1. Describe the organizational structures and devices 3M uses to encourage entrepreneurial activity. Why do they work? 3M heavily based its business on innovation and while doing this it always supported its employees in terms of being innovative. 3M also always followed the alternative ways in order to increase their profit and market share, and they found that one of the best ways is through organizational innovation. Therefore, in order to improve their business 3M developed 6 different strategies over its history.
These strategies helped 3M to promote entrepreneurship and increase customer satisfaction within the market.
First strategy of 3M’s was getting close to customers and understanding their needs.3M started their businesses by selling sandpaper and the only way they could generate sales was by getting close to the customers and demonstrating their products for them. This helped them to understand customer’s needs better based on the feedbacks they get from demonstrating their products to this selected group of customers. Afterwards, as a second strategy they tried to seek out niche markets no matter how small they are.
Following the success of the first strategy, 3M found that if they offered customers what they wanted, these customers will be loyal to their company. Thus they developed the second strategy to seek niche markets no matter how small, as this will allow them for charge premium prices for their products. Then they included product diversification as the third strategy. By being close to the customers, 3M identified problems that they can solve for their customers through technical expertise.
This was efficient as it ensure that they continued to diversify their product offerings by developing new products to solve new or unattended customer needs.
Once 3M found a new product to offer in their niche market they would move on to develop related products and thus occupy leadership positions in these markets. As the fourth strategy, they gave importance to the product development and innovation through research. This strategy was developed in line with the third strategy which was encouraging diversification. If 3M where to constantly diversify their product and service offering, the company understood that a support to its system is needed along with improved innovation and new product development to ensure that the company continues in line with their business model.
As it is very important in any kind of developing business and as by time 3M gained a good place in market, they decided to get knowledge sharing strategy as the fifth one. This became official with the establishment of the technical forum in 1950s, with the aim of sharing knowledge within the company. This forum comprised of technical council and directors that held annual shows to encourage knowledge sharing in 3M. And lastly, as the sixth strategy they decided to adopt encourage achievement through a rewarding system. This strategy was adopting an employee appraisal scheme that was encouraging achievement by rewarding employees who generated successful business ideas. Employees that successful innovate new products are promoted to be the managers of that product division, this ensured that other staff members are motivated to work harder and discover new product innovation as they seek to one day become managers of their developed product lines.
2. How does 3M distinguish between incremental and fundamental innovations? 3M established a new product development central research laboratory in 1940 in other to distinguish between fundamental and incremental innovation. This approach helped the company to explore the feasibility of new products or technologies that were not related to existing ones. Incremental innovation means innovation made based on existing products and technologies while fundamental innovations are those that are not related to existing products or technologies.
In the 1980s, two separate laboratories were developed in order to identify the long term and the short term researches. Short term researches were more of incremental innovation that were designed to respond to industrial and consumer needs, life science, electronics and information technologies and graphic technologies with a life span of 1-5 years. However the corporate lab was designed for fundamental innovations with researches of over 10 years. 3. Describe, as best you can from the case, the culture of the organisation. What does this depend upon?
3M based its success on entrepreneurship fundamentals and innovation. Innovation was encouraged originally in an informal way by the founders, but was later formalized over a century into an organizational culture. The organizational culture is one which encourages innovation, and it has helped 3M to realize success over the years as it was perpetuating itself. Actually this specific culture of 3M’s evolved from the place of origin which was called ‘Minnesota Nice’. It is described as a non-political, low ego, egalitarian and non-hierarchical, hardworking and self-critical. 4. Why has 3M been such a successful innovator for so long?
3M’s success in innovation can be traced back to their employee appraisal. This is because; the organization has found the missing link which numerous organizations tend to overlook when it comes to showing appreciation towards employee’s efforts. 3M is achievement oriented and achievement particularly through research was rewarded through promotion. For instance, successful new product teams were spun off to form a new division in the organization. The leader of the team is often the general manager of the new division and this w as seen as a great motivator. Lesser achievements were also rewarded and failure is not punishable. This increase in 3M employees’ motivation level has been the key to their long term success as their staffs continually give out their best for the organizational success. 5. Can other companies just copy 3M’s structures and culture and become successful innovators also?
It is very popular among firms to copy the other firms’ ideas if these other firms are especially profitable. It can be said that if properly copied, organizations that copy 3M’s strategies and culture can be successful innovators as because, 3M’s culture generally employee appraisal and in business psychology. It can be said that the appraisal has been rated high as increasing employee’s motivation level and enhancing organizational success.
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