[Draw your reader in with an engaging abstract. It is typically a short summary of the document.

When youre ready to add your content, just click here and start typing.]

INNOVATION at 3M CORPORATION
Product Management Case Analysis

Rahul Thampy Dilip Jaiswal Alok Shenoy Ankur Jain Ritesh Jaiswal Rohin George Thomas

12035 12076 12125 12127 12153 12157

Innovation at 3M Corporation

Table of Contents
Case Outline ..................................................................................................................................................2 Core Issues of the case ...............................................................................................................................3 Analysis of the Case facts............................................................................................................................3 Lead User Research Method- Its Potential ...........................................................................................4 Lead-user research projects: ..................................................................................................................4 Benefits and Challenges of the Lead-User Research Method ............................................................5 Product Innovation Charter .........................................................................................................................5 Recommendations by the 3M team ...........................................................................................................6 Recommendations ........................................................................................................................................6

Innovation at 3M Corporation

Case Outline
Minnesota Mining and Manufacturing Company later known as 3M has developed ground breaking products that helped them generate a revenue of $15 billion in the early 90s. The case in question is written by Stefan Thomke and was late revised in 2002 after the subject of this case was tested and its results documented. The Health Care Unit is a core component of 3Ms business model. Although, the unit was recording significant and increasing sales, it had failed to introduce a successful product in almost a decade. A senior product specialist Rita Shor has been the in charge of developing a new breakthrough product using a new and innovative market research method called Lead User Research. After many months implementing the new market research technique, Rita and her team landed on four recommendations. Three of the recommendations would see the introduction of new product lines, whereas the fourth recommendation hinged on a complete rewrite of the Health Care Units business strategy. Important themes of the case: Breakthrough products and services Lead User Research Managing change

About the Company Five business men founded 3M, formerly known as The Minnesota Mining and Manufacturing Company in Minnesota in 1902.

The firm is now headquartered in St. Paul, Minnesota initially stayed close to abrasives developed worlds first waterproof sandpaper in early 1920s. Over the decades 3M enjoyed national as well as global growth and the reputation of hothouse of innovation. 3M encouraged innovation through giving awards for innovation and in house grants for innovative projects. Company Employed Dual Ladder Approach Provide attractive career opportunities to senior, technical inclined individuals without having to switch to management. 3M model of expansion Splintering off decentralized units based on new key product areas that were sufficiently different from prior key technologies. Company objectives in 1990 Producing 30% of sales from product that did not exists 4 years earlier Greater than 10% annual growth in earnings per share Greater than 27% return on capital employed 20 25% on equity
2

Innovation at 3M Corporation

Core Issues of the case

The Health Care Unit was an important component of 3Ms business model, contributing a large percentage to the companys revenue streams. Although, the unit was recording significant sales, it had failed to introduce a successful product in almost a decade. The companys working objective was to produce thirty percent of sales from products that did not exist four years earlier. Traditional market research methods were marred with shortcomings, and have proved to be ineffective in helping the Health Care Unit understand customer and market needs. Rita Shor, a senior product specialist, with a creative mind and many years experience at 3M was tasked with developing an innovative product or process that would see unit break free of its long streak of unsuccessful products. After prolonged market research, the team comes up with four recommendations, three of them were innovative product concepts in the infection control area. But the fourth recommendation created tension in the business unit as it involves a departure from the current strategy statement.

Analysis of the Case facts

Based on the new core product technologies, the 3M Corporation strives to maintain an innovative edge. An increasing proportion of 3Ms business has come from incremental product changes. In an attempt to move away from the principle of incremental growth, 3M sought to produce 30% of sales from products that didnt exist four years ago. The health care group produced over 10,000 health related products and the company owned almost the entire surgical drapes market by the mid 1990s. The division had almost a decade without any breakthrough product. 3M product developers in the Health care unit utilized several tools to identify different market needs and trends like: Data from medical representatives Consumer focus groups Consumer evaluations of current marketed products Site visits by 3M technologists to hospitals

Innovation at 3M Corporation

Lead User Research Method- Its Potential

The lead-user research method was first rolled out to several divisions of 3M in the late 1990s. In all, eight divisions were involved in lead-user research, seven projects were completed, and a 3M Center of Excellence was established. In 2002, a research team published a study comparing the success of the lead-user research method at 3M to traditional idea-generation methods such as team brainstorming The Lead-User Research Method

Lead-user research projects:

This entails: 1. Focus on the needs of leading-edge users, not routine users; 2. Seek not only needs data but innovationsuser developed solutions to leading-edge needsfrom users; 3. Seek needs and solutions in adjacent markets and nonobvious, analogous markets, in addition to target markets; 4. Employ a cross disciplinary team, bringing in perspectives from various parts of the organization. The success of a lead-user research project depends greatly on the project team. Individual team members must have or acquire advanced interviewing skills, and the team must include a balance of deep expertise in all relevant domains and operate from a spirit of inquiry and creativity.

Phase One: Preparing to Launch the Lead-User Project. The team plans the project
schedule, learns about the current marketplace, and shapes the project focus.

