1 Introduction – A Century of Innovation

3M is a global diversified materials science company and a powerful,

diverse and integrated enterprise. Although 3M identifies its core

competency simply as “applying coatings to backings”, the company’s

operations extend far beyond this. 3M, famous for its consumer brands

such as Scotch® Tape and Post-it ® Notes, also creates thousands of

industrial products used by manufacturers and service providers to create

their own products.

From its beginnings in 1902 as Minnesota Mining and Manufacturing, 3M

has grown to achieve sales revenue of $US25.3 billion and an operating

income of $US3.5 billion in 2008. The company has over 79,000 employees

with approximately 13 percent employed directly as technical staff. As

a truly global presence, 3M services almost 200 national markets, and

operates subsidiary companies, such as 3M Australia, in more than 60

countries. Almost 64 percent of 3M’s entire sales revenue originates from

international operations.

With a vision “to be the most innovative enterprise and preferred supplier

in the markets we serve”, 3M prides itself on its history of innovation –

reinforced through its brand promise, “practical and ingenious solutions

that help customers succeed”.

Key values underpinning 3M’s continual success include its commitment to:

• Satisfy our customers with superior quality and value

• Provide investors with an attractive return through sustained, high-

quality growth

• Respect our social and physical environments

• Be a company employees are proud to be part of.

3M has 45 core technology platforms ranging from adhesives,

and wound management. The 60,000 products developed through

these technology platforms satisfy consumer needs in six market-

focused businesses.

New product development and innovation are the cornerstones of

3M’s continued success. According to the Australian Bureau of Statistics,

innovation is: “The process of introducing new or significantly

improved goods or services and/or implementing new or significantly

improved processes”.

3M celebrates its long history of innovation by turning innovators into

company legends. In 1925, Dick Drew famously visited a customer’s auto

production plant and discovered that the growing demand for two-tone cars

meant that workers needed a solution to create cleaner paint lines. After

some research, and testing, a new product – masking tape – was born.

Product development occurs when investment in research and development

leads to new and innovative products. This usually involves phases

such as idea generation, testing, engineering, prototype creation,

commercialisation, manufacturing and marketing. It can take many years

for a product to reach the market and product development also represents

significant capital investment; hence 3M uses the term, ‘patient money’.

3M adds 500 innovative new products every year to its 60,000+ product-

line. Many of these products are ground-breaking, newly-invented products,

unique in the marketplace and protected by patents.

2 What is innovation?

3M prides itself on being a customer-focused organisation. “We understand

our customers’ expectations and make sure that we exceed their

products and recommend you to others.”

The customer-focused organisation is an important part of continuous

improvement and Total Quality Management (TQM). A TQM organisation consists

of a number of interdependent internal stakeholders or customers. These

individuals, groups, departments and units supply to, and rely on, another

individual, group, department or unit within that same organisation. These

internal customers combine to improve quality throughout all processes and

create better quality output for the end-users; the external customers.

3M first used microreplication technology back in the 1960s to improve overhead projector

lenses and in doing so learned more about optics and optical lenses. Over the next 40 years the

results of this innovation flowed on to all sorts of areas...in traffic lights, lane markers, X-ray

scanning, LCD film, electronics and more.

This philosophy of 3M applies equally to internal customers, demonstrated

through the interdependence of its 45 technology platforms and diverse global

operations; as well as to external customers.

Each of the three broad categories of innovation applies to 3M.

1. Innovation in goods and services occurs when

new and improved goods and services are

developed or where new uses are found for

existing goods or services.

2. Innovation in operational processes occurs

when organisations implement significant

positive change in their methods of production

of goods and/or services.

3M describes the four fundamental reasons

driving innovation as; personal satisfaction,

competitiveness, growth and survival. New products

innovation into all of its operations. 3M’s innovation

is the deliberate product, “...of a complex set of principles and practices which

support and encourage the coupling of technology and creativity to satisfy

customer needs.” It is also no accident that 3M, a company driven by cutting-

edge technological innovation, believes that successful innovation is in reality

accomplished by its people.

3M’s senior management empowers employees to work with determination

and imagination to create innovative solutions. Customers are consulted so that

they can provide input and feedback to the process of innovation and product

development. This commitment to inclusive leadership resulted in 3M ranking

No. 1 on Chief Executive magazine’s 2008’s Best Companies for Leaders list.

A further strength of 3M’s organisational structure is that 3,000 of their 10,000+

technical employees are located outside the USA. These technical employees

work in research-based laboratories in 34 countries or in Customer Technology

Centres in 30 countries. The result is a highly-skilled global workforce uniquely

positioned to create proactive solutions in response to specific customer needs.

This localisation of innovation is demonstrated through 3M’s diverse research and

development centres; optical manufacture and testing in Poland, electronics in

Japan, water filtration in India and dental products in the UK and other markets.

3M provide locally-based product development resulting in customised solutions

that subsequently result in global replication through the entire company.

To support innovation, 3M allocates 6-7 percent of its entire sales revenue

($1.4b in 2008) to research and development. This heavy investment also

means that staff can devote 15 percent of their work time to self-directed

projects. It is no surprise that the company was ranked World’s 4th Best

R&D Company in 2007.

One of the most celebrated aspects of 3M’s entrepreneurial workplace culture

is the 15 percent rule that encourages employees to explore and work together

to generate ideas. Product development is driven by the cross-fertilisation

of ideas and new technologies shared across the entire company. “Products

belong to divisions, but technologies and ideas belong to the company.” 3M has

developed six principles of innovation to support this culture.

