staff or replacing the equipment in use for increased efficiency. The labor utilization KPI measures the productivity of the workers and is based on the number of hours worked in comparison to the hours attended. The company has set a range of 85% to 95%, and a lower efficiency percentage is associated with poor organization and low quality work.
As such, the management has previously adopted measures such as skill training and the introduction of bonuses based on employee efficiency. This has boosted efficiency in the services department to a large extent (Velimirovića, Velimirovićb & Stankovića, 2010).
British Airways’ annual performance is based on key performance indicators determined at the beginning of each year. It should be noted that the indicators focus on both financial and non-financial areas of the business. On the financial front, the firm aims at achieving a consistent and strong financial performance to remain relevant and benefit the shareholders. Customer satisfaction as indicated by onboard surveys is also critical in measuring the effectiveness of the company. Operations have also been streamlined to ensure all current and emerging customer demands are met accordingly.
This is also based on the running of a cost-effective business that effectively addresses all operational constraints. The firm has also identified employee performance as an integral KPI. As such, the firm has pursued employee commitment towards the vision of the company. The company conducts bi-annual surveys where employees are encouraged to speak out about everything on the company’s operations by using an employee involvement index, The aim as per the year 2007/08 was to achieve at least 73% of employee involvement (British Airways, 2007).
Reference List
3M, 2012, McKnight Principles. Web.
British Airways 2007, Annual Report and Accounts. Our key performance indicators. Web.
Murph, D, 2012, IPad Secrets, John Wiley & Sons, Hoboken.
Parmenter, D 2012, Key performance indicators for government and non profit agencies implementing winning KPIs, Wiley, Hoboken, N.J.
Terziovski, M 2007, Building Innovation Capability in Organizations, Imperial College Press, London.
The Times 100, 2012, Growth through ingenuity and enterprise. Web.
Velimirovića, D, Velimirovićb, M & Stankovića R 2010, Role and Importance of Key Performance Indicators Measurement. Serbian Journal of management. 6 (1): 63 – 72.