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Innovation at 3m

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Question 1: How has 3M’s innovation process evolved since the foundation of the company? Why, if at all, does 3M, known as a ‘hothouse’ of innovation, need to regain its historic closeness to the customer?
- The big winners are those who match new, marketable ideas with customers before anyone else can. It takes flexibility and creativity and willingness to risk.
- In 1902, 3M was founded as Minnesota Mining and Manufacturing by five northern Minnesota entrepreneurs.
- Their idea was to extract a mineral from shores of Lake Superior. The partners believed the mineral was corundum, an ideal substitute for garnet, the mineral abrasive found in grinding wheels used by furniture makers.
- Each partner put in $1000 and started their venture in Two Harbours hoping to find the mineral and possibly gold.
- The initial idea of incorporated first, investigated later. The company sold shares and made plans to start mining before they were even certain they had customers.
- When Hermon Cable travelled to Chicago and Deitroit to get the mineral tested with potential customers to find a “fairy satisfactory” results. However, he encouraged the other four partners to go on with the project.
- Two years after the founding of the company, 3M sold the first batch of minerals. The product was not corundum but anorthosite, a soft mineral that is inferior to garnet.
- Everything was tumbling down from here: the suppliers wanted their money back, the company could not sell shares to raise fund for operating activities, and the employees were owed wages.
- Two investors, Edgar Ober and John Dwan, having great faith in the company, stepped forward and bought 5000 shares in 3M.
- 3M partners at this stage had been working with no pay, but still held high hope in the business. They were credited for having remarkable faith and tenacity and strong work ethic.
- In 1904, when they could not sell the minerals and had no money to run the business, the founders came up with an idea of manufacturing the finished goods themselves instead of supplying the raw materials.
- (they changed the course of action)
- The partners had no knowledge of the grinding wheels business and at the same time a product invented by Edward Acheson called carborundum was very popular with the grinding wheel manufacturing field.
- A year later, the partners abandoned the idea and decided to focus on making sandpaper. They needed $40000 to pay its debt and start up the new project.
- Lucius Ordway, a friend of Ober, was contacted and decided to put in $25000. He had since then been supporting the business with much needed funding and keeping the business afloat.
- Since 3M had no domestic source of minerals, they found a source of Spanish garnet in 1905 and received their first shipment in 1907.
- The concept of patient money was introduced at this time – represent long term investment in an idea, technology, or product that shows promise, even when others argue otherwise.
- In 1910, Ordway acquired property to move 3M from Duluth to St. Paul where a construction of a new sandpaper plant occurred.
- The company started out with a worthless mineral, then virtually no sales, poor product quality and formidable competition. What had kept the partners going was just perseverance, a spirit of survival and optimism.

- 3M faced a long winding road when another disaster struck. The newly built plant collapsed when the raw material was loaded in the store room.
- After getting the plant restored, they faced a new issue with customers complaining about the quality of their products.
- 3M recognised the importance of quality assurance when McKnight, a sale manager of 3M, met with their customers to find out what the problem was. They later found out that the garnet during the shipment had been contaminated with olive oil that caused the poor quality of the sandpaper.
- 3M was left with 200 ton of oily garnet and a pack of angry customers. They later found a way to resolve the issue by cooking the garnet to evaporate the oil off the mineral.
- In the meantime, their competition, the Carborundumcompany of Niagara Falls New York, introduced a cloth coated with an artificial abrasive as a substitute for emery cloth used in the auto industry. 3M immediately manufactured a similar item called, Three-M-ite cloth.
- The Three-M-ite cloth became 3M’s first profitable product, 12 years after the founding of the company.
- Their competition sued 3M for patent infringement. 3M hired a tough lawyer and won the case.
- 3M finally achieved substantial profits and declared its first dividend of 6 cent per shares in 1916, totalling to $13,497.

- Innovation in 3M:

- After finally getting the company back on track and maintain a stable revenue, 3M’s president, Mr McKnight, recognising the importance of having a strong technical personnel who can lead and manage the company’s researching, manufacturing and engineering activities. Joining 3M in 1921, Richard Carlton had become the first lab staff with a college degree.

- Probing the impossible:

o In 1921, the response of 3M’s president to an unusual request from a young printing ink manufacturer, Okie had resulted in the introduction of 3M’s new product, called Wetordry. Okie invented the waterproof sandpaper but unable to find a reliable supply of raw material and obtain financial support. He agreed to sell his idea to 3M and joined the company after being contacted by 3M’s East Coast sales manager, Robert Skillman. o This product later gave 3M an important entry into the automotive marketplace

- The irresistible force:

o Dick Drew had an instinct that compelled him to push beyond reasonable limits and in some cases unreasonable limits. He was an irresistible force drawn toward any immovable object ( Lew Lehr, retired 3M chairman and CEO) o Drew’s irresponsible promise to solve a problem he saw in a local auto-body paint shop has led to the debut of 3M’s new product, the contraband Scotch masking tape in 1925.
- The dream team o The trio that joined 3M in 1921 shared characteristics that set the tone for 3M’s innovative climate. o Carlton was an optimist, go-getter, calculated risk-taker and a leader. Drew was unconventional, innately curious, a rule-breaker and also a leader. Okie was a consumable inventor; open to new ideas, resisting limits and probing the impossible.
o…...

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