3M pursues growth through innovation. Founders were encouraged for innovation informally and these rules have been formalized. Thus, it built up a culture which encourages for innovation.
The first strategies that 3M use in the early stage is promote its sandpaper by getting close to the customers and understand their needs. They demonstrated the sandpaper to the workmen who will use it. Furthermore, they persuaded workmen to assign the sandpaper. 3M able understand what their customers' needs through the demonstrating process and gain feedback from them. Nowadays, Customer Relationship Management (CRM) is one of the key to make business successful. They try to establish close connections with their customers and offer products that the customers really want, so that customers will be satisfied (Satoshi Ueno, 2006). Customers' loyalty will be increased and will repeat purchase products through CRM strategies.
Because of the success of closeness to the customer strategies, 3M discovered market opportunities that it had the expertise to take advantages on. Thus, the second strategies that used by 3M is to seek out the niche market, no matter how small and this niche market able to charges for a premium price for its products. 3M realized that small niche markets able to make more profit than those large markets. Niche market is a group of people with something in common it could be similar in interest, hobbies, age group, gender, social background, religion, ethnicity, lifestyle, education background, values and others. Therefore, those within a niche market with have similar desires and needs. Thus, a product or service is marketed specifically to serves them (Juliet Austin, 2006). 3M able to innovated their products due to the needs of the niche market.
The third strategies that 3M used in 1920's are product diversification. They started to diversify when they went into tape market. However, this built expertise coatings, backings and adhesives. 3M found out that technical expertise able to help them solve their problem. Therefore, when they found a new product to offer in their niche market, they will move on to develop related products and diversify it into several products line. When 3M diversify their products, they have greater solution for those unattended customer's needs.
Next strategies that 3M developed were to encourage product development and innovation in all sectors of the organization through research. Because of the third strategies which is product diversification, this strategy was developed for ensure that improving of innovation and new products development that support for their product offering to customers. The term "diversification" is usually associated with a change in the characteristics of the company's product line or market, in contrast to market penetration, market development and product development. (H. Igor Ansoff)
The fifth strategies that 3M developed is encourage knowledge sharing in their company. This strategy developed because of success their fourth strategies which is encourages product development and innovation. This strategies became official when establishment of the technical forum in 1950's. Due to Swan and Preston (1999), knowledge management is any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organization. Therefore, 3M able to solve company's problem more efficient through knowledge sharing within company.
Last, 3M encourage for achievement through reward. In the late 1920's, 3M developed a policy which allow their employees to spend 15% of their working time to generate idea for new products in the company. To let this strategy successful, 3M allow staff get money buy equipment and hire extra help. Besides this, for encourages employees generate idea, they allow failure is not punished and success is well rewarded. Motivation and performance will improve if people have challenging but agreed goals and receive feedback (Armstrong, 2006). 3M provides such performance appraisal that fully motivated its employees to work hard and create new products.
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2. Innovation is an important aspect that must be concerned by an organization to make sure that the product offered can be accepted by the customers and can compete with the competitors. Innovation can be defined as offer a new product or service that customer want by using the new knowledge. For 3M, they were realized that the best way to increase their profit and expand their business is through innovation.
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Incremental and fundamental innovation are two types of innovation that having their own meaning and practices. These two types of innovation was be done by 3M that really encouraged to apply the innovation activities within their business. Incremental innovation is requiring the knowledge to offer the new product or service that made on existing knowledge. Referring to Tushman and Anderson, this type of innovation is called competence enhancing. In the business world, they said that the most innovations are using the incremental innovation. For the fundamental innovation, this type of innovation is about the idea that creative and leads to the revolution of thinking. Most of the ideas for the fundamental innovation are generated from extensive research, knowledge-driven, and lead to follow up research and development. This innovation occurred with the collaboration of academia and commercial laboratories and even corporation.
3M was planned to increase the product development and innovation at every level in the organization through research. This is according to their planned strategic thrust of the company. In 1937, 3M was stated their first step of the innovation activity by established the Central Research Laboratory. This was used for encourage the innovation toward their product and service in 1940, 3M was started using the fundamental innovation by developed a New Product Department in order to explore the viability of the new products or technologies unrelated to existing ones. In this 3M's plan, four sector labs were created in order to be more responsive toward market place as their incremental innovation activity. This research used the medium-term research that took from five to ten years. The labs included Industrial and Consumer, Life Sciences, Electronic and Information Technologies and Graphic Technologies. Continuing with the fundamental innovation, the Central Research Laboratory, renamed the Corporate Lab, was maintained to use more long-term research that took over 10 years. In order to maintain the innovation activity in the 3M, they was using the approach of incremental innovation by most of the divisions had their own labs undertaking short-term, developmental research that taking one to five years. The result, 3M was successful by concerned toward the innovation on their business and distinguished the types of innovation as well.
3. The culture of the organization has its own concept of originality. According to psychologists, the concept content of "group norms" and "climate". According to Katz and Kahn (1978), they referred the organization culture more to norms, roles and value but unfortunately presented neither climate nor culture as explicit concepts. The actual definition of the organization culture derives from the fact that the organization concept itself as ambiguous.
