assignment case study of entrepreneurship

1. INTRODUCTION
In modern day business, product and service innovation has been highlighted as the key to
organisation differentiation and success. This is because, through product and service
innovations, companies are able to find new solutions to customer problems and companies that
can constantly find solutions to customer's problems will have a competitive advantage over their
competitors as they tend to gain high market shares through market pioneering and leadership,
and also increased sales through customer loyalty.
The case study presented a clear example of this claims with 3M an organisation widely
recognized for its contribution towards corporate entrepreneurship. Thus, this case study analysis
is meant to shade more lights and the strategic approaches that has made 3M successful over the
years. This case study analysis is based on secondary research and is divided into three sections.
The first section is an analysis of 3M's organisational structure and culture, and the business
strategies that has made them successful over the years. The second section presents a critical
review of problems face by 3M, while the third and final section highlights the limitations to this
case study analysis followed by conclusion and bibliography in the preceding pages.
CASE STUDY ANALYSIS
3M'S ORGANISATIONAL STRUCTURES AND DEVICES USED TO ENCOURAGE
ENTREPRENEURSHIP ACTIVITIES AND WHY THEY WORK
3M's organisational structure is built around cultures that encourage innovation. Being a
company primary based on production of adhesive, 3M searched for new ways to increase their
profit and market share, and they found that one of the best ways is through organisational
innovation. From this angle, the company was able to develop 6 business strategies to promote
entrepreneurship and increase customer satisfaction
First strategies – get close to customers and understand their needs
3M started life by selling inferior form of sandpaper and the only way they could generate sales
was by getting close to the customers and demonstrating their products for them. This helped
them to understand customer's needs better based on the feedbacks they get from demonstrating
their products to this selected group of customers.
3M's first business strategy is a successful path towards ensuring that the company improves
their sales. Thus, will be possibly through increased customer loyalty and repeat purchase which
are hugely influenced by both the products and services received.
Second strategy – seek out niche markets no matter how small

2. From the success of the first strategy, 3M found that if they offered customers what they wanted,
these customers will be loyal to their company. Thus they developed the second strategy to seek
niche markets no matter how small, as this will allow them for charge premium prices for their
products. The company realized that numerous small niche markets will be more profitable that
few large ones and this lead to the development of Three-M-Ite™ - an abrasive clothe using
aluminium oxide in place of the original abrasive, thus offering more durability.
Based on this suggestion, it can be argued that 3M's second strategy just like the first is a
strategic approach that is destined to bring back nothing less than success to the organisation
because through niche marketing, they can identify all needs of their customers and tailor their
products and services to meet these needs.
Third strategy – product diversification
By being close to the customers, 3M identified problems that they can solve for their customers
through technical expertise. This is exceptionally great as it ensure that they continued to
diversify their product offerings by developing new products to solve new or unattended
customer needs. Once 3M found a new product to offer in their niche market they will move on
to develop related products and thus occupy leadership positions in these markets.
when companies diversify they have a great opportunity of finding solutions to existing
unattended customers' needs and thus making their pioneers of these products and giving them
high competitive advantage in case of new market entries.
Fourth strategy – product development and innovation through research
The fourth business strategy as developed by 3M is to encourage product development and
innovation in all sectors of the organisation through research. This strategy was developed in line
with the third strategy which encourages diversification. If 3M where to constantly diversify
their product and service offering, the company understood that it will need to support its system
with improved innovation and new product development to ensure that they continue in line with
their business model.
When companies successfully introduce new products through a well-developed process, they
tend to satisfy specific customer needs and thus ensuring customer loyalty. This system worked
because 3M was able to gain customer loyalty through new product development and
innovations to offer their customer more value for their money.
Fifth strategy – knowledge sharing
In other to perfect their fourth strategy of encouraging innovation and development in all sectors
of the organisation, 3M developed their fifth organisational strategy which is to encourage

3. knowledge sharing in the organisation. This became official with the establishment of the
technical forum in 1950s, with the aim of sharing knowledge within the company. This forum
comprised of technical council and directors that held annual shows to encourage knowledge
sharing in 3M.
Therefore, it can be argued that through knowledge sharing, 3M was able to increase their
knowledge stream and find new years to tackle their business problems effectively and
efficiently.
Sixth strategy – encourage achievement through reward
The last strategy is an employee appraisal scheme that encourages achievement by rewarding
employees who generated successful business ideas. Employees that successful innovate new
products are made managers of that product division, this ensured that other staff members are
motivated to work harder and discover new product innovation as they seek to one day become
managers of their developed product lines.
Looking from the researchers' point of view, it can easily be concluded that this business strategy
works because it has numerous potentials of motivating bot the individual and other members of
the organisation. As agued above, employee appraisal is essential for motivating individuals in
3M as they tend to work hard, increase their innovative abilities and seek new ways to make the
company better because they know that if they develop new products they would be made
manager of that product line.
HOW 3M DISTINGUISHES BETWEEN INCREMENTAL AND FUNDAMENTAL
INNOVATIONS
In other to distinguish between fundamental and incremental innovation, 3M established a new
product development central research laboratory in 1940. This was used to explore the feasibility
of new products or technologies that where not related to existing ones. Incremental innovation
means innovation made based on existing products and technologies while fundamental
innovations are those that are not related to existing products or technologies. In the 1980s, two
separate laboratories where developed to over-see short-term and long-term researches. Short-
term researches are more of incremental innovation that are designed to respond to industrial
and consumer needs, life science, electronics and information technologies and graphic
technologies with a life span of 1-5 years, while the corporate lab was designed for fundamental
innovations with researches of over 10 years.
3M's ORGANISATION CULTURE AND WHAT IT DEPENDS ON
For decades, 3M has been known as an entrepreneurial organisation that pursues growth through
innovation. Innovation was encouraged originally in an informal way by the founders, but was

