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An Analysis of 3M the Innovation Company Case Solution
3M has been recognized as one of the most innovative companies in the world. It has evolved to become a company that is known for continuously coming up with an increasing number of innovative products, which have become a part of their product portfolio. It started off producing sand paper in 1902 and evolved to become a company with one of the most diverse product offerings in the industry (Meng, 2019). The culture of innovation has been deeply embedded in the organizational culture of 3M, and this has been a central force behind such a magnificent achievement.
Following questions are answered in this case study solution
Introduction of 3M as an innovation powerhouse
Analysis of the firms competitive environment and internal resources, capabilities and strategies using various frameworks.
Innovation process, organizational strategy, systems culture and climate using various frameworks such as VRIO
How the firm is managing innovation in specific sectors.
Present recommendations for improving the innovation activities
Provide managerial implications for business executives
Answer the case questions
i. There are many examples of successful companies. To what extent is 3M justifiably highlighted as the ‘innovating machine?
ii. Explain the 15 percent rule, is it realistic for companies to implement this? Does it depend on what industries a company operates in?
iii. In the 3M case study, what is meant by the statement: ‘the message is more important than the figures’?
iv. Discuss the merits and problems with the so-called ‘15 per cent rule’. Consider cost implications and a busy environment with deadlines to meet. To what extent is this realistic or mere rhetoric?
v. Encouraging product and brand managers to achieve 25 per cent of sales from recently introduced products would be welcomed by shareholders, but what happens if a successful business delivers profits without 25 per cent of sales from recently introduced products?
vi. Some people may argue that 3M’s success is due largely to the significance given to science and technology and this is the main lesson for other firms. Discuss the merits of such a view and the extent to which this is the case.
vii. Explain how the innovation dilemma affected 3M.
Case Analysis for An Analysis of 3M the Innovation Company
2. Analysis of the firms competitive environment and internal resources, capabilities and strategies using various frameworks.
Two strategic frameworks can be applied in a relevant manner to analyze the internal and external environment of 3M. Firstly, SWOT (Strengths, Weaknesses, Opportunities, and Threats) can be used to ascertain the internal capability of the organization to respond to the competitive environment (Madsen, 2016). The strength of the organization is the culture of creativity and innovation, and its tolerance for failure. Weakness can be the lack of focus in the business strategy of the company, as it has a diverse service offering. Opportunity can be the numerous technological developments taking place, offering more opportunities for innovative product development. Threat can be an evolving start-up eco-system that can give stiff competition to the brand.
Another framework is Porter's Five Forces. It is useful in the case of analyzing the competitive environment in which a firm operates. It helps in understanding the comprehensive framework that incorporates diverse aspects of threat of new entrants and substitutes, power of buyers and suppliers, and intensity of competitive rivalry (Prasad & Warrier, 2016) (Ariyani & Daryanto, 2018). New entrants are coming in the market, particularly pertaining to the startups ecosystem, which provides a lot of substitutes in terms of the technological products they introduce in the market. A lot of technological developments are taking place in different industries that produce various options for buyers. This denotes a highly competitive culture for the industry in which 3M is operating.
3. Innovation process, organizational strategy, systems culture and climate using various frameworks such as VRIO
Innovation plays a key role in creating a competitive advantage for any firm. VRIO framework is used to understand the internal resource base to develop an innovative process and the organizational strategy for developing a competitive advantage for the firm. VRIO revolves around four key components, including value, rareness, imitability, and organization (Ariyani & Daryanto, 2018). As far as 3M is concerned, the company uses diverse technologies, numbering around 100. This enables us to come up with innovative and valuable options for its customers. Rareness is also find in the products of 3M, as their latest products account for 30% of their revenue base. The factor of imitability is always there in the technology industry, but considering the pace of innovation in 3M, this factor is not that important in the perspective of 3M. Keeping in view the organizational framework of the model, 3M has a quite effective institutional arrangement that can help implement the various innovative initiatives from its management, as it was discussed earlier that the company has an environment that facilitates entrepreneurial initiatives and creativity. Considering the VRIO framework, it can be ascertained that 3M is well suited to develop a long-term competitive advantage for its organization.
4. How the firm is managing innovation in specific sectors.
3M and innovation have a very close association. 3M has developed a highly encouraging environment for those who want to contribute towards any innovative initiatives in the company. It has been mentioned in the case that senior managers at 3M have made at least one mistake in their careers. This is because the company has a high tolerance for failures. It also encourages its employees to invest their time towards developing their inventions, relevant to the product portfolio of the company. They also invest an ample amount on the research and development activities to support the innovative process in the organization. This is the main reason behind the increased pace with which innovation has taken place in the organization.
5. Present recommendations for improving the innovation activities
It is highly recommended to have a more focused approach towards innovation. 3M has witnessed the innovation dilemma, particularly related to the creativity and efficiency in the organization. It experienced an era where it did not appropriately balance the creativity and efficiency in production. The organization worked in a highly competitive mode under James McNerney, who emphasized a lot on increasing the efficiency of the organization, drawing guidance from the 'six sigma total quality management' framework. However, it failed to maintain its effectiveness as the organization that produces 30% revenue from new innovative products.
6. Provide managerial implications for business executives
It was learned from the case that a strong culture could have a huge impact on the processes of a business organization. This has empowered the employees to add value to their professional careers, and towards the development of the organization. This also provides a strong direction for the business executives, operating in the organization.
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