New Product and Process Innovation

1. “Leading Through Innovation”
Roberto Castillo
Jenilee Kilbury
April 2, 2013
MGMT-762 1

2. Company Numbers
• $29.9B annual sales
• R&D Expenditures
• 2012 - $1.6B
• Last 5 years - $7.3B
• Aim to invest 6% of
annual sales by 2017
• 87,700 Employees
• 34,750 in US
• 8,200 researchers
• 50% in US
• In more than 70
countries
• 40 mfg facilities
• 35 laboratories
• Products sold in nearly
200 countries
• 3,102 awarded Patents
http://solutions.3m.com/wps/portal/3M/en_US/3M-Company/Information/AboutUs/WhoWeAre/
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3. Company Business Units
• More than 35 business units under the following groups:
• Consumer – homes cleaner, offices organized and buildings
well maintained
• Electronics & Energy – telecommunications networks, high-
performance electronics and reliable sources of power
• Health Care – medical and oral care, drug delivery and
health info systems
• Industrial – abrasives, adhesives and filtration systems
• Safety & Graphics –
personal protective equipment, saftey
and security products
http://solutions.3m.com/wps/portal/3M/en_US/3M-Company/Information/AboutUs/Businesses/
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4. Competition
• Many smaller specialized companies in singular
fields of expertise
• Few larger cross-sector competitors:
• Tyco International
• PPE and Industrial Products
• SC Johnson
• Cleaning Products and Auto Care
• Johnson & Johnson
• Health Care, Medical and Oral Care
• Strategic Group??
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5. Innovation at 3M
• Innovation = Idea + Exploitation
• Trends:
• Market Research
• Products = consumer demand
• Mobile devices, medical technology and energy
• Developing nations
• Generation of new ideas focus on customer
needs
• Medical products poised for growth to meet
needs of aging population (baby boomers)
• Race for hospitals to digitize medical records
DePass, Dee. "3m Bets Big on Innovation." Star Tribune Nov 09 2012. ProQuest. Web. 2 Apr. 2013 .
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6. Innovation Culture
• Cross functional teams
• Sales, technical , manufacturing, product
development, business experience
• Freedom to create ideas and share them
• Tolerate mistake
• Comfortable with Risks
• Prioritization
• Lack of formal processes
• Reduce Time to Market
• Value and business model
• Do not kill good ideas 6

7. 3M Corporate Innovation Culture
• The 15% option
• Seed capital
• Own or Other business units
• Corporate grants
• Genesis Grant - up to $100,000
• Dual career path
• Technical or managerial
• Rewards and recognition programs
• 12 Global Programs
• 4 US Programs
Studt T. 3M--Where Innovation Rules. R&D Magazine [serial online]. April 2003;45(4):20
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8. Product Cycle Development
• Prioritize ideas
• Make a prototype
• Numerous prototypes, trial and modification
• Manufacture the product
• Six sigma
• Generate Sales
• Distribution Channel which must suit the
customer
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9. NPD Process Basics
• Match customer needs
• Increase barriers to entry
• Product should not be easily imitated
• Be simple and cost-effective
• Have fast time to market
• Have robust designs and good quality
• At 3M:
• Lead User Approach
• Enterprise Growth Teams 9

10. Lead User Approach
• Customer driven, but NOT
• Focus groups
• Sales data
• Customer complaints
• Collect information about needs and solutions from
the leading edge of the target market
• Similar problems in more extreme form
• Adapt lead users ideas to their own business needs
Von Hippel E, Thomke S, Sonnack M. Creating Breakthroughs at 3M. Harvard Business Review [serial online].
September 1999;77(5):47-57
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11. Lead User Approach
• Lead Users – “companies,
organizations, or individuals that
are well ahead of market trends
and have needs that go far
beyond those of the average
user”
• Advantages:
• Lead users are not competitors
• Willing to share knowledge
• Lead users need the technology
• No cost to 3M (usually)
Von Hippel E, Thomke S, Sonnack M. Creating Breakthroughs at 3M. Harvard Business Review [serial online].
September 1999;77(5):47-57
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12. How does it work?
Cross-Functional
Project Team
- 4-6 people
-Marketing and
technical depts.
-One project leader
Laying the Foundation
-Identify target markets
-Type and level of
innovation desired
-Stakeholder approval
Determining Trends
-Talk to experts with a
broad view of emerging
technologies and leading
edge applications
Identify Lead Users
-Gather info via
networking
-Identify especially
promising ideas
-Shape prelim ideas and
assess business potential
Develop the
Breakthrough
-Move prelim concepts
toward completion
-Workshop w/ lead
users and team
members
Commercialization
-Finalize concept
design
-Commercialize with
management
approval
Von Hippel E, Thomke S, Sonnack M. Creating Breakthroughs at 3M. Harvard Business Review [serial online].
September 1999;77(5):47-57
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13. Enterprise Growth Teams
• Goal: Finding new customers-driven applications
for existing 3M technologies
• Cross functional Team
• Time to develop a new product
• 3 to 6 months
• Incremental Innovation
• Problem identified in one industry, able to find
solutions from current technologies in another
industry
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14. Applying Current Trends to New
Applications
• Clear Credit Cards
• Credit Card company wanted a unique
transparent card design
• Used technology of their optical films to
block IR light without blocking visible light
http://solutions.3m.com/innovation/en_US/stories
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15. Applying Current Trends to
New Applications Cont’d
• Micro-needles
• Micro-replication pattern used in reflective street sign
• Small painless patch of hundreds of micro-needles
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16. Applying Current Trends to
New Applications Cont’d
• Auto Body Filler
• Mixing process is done by hand – wasteful, inefficient
and messy
• Scaled up the Pentamix system used to mix putty for
dental impressions
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17. How does 3M win?
• Agile
• Flexible
• Tolerate risk
• Allow mistakes
• Quick to market with new products
• Protect their products
• 500 Patent Applications/year
• Trademarks
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18. Conclusions
• 3M’s Strengths
• Work closely customers to find trends in new markets
• Creative Corporate Culture to motivate innovation
• Fast development and time to market
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19. Our Recommendation
• What would we do?
• Increase R&D spending by implementing efficiency
initiatives to reduce costs in manufacturing and supply
chain
• Encourage more collaboration among R&D
departments from different industries and markets
• Encourage radical innovation
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20. Do you have any question?
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21. Thank You
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