4. later formalized over a century into an organisational culture. The organisational culture is one
which encourages innovation, and it has helped them to realize success over the years as it
perpetuates itself. This culture evolved from 3M's place of origin which is called 'Minnesota
Nice'. It is described as a non-political, low ego, egalitarian and non-hierarchical, hardworking
and self-critical.
WHY 3M HAS BEEN A SUCCESSFUL INNOVATOR FOR SO LONG
3M's success in innovation can be traced back to their employee appraisal. This is because; the
organisation has found the missing link which numerous organisations tend to overlook when it
comes to showing appreciation towards employee's efforts. 3M is achievement oriented and
achievement particularly through research was rewarded through promotion. For instance,
successful new product teams were spun off to form a new division in the organisation. The
leader of the team is often the general manager of the new division and this w as seen as a great
motivator. Lesser achievements were also rewarded and failure is not punishable. This increase
in 3M employees' motivation level has been the key to their long-tern success as their staffs
continually give out their best for the organisational success.
CAN OTHER COMPANIES BE SUCCESSFUL INNOVATORS IF THEY JUST COPY
3M'S CULTURE AND STRUCTURE?
Copying ideas and practices of other organisation is a mechanism widely used by firms across
the globe to improve their performance. Indeed, imitation had been seen as a key means or
organisational learning (Argote 1999) and has found in academic and practitioner-oriented
literature. For manager, imitation is a crucial fact of organisational life – a colourful illustration
of this was given by president of Rexhall, a manufacturer of premium motorhomes, who openly
revealead, "in this industry we call it R&C: research and copy" (Schnaars 1994, p. 3).
If properly copied, organisations that copy 3M's strategies and culture can be successful
innovators. This is because, 3M's culture general revolves around employee appraisal and in
business psychology; appraisal has been rated high as increasing employee's motivation level
and enhancing organisational success. There it can be argued that organisations can become
successful innovators if they directly copy 3M's business model and culture. Nevertheless, it
must be understood that since external environment affect the success of any organisation; fully
copying their model and culture could be disastrous as it could lead to negative effects such as
legal prosecution from 3M in-cases where they copy patented rights etc.
PROBLEM IDENTIFICATION
Although 3M has been associated with numerous success stories over the years, they
organisation is prove that all businesses no matter how successful is filled with ups and downs.
Today 3M faces numerous challenges as it seeks to maintain their reputation for innovation. As

5. 3M becomes larger and more complex, involving with different markets and product life cycles,
the organisation has been face with numerous problems and issues that it will need to handle if
they are to continue their market leadership. These problems are:
1. Proper management issues.
2. High expense on research with the adoption of Maverick high risk approach.
3. Increasing competition and new entries.
CRITICAL REVIEW OF HIGHLIGHTED PROBLEMS
Management issue
3M initiative of making product innovating teams the management of the product division is a
strategic way of ensuring that staffs continue to purse innovation and new product development
but also questionable. It is questionable because being a great innovator does not necessary
means being able to manage and coordinate the markets where these products are sold. Thus, this
decision can deter their success potentials when compared with employee qualified managers to
manage these product lines.
Schoemaker (1997) described scenario planning as a logical process of imagining possible
futures. It tries to executive thinking away from "what has been in the past" and "what is
happening in the present" to consider alternative for "what will happen in the future". In doing
so, scenario planning engages with confusion, uncertainty and complexity (Wilson, 2002). From
this point of view, it can easily be seen that 3M faces critical management issues is they continue
to adapt their old format of making product innovators the management team of these product
line.
It can be argued that proper training and development will offer them the needed skills, but it
must be understood that training does not necessary guarantee transfer of acquired skills and
development takes time to perfect. Some of these innovators might be staffs from the technical
team who have no business background and it can scupper the success of the company if they
compete with organisations that have a better management team.
High expenditure on research and development
Over the years, academic and managerial literatures have drawn their attention to problems of
measuring the performance of organisational investment on research and development activities
(Lebas, 1995; Merchant, 1998; Amadio, 2005), because research and development has been
recognized as a critical issue for motivating personnel, supporting decision making, and
enhancing organisation learning and continuous improvement (Simons, 1990; Eccles, 1991;
Sink, 1991; Lebas, 1995).

6. Although they are many positive attributes to research and development in an organisation, it
must be argued that 3M high risk approach towards research and development is an issue the
organisation must seek to resolve. In 3M all staffs are encouraged to pursue innovation and the
company constantly spend million in research and development on these new products; many of
which fail. Thus, this leads to loss of both organisational and human resource capitals. This is a
critical issue the company must address if they are to continue their market leadership as
continued loss could lead to loss of company market shares and low returns on investments.
Increased competition and new entries
The drift in recent years towards globalization and internationalization of companies has affected
the competitive landscape of business across the globe (Harvey and Novicevic, 2001) and
created a state of change as businesses struggle to adopt innovative leadership approaches to
meet the challenges of new market environment (Robinson and Harvey, 2008). As 3M continue
to expand their market research in search of new ways to generate profit, the company faces stiff
competition from all their product lines.
Global competition is a tough encounter for any organisation both in global and national market
as the unpredictability of external environment, coupled with new market entries and product
imitations can put companies on the blink of collapse if they don't adapt strategic management
system that offer organisations competitive advantage. Therefore, it can be seen that competition
and new market entries is a serious issue that 3M must find ways to combat if they are to
continue to be market leaders in their product lines.