Reference no: EM133086777
1. What sources of competitive advantage does 3M have, and is that position supported by its resources and capabilities? Please identify the tangible, intangible resources and organizational capabilities and apply VRIN framework.
2. Consider how 3M creates value through diversification. ( Leveraging Core competencies,Networking, Sharing Activities, Increase market power, Pooled negotiating power, Vertical integration?)
Case Study:
3M's Innovation Revival: How the company that bought you 55,000 products, from Scotch tape to Thinsulate, got its moio back.
3M is everywhere. That's the point George Buckley, the chairman and CEO of 3M, is trying to make as he talks about his favorite subject, inventing things. Last year, he says "even in the worst economic times in memory, we released over 1,000 new products." Apple and many others couldn't do what they do without 3M. The St. Paul company produces a mind-bending 55,000 products. Some of them you know - Post-it notes, Scotch tape, Dobie scouring pads, Ace bandages, Thinsulate insulation. But most you don't, because they're embedded in other products and places: auto, factories, hospitals, homes, and offices. Scientific Anglers fly-fishing rods and Nutri-Dog chews? Yup. They also come from 3M.
3M has long been synonymous with innovation. Founded in 1902 as the Minnesota Mining & Manufacturing Co., it has deployed a range of practices to promote out-of-the-box thinking. Long before Google gave its engineers one day a week to pursue their own ideas, 3M let its researchers do the same with up to 15% of their time. Last year, 3M introduced the first electronic stethoscope with Bluetooth technology. It allows doctors and medical students to listen to patients' heart and lung sounds as they go on rounds and then transfer those sounds to software programs for deeper analysis.
Despite such practices, many inside and outside 3M, including Buckley, think 3M lost some of its creative juice under James McNerney, the acclaimed GE alum who led the company from 2001-2005 and is now CEO of Boeing. It's not that McNerney, the first outsider to run 3M, did a poor job. The company has become sluggish, and McNerney whipped it into shape. He streamlined operations, laid off 8,000 people, and imported Six Sigma management techniques, popularized by GE, to analyze processes, curb waste, and reduce defects. Earnings grew, margins improved, and shareholders cheered. But the efficiency gains came at a price. Scientists and engineers griped that McNerney, an MBA, didn't understand the creative process.
Why is that important? Because as 3M's older products grow outmoded or become commodities, it must replace them. "Our business model is literally new-product innovation", says Larry Wendling, who overseas 3M's corporate research. The company, as a result, had in place a goal to generate 30% of revenue from new products introduced in the past five years.
By 2005, when McNerney left to run Boeing, the board turned to Buckley, now 63, who had demonstrated his business chops as CEO of Brunswick, an Illinois company known for bowling gear and boats. But the most important thing to know about Buckley, a Brit with a PhD in electrical engineering, is that he's a scientist at heart who has several patents to his name. In other words, he's a good fit for 3M. "This is to me an engineer's and scientist's ToysRUs", Buckley says.
Buckley has laid out some clear business goals for the company. He wants his managers to protect and strengthen 3M's core businesses, like abrasives, industrial tapes, and optical film and 3M has a long history of acquisitions). He wants 3M to develop lower-cost products to compete in emerging regions. He wants 3M to be part of future growth markets like renewable energy, water
infrastructure, and mobile digital media. Above all, Buckley has been an outspoken champion of the labs. Last year, despite the recession, he kept R&D spending at more than $1billion. Although 3M has never been about inventing the Next Big Thing, it's about inventing hundreds and hundreds of Next Small Things, year after year. (Source: Adapted from Marc Gunther, Fortune, September 27, 2010)