INNOVATION AT 3M

Abhoy K. Ojha

WHAT IS INNOVATION?

Abhoy K. Ojha

 Innovation is not the same as invention. Invention creates technical value, and Innovation creates economic value Innovation is the process of applying a new idea to create a new process or product. Innovation occurs in a probabilistic setting. A company never knows whether a particular technical result can be achieved and whether it will succeed in the market place. For every new solution that succeeds, tens to hundreds fail.

Abhoy K. Ojha

 Technology tends to advance through a series of random - often highly intuitive - insights frequently triggered by gratuitous interactions between the discoverer and the outside world. The innovative process is inherently incremental. An innovator often does not know whether his problem is tractable, what approach will prove best, and what concrete characteristics the solution will have, if achieved.

Abhoy K. Ojha

HOW CAN THE INNOVATION PROCESS BE SUPPORTED?

Abhoy K. Ojha

 The task of the innovating organization is fundamentally different from that of the operating organization. The innovating task is more uncertain and risky, takes place over longer time periods, and assumes that failure in the early stages maybe desirable.

An organization that is designed to do something well for the millionth time is not good at doing something for the first time.
From Galbraiths Designing an Innovating Organization

Abhoy K. Ojha

 Because ongoing operations are repeatable, while innovation is nonroutine, innovation leaders must think very differently about organizing Because ongoing operations are predictable, while innovation is uncertain, innovation leaders must thing very differently about planning.
Govindarajan & Trible (2010: 15)

Innovations Missing Link

Ongoing Operations Strategy Innovations Committing to an innovative idea

Organizing and planning

The need to reassess organizing and planning is often overlooked

Making Innovation happen
Govindarajan & Trimble, 2010: 16

Execution

Components of an Innovating Organization

Structures Processes Reward Systems People

Abhoy K. Ojha

3M History
Founded in 1902 as the Minnesota Mining & Manufacturing Company by 5 businessmen to mine a mineral deposit for grinding-wheel abrasives in Minnesota. Almost went bankrupt as the venture failed Produced a successful abrasive cloth in 1914 First dividend in 1916 Success continues.

Abhoy K. Ojha

3M Today
50,000+ products
100 major products every year 500 products every year (or around 10 per week)

35 business units in 6 businesses, 45 technology platforms 17 international divisions 15% of sales from products introduced in the last 3 years. Operations in 60 countries (manufacturing in 35) 3M products sold in about 200 countries Patents: 570 (2006), 571 (2007), 561 (2008), 518 (2009), 589 (2010), 514 (2011) 2009
Sales: $23.5 billion (63% outside the US) Net income: $3.2 billion About 75,000 employees (43,500 outside US), 6700 researchers

2010
Sales: $26.7 billion (65% outside the US) Net income: $4.08 billion About 80,057 employees (47,102 outside US), 7350 researchers (50% outside US)

2011
Sales: $29.61 billion (66% outside the US) Net income: $4.28 billion About 84,198 employees (51,000 outside US), 7900 researchers (more than 50% outside US)
Abhoy K. Ojha

3M Technology Platforms
Adhesives Abrasives Ceramics Electronic packaging Micro replication Optics Specialty materials Non-woven Materials Polymer melting

Markets
Architecture & Const.
Auto. & Aerospace Electronics Manuf. Graphic arts Health care Home and Leisure Industrial OEM Consumer & Office Safety & Security Telecoms and Utilities

Abhoy K. Ojha

WHAT ARE SOME OF THE KEY FEATURES OF 3MS INNOVATION STRATEGY?

Abhoy K. Ojha

McKnight Principles

As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their on way.

Abhoy K. Ojha

 Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs. Management that is destructively critical when mistakes are made kills initiatives. And its essential that we have many people with initiative if we are to continue to grow.

Abhoy K. Ojha

Innovation Philosophy at 3M
Research is the transformation of money into knowledgeInnovation is the transformation of knowledge into money Innovation is not an accident
It is the product of a complex set of principles and practices which support and encourage the coupling of technology and creativity to satisfy customer needs.

It is accomplished by people
Leaders who give permission and encouragement Staff who work with determination and imagination Customers who provide input and feedback to the process
Abhoy K. Ojha

Support for Innovation

Explicit top management commitment to innovation 15 % time on projects of own choosing Failure is not fatal/ Often turned into success (Post It) Management sponsors for projects Dual-ladder system of promotion (pure technical role) Target of 30% of global sales from products introduced in the past 4 years (it used to be 25% in 5 years) Small divisions (despite loss of economies of scale)

Abhoy K. Ojha

Nurturing New Products

High R&D spending
over $ 1 billion in 2001, $ 1.4 billion in 2008, $1.3 billion in 2009, 1.43 billion in 2010 $ 7.02 billion in last 5 years
About 6% of sales

R& D at three levels

Division - products Sector long term platform technology Corporate basic research

Formal and informal forums

Abhoy K. Ojha

Golden Step Program Carleton Society Cross-functional teams (initially volunteers) Product champion (initial idea provider) Management Sponsor (not necessarily from division) Send lab people to the field (field people to lab)

Abhoy K. Ojha

Structure
Roles
Idea Generator
primarily technical recruits early in the career (rarely go for lateral recruits) 15% time not linked to operational work

Sponsor
General Managers General Managers of other divisions (matching grant from Head office)

Orchestrators
Top Management Top Manage
Abhoy K. Ojha

Differentiation
Project team consists of volunteers (15% time) After initial clearance multi-disciplinary members full-time

Reservations
Several R& D labs (32 international) University projects

Abhoy K. Ojha

Processes
Funding
Each GM has funds GM can fund project in other divisions Genesis grants up to 50,000 to take projects past idea stage

Getting Ideas
seminars/conferences 15% free time burden of proof on questioner

Abhoy K. Ojha

 Blending Ideas after initial stage, multi-disciplinary team necessary head office matches grants from other divisions

Transitioning
idea generator stays with project, finally becomes GM

Managing Programs
keep divisions small ($200 m sales) R&D at three levels

Abhoy K. Ojha

Reward Systems
Rewards for individuals and team
15% free time team membership voluntary financial rewards membership of Carlton Society follow and manage the project to completion. team returns to old position in case of failure

Abhoy K. Ojha

People
Rely primarily on engineers hired out of college Local hiring Internal career paths, rare lateral hiring Failures accepted Peer review

Abhoy K. Ojha

CAN SOME OF THESE FEATURES BE TRANSFERRED TO ORGANIZATIONS IN THE INDIAN CONTEXT?

Abhoy K. Ojha

3M in India
In India since 1988 Headquartered at Bangalore 5 Manufacturing facilities at Ahmedabad, Bengaluru, Pondicherry and Pune. 3M India Innovation Center

80+ Technical Personnel plans for further growth Based in Bengaluru, Gurgaon, Pune and Ahmedabad Serve all 6 of 3Ms Big Businesses Localization and Local Product Development for specific Indian market needs Cross-functional and Cross-Country Collaborations for CustomerCentric Solutions Development

Abhoy K. Ojha

Abhoy K. Ojha

WHAT DO YOU THINK 3M SHOULD DO IN THE FUTURE?

Abhoy K. Ojha

Questions?

Abhoy K. Ojha