3m Case Analysis Solution

Global Business Environment

Individual Report

(Case : 3M India: IN INDIA FOR INDIA)

2013123062 HEESO JEONG

1. How has 3M built structural and contextual ambidexterity into the organization? How do the various elements of the system support innovation at 3M?

3M is considered as one of the most innovative companies in the world. It is diversified technology company serving customers and communities with many innovative products and services that half of the world’s population today enjoys at least one of 3M’s products out of 50,000 products which are sold in the market. Their philosophy is ‘decentralization’ which prevents company being hierarchical and bureaucratic. One noticeable feature of 3M company is its high tolerance of failure. Sometimes it seems like they’re promoting failure since their main power of innovation is in trial and error. 3M company encourages employees to try creative thoughts as much as possible and guarantee them not to blame anything because of failure. We can summarize their characteristic managerial philosophy as followings: structure, process, reward and people. In the beginning, organization structure of 3M company is toward supporting innovation.

First of all, they try to keep small size of business and administrative unit. They compose of organizational structure based on function. It makes decentralized power and authority possible. Secondly, 3M company installed research and development laboratories everywhere. Each business division could have its own research laboratory. Finally, organizational role of every employees are essential for innovation. The executive champion or a mentor promotes trying innovative ideas. Executive champion is usually former product champion who was in the same situation with other employees that they understand difficulty in executing new ideas.

The second element of supporting innovation is process. 3M is famous for its 15% rule, which employees spend 15% of their time on developing products. It works off since this system encourages many employees pursue ideas they have in mind. This is proven to be effective empirically given that many famous products nowadays were born in this process. 3M also has another process that facilitates innovative ideas. For helping middle manager not to abandon ideas which worth to develop, they set 25% of the revenues in each division to be concerned latest products which introduced market less than 5 years ago. This figure differs depending on the time but basic idea is the same. The fact that many of 3M’s products came from slight modification of existing products. So they set the rule of revenues and promotes breakthrough items which are pretty new in the market. Knowledge sharing processes were an obviously part of innovation. 3M let technical council meet senior people regularly. Also interaction between 3M employees and clients were high.

The third part of innovative company is its reward system. 3M doesn’t use monetary system as the main part of rewarding system but spiritual method. The product champion and the best teamwork were celebrated. Person who were awarded as champion could potentially become the CEO of the division where he/she belongs to. The procedure is when one have an idea, he/she can take the idea to an executive champion. If accepted, it immediately started to implement that idea. If denied, it can still encourage that idea to other division or request until accepted.

Finally, last element of innovation supporting system is people. It has philosophical hiring system. People who differently and loyal to company are preferred. 3M offered dual ladder career so that they can develop their expertise in every fields.

1. Why did 3M not provide a thrust for innovation in 3M India until 2011? What has promoted the change in strategy?

        The 3M India was founded as a joint venture between Ashok Birla Group and 3M corporation. In that age, 3M’s portion (40%) was not as much as nowadays it has which is 76% of stake. Despite about 20 years of healthy growth, it only contributed 1% of 3M global revenues and even less in terms of profit. That’s when it realized they need change in strtegy when approaching to Indian market. In 2011, 3M started to notice the importance of localized, open environment, and decentralized culture at 3M India. This shift was aimed to stimulate more growth and innovation within the company. Basically the sift is about implementing 3M’s corporate architecture and culture into 3M India. As soon as it knew this fact, it renewed thrust to expand the Indian market with an strategy. This strategy accelerated development of products in India, for India, through R&D. In short, 3M India should focus on developing technologies which are unique in India market and avoid possible reverse development for other international markets. 3M India targeted to obtain 40% of revenues from new products and invested 2.5% of revenues on R&D and expect to earn %1billion gross sales by 2015. Their primary focus is explained as product development for the local market in India while sharing technical information from worldwide data. 3M India knew that price is the most important part in Indian market. The Indian market is price sensitive that overly designed products could be accepted paradoxically only if they match the price level of common needs in India. For instance, ‘Pochha’ was recreated not for technical purpose but ‘value for money’ initiative that Indian people put importance on. Also as part of implementing their strategy in local market, It localized products they have. A famous example of localized product was respirator depicted in Exhibit5. It matched all the needs Indian people had. Seeking potential new application for existing technology is another path to innovative path.