Innovation At 3m

INNOVATION AT 3M

“IF THE OUTER APPEARANCE OF THINGS MATCHED THEIR INNER NATURE, THERE WOULD BE NO POINT TO SCIENCE” - GALILEO

Rubini, Nikunj & Madhuvanthy

Facts

 Company: Minnesota Mining and Manufacturing Company (3M)  Formed in 1902  Nature of business: Conglomerate        

Tape products Abrasive products Automotive and chemical products Connecting and insulating products Consumer and office products Health Care products Safety and personal care products Other products 2

Facts contd …

 Operates in 60 countries  Highlights of the company: – Places heavy emphasis on R & D (7% of every

sales dollar spent on R & D) – Has nearly 6500 scientists, engineers and technicians (figures as of 1997) – Revenue – $ 15.07 Bn* – Operating Income - $2.7 Bn*

* Figures as on 1997. Half of the revenue and operating income comes from overseas. 3

Facts…

 The case discusses: – New methodology for customer needs

research  Lead User Research – The market research teams’ idea of upstream containment and the feasibility of implementing the same

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Innovation at 3M

 Technical individuals were behind making new products. Process engineers involved for feedback on manufacturing capability  Market input– Current customers – Customer evaluation of – – – –

currently marketed products Sales representatives Focus groups- Market researchers at 3M Market research firms On site visits by 3M scientists & technologists 5

The need for new mode of customer needs research

 Disadvantages – Information was not necessarily proprietary – Focus groups failed to give clues on market

needs, 5 to 10 years down the road – Customers – Blind about own needs, no new insight on revolutionary products – The product developers never assumed ownership for understanding customer needs Ergo, a need for a new method to understand the latent demand arose 6

The lead user research for Medical Markets Division

 Premise: “Certain consumers experienced needs ahead of other consumers and that some of the former would seek to innovate on their own- Lead users”  The lead user method benefits – Richer and more reliable information – Better product and service concept – Acceleration of the product and service

development process 7

 Mandatory elements for the success of this approach – Supportive management – Use of a cross disciplinary team of highly

skilled people – A clear understanding of the principles of the Lead User Research

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Lead user research stages

 Stage 1- Project planning (4-6 weeks) – What

Identify the type of markets and the new products of interest and the desired level of innovation – How Informally interviewing industry experts, customers, suppliers, internal company managers

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Stage I @ 3M

 Team met 4 hours each week  Discussed questions like ”What do you know about this market? What don’t you know? How about reimbursement policies? How important is the skin itself as a source of infection?”  Findings: – 30% of infections occurred from the patients own skin – This highlighted the need for good surgical drapes

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Stage I

 Trends or needs Identification (5-6 weeks) – What

Identify specific need related trends to focus upon for the remainder of the study – How Digest information collected in stage 1 Helps in understanding major trends, helps the team in framing a customer need that can be addressed by a product or service 11

Stage 2 @ 3M  5 day workshop  Developed parameters for a breakthrough product – It should conform to the body – Prove more effective than the current products – Should be easy to apply and remove

 MASH unit: Was considered a potential lead user – Reason: It has needs for portable, inexpensive and

flexible products

 But MASH was not a Lead User 12

Stage III

Preliminary concept generation (5-6 weeks) Having selected the area of focus, the team – Starts generating preliminary concepts – Informally assess business potential product/service

being conceptualized – Continues interviewing lead user experts – Meets Key Managers to confirm that identified needs and initial concepts fit well with important interests

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Stage III @ 3M

 Realized there was more potential in developing countries than in developed countries  2 groups of product developers traveled to visit potential customers.  Fact finding trip lengthened stage 3 duration  Visits yielded invaluable information but it did not turn up to be experts on lead use in terms of product efficacy  Team found no single lead user who proposed 3M specifications that the breakthrough product would need  Challenge: To pool together the combined knowledge and talent of this diverse array of knowledge to develop product concepts 14

Stage IV

Final Concept Generation (5-6 Weeks) The team  Takes the preliminary concepts developed in Stage III towards completion  Alternatives product concepts are generated  Evaluation of concepts- technical feasibility, market appeal and mgmt priority  Finally arrive at the most commercially promising concept and develop recommendations

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Post-Workshop Refining preliminary concepts based on the knowledge  Presentation of the proposed products/services covering design principles and justifying why customers would pay for it.  1 Member of the Lead User Team remains involved for the further steps 16

Stage IV @ 3M

 The new Business Unit Manager believed in traditional market research  He had a mandate to “stop the hemorrhage of profits and reconsolidate the division”  By reducing one member from the Lead User Team, he made his opposition clear

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Challenges faced by Group-Members and Facilitators

1. Lack of structure in many corporate meetings 2. Introverted and Extroverted Participants 3. Finding ways to marry very creative ideas with technical feasibility 4. Navigating a sea of facts

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Metrics for evaluation of product development concepts

 Customer preference for the new product  Creation of new growth for the division & Creation of new businesses and industries that could change the basis of competition for the business unit  Higher growth for the rest of 3M through incorporation of proprietary 3M technology with patent protection

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Recommendations

The team ended up with 3 product recommendations 2. The Economy Line 3. The Skin Doctor Line 4. The Antimicrobial “armor” line 5. Evolution or Revolution

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4. Evolution or Revolution

 Include upstream containment of infections  This requires sophistication like combining technologies from more than one core area(s)  Asks for combining technology from medical surgical division with diagnostics  MSD- Core; Diagnostics- Area which lacks depth 21

Market Research Aspect

 Various forms of market research have been discussed in this case – Data from sales representatives – Focus groups – Current evaluations of currently marketed products – Site visits by 3M scientists and technologists – Data on risk factors for diseases  The case also discusses other ways that can be used in market research – Lead user research 22

HR Aspects

 Change Management – The case talks about getting the support of the team

members and the management (Post lead user method implementation)

 Need for a structure in meetings to enhance proper communication  Increased presence of introversion among participants  Need for a proper succession planning- Wrong selection of BUM

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Our recommendations

1. Develop the fourth recommendation into a structured concept, patent it and sell it to other health care companies. Advantage: A possible source of revenue 2. Continue with the existing 3 recommendations that came out of the meeting 3. Do not solely depend on the lead user method, supplement it with the other traditional market research methods

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Other Learnings from 3M

 By-passing purchasing agents to understand customer needs  Motivated innovation by giving grants and awards (15 % time on innovation)  Dual-ladder  Inclusion of process engineers to under the feasibility

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