CPET 575 Management of Technology - IPFWlin/CPET575_MangOfTech/2015Fall/1...Paul I-Hai Lin, Professor lin A Course for M.S. In Technology Purdue University Fort Wayne Campus CPET 575

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CPET 575 Management of Technology

Discussion and Summary Note

Reading III-12“At 3M, a Struggle between Efficiency and Creativity,” by

Brian Hindo, pp. 949-954.

From Robert A. Burgelman, Clayton M. Christensen, and Steven C. Wheelwright, Strategic Management of Technology and Innovation, 5th edition, McGraw-Hill, ISBN 0073381543, 2009, pp. 949-954.

Originally published at BusinessWeek, June 10, 2007

Paul I-Hai Lin, Professor

http://www.etcs.ipfw.edu/~linA Course for M.S. In Technology

Purdue University Fort Wayne Campus

CPET 575 Management of Technology -3M Creativity & Efficiency Lecture

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An Overview

3M Company Background

James McNerney, CEO, 2001-2005; Leadership and

Organization Changes

George Buckley, 2006- Leadership and Challenges

Inge Thulin, CEO, 2012-present; Current

management practices. What has changed as a

consequence?


http://www.ipfw.edu/~lin

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3M Company Background

Founded in 1902 by five businessmen in Two Harbors,

Minn.

Minnesota Mining and Manufacturing Company (3M).

Moved to Duluth, Minn., making sandpaper with abrasive

minerals purchased from another source.

Management Philosophy

• Encouraging individual initiative, risk-taking and the freedom to

fail, enabled 3M to manage many diverse businesses and

continue steady growth.

• Enabled company success: Flexibility, Less structured

• Produced a bloated staffs and inefficient workflow


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3M Company Background – History of

Innovations 1920-1929

• 3M™ Wetordry™ Waterproof Sandpaper in 1921

• Scotch® Masking Tape in 1924 by Richard Drew

1930 - 1939

• Scotch® Cellophane Tape - another by Richard Drew in

1930.

• Central Research Laboratory established in 1937.

• First traffic sign featuring Reflective Sheeting (Scotchlite™)

was erected in Minneapolis in 1939.

1940 - 1949

• First nonwoven product, decorative gift ribbons, vinyl

electrical tape, 3M™ Sound Recording Tape,

• 3M’s first surgical drapes (Steri-Drape®) in 1948.

etc


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James McNerney from GE Joined 3M as CEO

2001-2005

James McNerney worked for GE for 19 years (1992 to

2001), the first outsider appointed the CEO in 2001 to lead

3M

Borrowing GE strategies (Initiated sweeping changes)

Cut 11% of current workforce

Intensify the performance evaluation process

Adopt GE’s Six Sigma program (decrease production

defects and increase efficiency)

Gained strong profit during his time at 3M.

• Profits grows on average 22 percent a year

• Wall Street, Investors like McNerney’s management approach

to boosting earnings

• In 2004, sales topped $20 billion for the first time.


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James McNerney from GE Joined 3M as CEO

2001-2005

At 3M, James McNerney introduced two main Efficiency

Management Tools

• Six Sigma & DMAIC (Define, Measure, Analyze, Improve,

Control) – 5 steps of Six Sigma approach to problem solving

• Design for Six Sigma (DFSS) – support systemic approach for

new product development process so that something can be

made to Six Sigma quality from the start


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Efficiency Programs

What is Six Sigma Program

• A discipline, data-driven approach and methodology for

eliminating defects (driving toward six standard deviation

between the mean and the nearest specification limit in any

process – from manufacturing to transactional and from

product to service, www.isxigma.com

• What is Six Sigma,

http://www.ge.com/en/company/companyinfo/quality/whatis.

htm#

Key concepts of Six Sigma, at its core, Six Sigma

revolves around a few key concepts:

• Critical to Quality, Defect

• Process Capability, Variation

• Stable Operations, Design for Six Sigma


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Efficiency Programs

Lean, ISO, and Six Sigma,

http://www.nist.gov/baldrige/lean_iso_sixsigma.cfm

• Lean

Lean focused organizations extend the concepts of

waste elimination and value-added processes to

suppliers, partners, and customers.

• ISO

ISO 9000: The standards describe the need for an

effective quality system, regular calibration of measuring

and testing equipment, and an adequate record-keeping

system

ISO 9000 registration determines whether a company

complies with its own quality system.

