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3M Optical Systems: Managing Corporate Entrepreneurship

Submitted by:

GROUP 6

Padilla, Rachelle Pangader, Abdul Najib P. Penallosa, Mary Ann Pizon, Rosjeb Ravanera, Aaron Sumanpan, Hester Lee

WRITTEN ANALYSIS OF CASE (BA 115)

I.

PROBLEM Mr. Andy Wong is in a dilemma on whether he should support an investment request for a third attempt at launching the privacy screen project developed by the struggling Optical Systems Unit.

II.

POINT OF VIEW Andy Wong

III.

OBJECTIVES 1. To be able to come up with the right decision whether to support, postpone or reject the re-launch of the product. 2. To strike a balance between two important corporate objectives that is, Profitability and Innovation

IV.

AREAS OF CONSIDERATION Corporate Culture and Philosophy 1. Over the years the corporation place great importance at building the company’s core technologies and creating an environment in which people could draw on them to innovate. 2. Creating innovations at current technologies is very important to the organization as exemplified by the “15% Rule” which allowed employees to devote up to 15% of their time on non-program activities that were related to innovative ideas they believed could be of value to the company. 3. Because of the economic downturn in the 1980’s, the organization imposed more discipline, coordination and control on their increasingly diverse and widespread business. It requires all divisions to “do more, faster with less” which put the company on a

competitive strategic position not only to develop differentiated products but also to create a product that could defend its market position. 4. All employees are taught that “products belong to division, but technology belongs to the company” to ensure that various divisions help one another in bringing new inventions and innovations. 5. A company CEO introduced the “Pacing Program” which aimed at identifying, among the thousands of projects in progress at any time within 3M, the hundred or so which could “change the basis of competition” and ensuring they received the funding and

management attention they deserved. 6. Due to the decentralized structure of 3M, informal channels are common like the relationship between Andy Wong and the former Group Vice President Ron Mitsch and now SVP for Corporate R and D, who has been, through the years, an avid supporter of the OS unit.

Corporate Goals 1. Each Division in the organization is expected to contribute to the corporate objective of inflation-adjusted sales growth of 10%, pretax profit margins of 20% return on capital employment of 27%. 2. The new CEO, “Desi Desimonne” wants to protect the 3M’s legacy of innovation-based entrepreneurship, and the need to tolerate “well-intentioned failure”.

3. Most people in 3M believe that the Optical System’s unit needs to earn money for the organization.

Business Unit Related Issues 1. Optical system was created to exploit light control films using the microlouver technology. This technology has been in the organization for more than 15 years. 2. Morale in the unit is low, with many losing confidence that they could build a viable business. 3. Market research in the first two launches was limited due to budget constraints. 4. The unit was losing money since its formation in 1979 and was losing money at the rate of $3 to $5 million a year in the mid 1980’s.Because profits were reported by business unit,

everyone was aware that the OS unit was pulling down the SSSD’s overall performance numbers. 5. Mr. Rob Noirjean, the Professional Marketing Manager, launch twice the privacy screens but all of them did not meet the expectations set. 6. The new Group Vice President, Paul Guehler, emphasized that he will be giving a lot of attention to the OS Unit and stated that if OS didn’t perform, it would not be around in coming years. 7. Mr. Andy Wong, believes that he has four responsibilities which are: 1. To attract and retain good people 2....
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