Phase Two: Identifying Key Trends and Customer Needs. The team seeks out lead users and
lead-use experts in order to understand trends that impact the area of study and to glean deeper insight into the needs of leading edge users by observing how they are innovating makeshift solutions to address gaps in the market. This phase culminates in framing the needs that will be the focus of the next phase.

Phase Three: Exploring Lead-User Needs and Solutions. The project team continues to find

lead users through networking and interviews. The team may make site visits to observe lead users and uncover tacit information. (A lead user may not be aware of the uniqueness or innovative quality of his or her work, and the project team, in observing the user, may glean additional insights.) At the same time, the team generates preliminary solution concepts by putting together insights gleaned from various lead-user innovations and outcomes from team synthesis activities. These solution concepts will be refined further in a workshop with some lead users.

Phase Four: Improving Solution Concepts with Lead Users and Experts. The team invites a
select group of lead users and lead-use experts to attend a two-and-a half day workshop focused on improving or adding to promising preliminary concepts. The project team takes the concepts generated from the workshop, ties them into the other pieces of the solution, creates a business case, and delivers recommendations to management.

Innovation at 3M Corporation

Benefits and Challenges of the Lead-User Research Method

In this era of accelerated innovation cycles, project teams may not have an extended period of time to develop a research project with outcomes that are difficult to predict. Temporary teams especially cross functional teams and part-time teams do not always get appropriate support and air cover from management, which can undermine their effectiveness and rob the project of needed resources.

Finding the right people: Reaching the real lead users and lead-use expert Getting the right people to answer the e-mail or phone call. Remaining open-minded about problems and solutions. Allocating enough time for the process

Product Innovation Charter

This would classify as a new product strategy so it can be understood a new PIC would be necessary to interpret the ramifications of this approach

Background

3M is a human resource intensive organisation of about 6500 scientists. The company is highly reliant on research and development. It is necessary for such a company that when it comes up with new products that are often radical, it must have the right target audience for testing their product. The people who foresee these products and have a want for this kind of a product, would be the first adopters- namely the lead users.

Focus

The companys competence is in developing new products that have never been conceived in the market before. Their targets are the lead users who have understood this need and await the launch of such products in the market who are thus the ones who will buy the product first. The targeting must be focused upon them. After that come the early adopters who can be targeted in the same mode as the lead users are. The best part of targeting lead users is that they just need to be shown the product and they know what the products true value is.

Goals/Objectives

The company has always striven at delivering breakthrough innovation to the market. This strategy of targeting Lead users helps to diffuse the value to the consumer base. The company should hope to bring home profits earlier on in the product life cycle. The company can create brand loyalty in this process.

Guidelines
To use the lead users base wisely and try and infer what they see as marketable products. Mature products may need modifications and tweaking which these lead users can recommend. Time taken to develop the new product and then to delivery it market needs to be reduced. Quality needs to be upheld. 5

Innovation at 3M Corporation

Recommendations by the 3M team

The First two strategies can be conservative strategies as in case they were trying to build on new product concepts. The last recommendation is radical approach which involves changing the current business strategies of the company. ch: This approach suits to the wishes of the higher management. The manager will accept this approach because it involves less risk and does not involve any major changes in existing business situation. There is a need to validate each of these new concepts before taking any strategic decisions on them. One problem is that not enough data to confirm that these products will be success in the market Radical approach: The team was charged to find breakthroughs, so they should not hold back their findings. The team is empowered and submit all the relevant information. 3M has such a defiant culture that this new strategy fits into it. Even though Dunlop doesnt find it amusing, this new strategy fits into 3Ms new strategic mission. This approach is good because Incremental strategy will not work now as the customer needs and the market environments are fast changing. In order to find market growth and more profits, the company should try to find untapped market (or product) segments and not extending the existing product lines. 3M, known for innovations, must need newer platforms to showcase its dominance and for that radical thinking is necessary. Many of the successful 3M products also came from informal lead user research processes (unknowingly). So this Radical approach can fare well in the context of changing market conditions.

Recommendations
The team was charged with finding new breakthroughs. So, it must present them with relevant findings without holding them back with the senior management. They are able to land on three potential new product lines that could help improve the companys bottom line, and continue to build its competitiveness in the health care market. The company should continue to rely on product developers to visit potential customers. Product developers are aptly familiar with the technical limitations of products and/or services, and may be more knowledgeable with the limits of particular technologies, trends and business priorities 3M could potentially save costs associated with hiring external market researchers. To continue to encourage management to invest in R&D activities because higher investments in R&D resulted in increased innovation.

Innovation at 3M Corporation

Convincing senior management of making additional R&D investments might not be difficult, as the company already invests significantly. In addition, the team could propose to senior management that additional investments be made in hiring overseas scientists, engineers, and technicians. The lead user research concept still needs consideration and additional refinement before it could be implemented at a wide scale across the company. For instance, the various challenges the group faced during Stage IV of the process would need to be addressed in order to increase the efficiency of the overall process. A successful launch of the three recommended product lines might further dictate the value of lead user research and make for a stronger case for company-wide implementation.