The first culture from the case is, encouraging innovation in field of things created. This culture depend on how the innovation expand their product line from its origin product has the beginning in the company operates which is flexible sand paper. The organization has found the missing link which some company tend to overlook when it comes to showing appreciation towards employee's efforts.
Besides, the organization culture enhances their customer relationship. The company demonstrated its product to others company who will or needed those products that 3M company manufactured for their particular uses. While doing such things, indirectly the company has creates the customer relationship which can capture the market of the company.
Thirdly, the 3M Company had responded towards technologies to developed new product in order to more competitive. The organization has diversified its product range to create a niche product in order to create a new market in the market space. They had thought innovatively to create new technologies that they come to conclusion that technologies can break through the market and increased their sales.
Next, the culture of the organization also depends on research and development. The 3M Company had responded towards R&D. aspect. Where the staffs needs to spend 15% of their working hours to generated an idea for new product development. This acts as a corporate culture of the organization. The employees had play important roles to maintain the market and its products lifetime by gave an idea and did research on that.
Fifthly, the each department within the organization had come across to share the knowledge and link of technologies to produce various products that could be sold in the different market. The employees and staffs of 3M Company had come out with new idea that can generate new innovative products.
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Lastly, due to high competition whether the company develop its products and stand hold in the market. This makes the organization to come out with new strategies to maintain their corporate culture at management level. The 3M Company had increased their employees' motivation level has the key to their long term success as their employees continually giving the best for the company success.
4. There are many organizations across the global level to improve their performance by copying ideas and practices. The key or organizational learning is had been seen from imitation and it has founded at practitioner oriented literature and academic. The imitation is a crucial fact of organizational to the manager because the organizational life is a colourful illustration. An organization can be a successful innovator by properly or directly copied 3M's strategies and culture. It is because the 3M's cultures has general revolves around employee appraisal which has been rated high in increasing employee's motivation level and enhancing organizational success.
3M has been such a successful innovator for so long because of management issue, high expenditure on research and development, and increased competition and new entries. The management teams of the innovating product division by 3M initiative as a strategic way of ensuring that staff keeps purse innovation and development of new product but also questionable. The reason of questionable, does not necessary is being a great innovator besides that they should being able to manage and coordinate the markets of products are sold. This decision is because to deter their potentials when compared with employee qualified managers to manage the product line as well. There can be argued regarding proper development and training will offer them with needed skills.
The second reason of 3M has been such a successful innovator for so long because of high expenditure on research and development. According to Lebas 1995, Merchant 1998 and Amadio 2005, the research and development is attention to problem of measuring the organizational investment of performance, it is because the research and development activities has been recognized as a critical issue for supporting decision making, enhancing organization learning and continuous improvement, and motivating personnel. It must be argued with 3M high risk approach towards research and development must seek to resolve even though there are many positive attributes to the research and development in an organization. All the staffs are encouraged to pursue innovation in 3M and the organization also constantly spend million in research and development on the new products.
Increased competition and new entries is the another 3M to successful innovator for so long. According to Harvey and Novicevic, 2001, recently the competitive landscape of business across the globe has affected globalization and internationalization of companies and created a state of change in business struggle to adopt innovative leadership approaches to meet the challenges of new market environment. As 3M continue to expand their market research in search of new ways to generate profit and the company faces stiff competition from all the product lines. Any organization in global competition as the imitations of products can put the organization on the blink of collapse and unpredictability of external environment if they did not adapt with strategic management system as offer in organizations competition advantage. Therefore, it can be seen new market entries and competition is a serious issue and if they are to be market leaders in their product line must find ways to solve from 3M.
As result, 3M must be appreciated for the contribution in innovator corporate entrepreneurship.
Imitation is a norm or phenomena that widely adopted by firms to enhance their competencies. For example, Samsung is copying the idea from Apple after Iphone released 2007 while Samsung also market their Samsung Galaxy on the same time.
In our opinion, if competitors copy 3M's strategies and culture, they have possibility can be successful innovators because 3M's culture focusing on employee appreciation and organization innovative culture to enhancing organisational success. In contrast, there is also has possibility to involved themselves in legal prosecution where competitors directly copy patented rights or business model from 3M. As result, this might cause both sides to spend extra for court issue. In fact, globalization of the companies has pushing 3M to meet the challenges of new market environment because the door of new entry is opened for competitor to enter the industry. This can be factor to affect the sustainability of 3M in the market.
Global competition make 3M explore themselves at unpredictability of external environment. It will cause the industry or companies look no different and no distinctive point. Commonly, product and service imitations can put companies on the blink of collapse if they didn't offer organisations competitive advantage to make themselves stand out the most among the group of companies in the same industry. To defeat the competitor or avoid new entry, 3M should continue developed new product lines, non-stop update to the trend and pushing and encouraging new ideas from time to time just hope to create barrier to entry for new company.
As a conclusion, this case study pointed out 6 powerful strategic approaches which 3M developed themselves to become a successful corporate entrepreneurs. 3M's organisational structure which is encouraging innovation from bottom to the top of organisation in order to developed their competitive advantage throughout the global market.