Harvard Business School
January 3, 1995
3M: Profile of an Innovating Company
As a perennial winner in Fortune magazine’s annual poll of American CEOs to determine “The Ten Most Admired Corporations,” 3M was almost universally recognized as one of the world’s most consistently innovative companies. Indeed, Fortune described it as “a kind of corporate petri dish that fosters a culture of innovation.” In an era when large companies were struggling to reignite employees’ entrepreneurial spark, 3M was the benchmarking standard. Yet, in November 1991, as “Desi” DeSimone assumed the job of CEO in the midst of a worldwide recession, he was more focused on 3M’s uncertain future than on its glorious past. Beyond the stagnating sales and declining margins he knew would be reflected in his first annual report (see Exhibit 1), DeSimone was aware that the company faced some longer term challenges. With a portfolio of over 100 core technologies being leveraged into some 60,000 products which it sold in 200 countries, some observers were beginning to ask whether this $14 billion giant with over 88,000 employees could continue its extraordinary innovation-powered growth and expansion. It was a question that the new CEO knew he would have to confront honestly. A lot more than the continued admiration of his Fortune 500 peers depended on it.
The Beginning: Foundations of 3M’s Values
In 1902, on the basis of a report that deposits of corundum, an abrasive mineral, had been found nearby, five businessmen from Two Harbors, Minnesota invested $1,000 each to form Minnesota Mining and Manufacturing (3M). When it was learned that the mineral deposit was not commercially viable, management decided to manufacture its own sandpaper. But initial manufacturing efforts were not much more successful than its earlier mining performance, and losses continued. Things began to change only after a young bookkeeper named William L. McKnight took the place of 3M’s sales manager who had quit in frustration over the product’s continuing quality problems. By communicating directly with the 3M plant, he gradually resolved the quality problems; and by taking the product directly to customers’ front-line operations he helped develop new applications. Finally, after 14 years of losses, the company turned a profit in 1916.
Professor Christopher A. Bartlett and Research Associatee Afroze Mohammed prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1995 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
3M: Profile of an Innovating Company
The Founding Philosophy
Despite continuing struggles, 3M’s first quarter century was a vital period that saw the emergence of many of the values and beliefs that subsequently guided the company’s development. One pivotal event occurred in 1916 when McKnight, now the general manager responsible for sales and production, authorized the creation of a laboratory to deal with the continuing problems with 3M’s sandpaper. It was a tiny 6 x 11-foot enclosure staffed by a single employee, but its impact on product quality was immediate. Within 18 months a larger lab was built and the seeds of 3M’s technology-driven culture were sown. A second influential event occurred when McKnight received a letter from an ink manufacturer named Francis Okie asking for samples of every mineral grit size used for abrasives. Curious to find out why he had not written to a mineral supply house, McKnight dispatched...
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