Build a Vision

Effective leadership means that employees understand the importance of

achieving 3M’s vision. Innovation is a cornerstone of 3M’s self-image and

the company prides itself on a culture of success stories by celebrating the

achievement of its people. The importance of innovation is communicated

and reinforced which replicates success.

Foresight

It is vital to, “...anticipate the structure of the future before it arrives.” 3M can

solve articulated needs, whereby the customer knows and communicates what

they need; as well as unarticulated needs, whereby 3M proactively provides a

solution for a problem that the customers don’t yet realise they have!

Going beyond

3M sets goals to challenge their people to strive for significant improvements.

One objective is to generate 30 percent of all sales from new products

introduced in the past four years. However 3M’s commitment to stretching goals is demonstrated
through an additional objective; to cut the time for new

products to reach the market by a further 50 percent.

Empowerment

Back in the 1940s McKnight said, “Hire good people and leave them alone”, and

this philosophy is still paramount. 3M’s management believes that employees

need freedom to achieve their goals. Empowered employees are given both

responsibility and accountability for key tasks. The company trusts employees,
provides direction, support and resources, with minimal interference. This

collaborative management style is effective when dealing with intrinsically

motivated and highly-qualified professionals.

Communication

3M feels that successful people need to work with others. Management

communicates the vision, employees communicate opportunities to management

– the dialogue extends into multiple channels throughout the organisation.

3M use technical forums, trade fairs and conferences to encourage networking

and ideas sharing. Staff use part of their 15 percent self-managed time to help

people from other areas. Networking occurs internally across platforms and

externally through customer feedback and joint ventures. Staff can be transferred

locally and globally and apply their particular expertise on projects. This adds

value by sharing both expertise and the experience of 3M’s diverse global culture.

Rewards and recognition

3M believes that the most effective type of reward is recognition through

technical and corporate awards and promotions. 3M’s celebrated Innovator

Award is given to individuals who use their 15 percent self-directed work time to

develop a new product or technology. The highly prestigious Circle of Technical

Excellence honours extra effort, motivation and creativity.

3M have a dual career structure that maintains parity between technical and

corporate staff. Outstanding technical employees can be promoted into positions

such as Corporate Scientist or they can move into management with the same

opportunities for salary, benefits and other privileges. This encourages top

performers to stay with the company.

4 Creating innovative applications

The Australian passport is the most widely held identity document used in the

Australian community. Over many decades the Australian Government, through

the Department of Foreign

Affairs and Trade (DFAT)

producing high quality,

innovative passports that

are recognised as being

amongst the most secure

in the world.

Since the early 1980s

3M has worked

collaboratively with

DFAT to deliver a series

of unique laminates

that secure the data

page against fraudulent

alteration. The data

page contains the

holder’s personal details,

signature and facial

image. To manufacture

security laminates, 3M

leverages a range of

core technologies and processes including adhesives, vapour coat processing, optics, moulding and

specialty materials.

In the early 1980s, the practice was to adhere a photograph of the passport

holder to the data page and cover it with a security laminate. While best practice

at the time, it was open to the risk of fraudulent photo substitution. DFAT, in

partnership with 3M, innovatively applied advances in digital printing technology

to issue a passport with a colour facial image and signature digitally printed

into the passport, a world first in passports. This evolution occurred over three

phases, Dawn I, Dawn II and Dawn III.

zone (MRZ) and was successfully introduced in 1985. It was the first passport

in the world to achieve 100 percent reading accuracy in the MRZ and set a new

standard. A patent was lodged on behalf of the Australian government to cover

what became known as ‘reverse imaging technology’ and 3M were engaged to

commercialise the technology.

Dawn II used the reverse imaging technology to directly image a black

and white photograph into the reverse side of the laminate, a world first for

DFAT and 3M.

Dawn III built on the technology developed in the preceding phases of the

project and culminated in the first passport with the holder’s facial image and

signature digitally printed in full colour being issued on the 4th May 1994. The

3M laminate also contained new covert security features including images of

the Australian Coat of Arms, which were visible under coaxial light, and three

stylised kangaroos securing the signature label and a corner of the facial image.

These innovations were another world first for DFAT and 3M and significantly

reduced the security risk of photo substitution and data alteration.

In 2003, the next generation of 3M laminate allowed DFAT to add the first

‘floating image technology’ seen on passports. Lasers were used during

manufacture to create images of kangaroos and emus within the laminate

that appear to ‘float’ above and sink below the surface as the page is viewed

from different angles.

In 2009, the 3M laminate was redesigned and enhanced to incorporate a

continuous Australian wave pattern visible only under UV light. Today, this is one

of the key features used by border control authorities to validate the integrity of

the passport.

5 Conclusion

3M has emerged as a global leader in providing practical solutions and is

home to some of the world’s most recognisable brands.

stems from the quality of its people. 3M has a diverse global workforce of

naturally inquisitive and highly-trained technical specialists that is supported

throughout the entire corporation by a progressive and people-centred

management philosophy.

3M delights both in reinforcing the principles laid down by some of its key

early executives and also celebrating the ongoing success of its current staff.

With a continual emphasis on innovation and product development 3M is

committed to finding solutions for its diverse group of customers. Management

is also committed to encouraging and supporting staff in their pursuit of

excellence. The company attributes much of its success to the 15 percent rule

which allows staff to search for proactive solutions for difficult problems.

For a company whose core competency might be described as ‘making things

stick’, 3M has developed an innovative entrepreneurial workplace culture that

its stakeholders seem more than happy to be stuck with.