• Six Sigma

Aims to reduce variation through statistical methods that

lower process defect rates to less than 3,4 defects per

millions opportunitiesCPET 575 Management of Technology -3M Creativity & Efficiency Lecture

http://www.isxigma.com/

http://www.ge.com/en/company/companyinfo/quality/whatis.htm

http://www.nist.gov/baldrige/lean_iso_sixsigma.cfm

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James McNerney Left 3M to Join The Boeing

Company in 2005

His departure left the company to find a balance

between “Efficiency” and “Creativity”

This paper tackles the difficulties of combining Six Sigma

(efficiency) and Creativity (innovation)

2005 to 2015, CEOs and Presidents of 3M

• 2001-2005 W. James McNerney, Jr.

• 2005-2012 George W. Buckley

• 2012-present Inge G. Thulin, Chairman of the Board,

President and CEO,

http://investors.3m.com/governance/corporate-

officers/default.aspx


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3M in 2015: Product Catergories

Electronics

Energy

Healthcare

Manufacturing

Mining, Oil & Gas

Safety

Transportation


Abrasives

Aerospace & Aircraft

Maintenance

Animal & Pet Care

Architecture & Construction

Automotive Products

Commercial Solutions

Communications

Consumer

http://investors.3m.com/governance/corporate-officers/default.aspx

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3M’s New CEO George Buckley, 2005-2012

McNerney Successors face a challenging question:

• Whether the relentless emphasis on efficiency had made 3M

a less creative company. That’s a vitally important issue for

a company whose very identity is built on innovation.

The tension that George Buckley is trying to manage --

between innovation and Efficiency– is one that’s

bedeviling CEO’s everywhere

• Innovation

Today’s idea-based, designed-obsessed economy

Explicitly encourages risk and tolerance failure

• Efficiency

Process excellence demands precision, consistency,

and serendipity


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James McNerney vs. George Buckley

Reputation Upon Arrival

• McNerney: Huge, Renowned as a GE Ober-Manager. Was

runner-up to Jeft Immelt in the bake-off to succeed Jack Welch.

• Buckley: Almost nonexistent. Cut his managerial teeth at

Emerson Electric and revived boatmaker Brunswick.

Mandate

• McNerney: Increase profitability at a company that had become

a sluggish performer and a disappointment to investors.

• Buckley: Bring back the legendary creative oomph, while

preserving the operating efficiencies McNerney won.


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Attitude toward Six Sigma

• McNerney: To remake the culture of 3M, instigated one of the

most ambitious Six Sigma drives in a corporate history.

• Buckley: Dialed back on Six Sigma regime, especially in the

research labs, while preserving it in manufacturing.

Capital Spending

• McNerney: Clamped down on profligate spending to goose cash

flow and improve operating margins.

• Buckley: Worried about underinvestment, plowed $1.5 billion

into 18 new plants or major expansions.


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Research Priority

• McNerney: Held R&D spending constant and allocated funds to

promising new markets such as pharmaceuticals.

• Buckley: Boosted R&D budget. Refocused on “core” research

and away from ancillary business like pharma.

Culture

• McNerney: Instilled a GE-like managerial sensibility.

• Buckley: Reignited the innovation machine by encouraging risk-

tasking.

Appearance

• McNerney: From central casting. Former college baseball player

is tall, athletic, and charismatic.

• Buckley: From the research lab. Bespectacled and unassuming,

has an informal “call me George” demeanor.


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Quotes from Two Complementary Cases

Six Sigma: So Yesterday? By Brian Hindo in New York,

with Brian Grow in Atlanta

• In an innovation economy, It’s no longer a cure-all.

Have it Both Ways: Ambidextrous Companies can

handle incremental change and Bold Initiatives, by

Jeneane Rae

• Three strategies for managing incremental and disruptive

innovative initiatives simultaneously

Separate the efforts. Don’t expect people running mature

businesses to behave the same as those in change of

startups.

Appoint an ambidextrous senior manager to oversee

both efforts.

Support both teams appropriately


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Lesson Learned

The balance between innovation and efficiency is not

unique to 3M. Companies everywhere strive for this

equilibrium in order to achieve maximum profit.

Where certain tools thrive in achieving certain goals,

there is no one that can adhere to all situations. Trial

and error is often necessary, but learning from others

failures can prove invaluable in the end.


Documents

CPET 575 Management of Technology - IPFWlin/CPET575_MangOfTech/2015Fall/1...Paul I-Hai Lin, Professor lin A Course for M.S. In Technology Purdue University Fort Wayne Campus CPET 575