School of Management, NIT WARANGAL

1. The First 110 years
Decoding the strategies (1902 – 2012)
Raja Oiendrila Venkatesh Akhila
19th April, 2018

2. Case Overview
 History, Development & Structure
 Internal Strengths & Weaknesses
 External Opportunities & Threats
 SWOT Analysis
 Corporate & Business Level Strategies
 Recommendations

4. SPOTLIGHTS
 15%Rule
 Pacing PlusProgram
 PathFinderProgram
 TechnicalForum
 3M Innovative Properties(3MIPC)
 Dual Career Track
 Lead Users
 SeedCapitalfunding
 ProductDevelopment Audit
 Internationalisation
 SIX – SIGMA
 Toyota’s Lean system
 Performance Evaluation Systems
 Rewards & RecognitionProgramme

5. Internal Environment
Strengths & Weaknesses
Leadership
CEO George Buckley is highly respected,
3M is repeatedly recognized as a top company for developing leaders.
Innovation
Get a load of these stats: 567 patents awarded | 6,700 researchers worldwide,
more than 1,000 Ph.Ds on staff | and nearly $1.3 billion spent on R&D in 2009.
Geographically diverse
Sixty-three percent of sales are outside of the United States.
The company has operations in more than 65 countries.
Diverse in terms of revenue streams, too.
3M has six key business units, none of which account for more than 33% of sales.
Financially strong - Paid a dividend every quarter since 1916.

6. Internal Environment
Strengths & Weaknesses
Litigation
The company needs to fight its patents in court and in the recent past has brought or settled suits
against fellow well-financed companies DuPont and Avery Dennison.
Continual reinvestment
The downside of innovation: Continual reinvestment is necessary for 3M to maintain innovation
and keep the product pipeline strong.
Pension obligations
3M has a well-funded pension and last year moved from defined-benefit to defined-contribution plans
for new workers, but it still faces rising expenses related to pension and retirement benefits.

7. External Environment
Opportunities & Threats
Growth in emerging markets
In the recently completed second quarter, sales in emerging economies grew 38% year over year.
Growth by acquisition
This strategy has served 3M well of late, and it plans to continue spending money on acquisitions this year.
Adjacencies
Enter markets similar to areas it is currently in, such as renewable energy, water infrastructure,
architecture, and lighting.

8. External Environment
Opportunities & Threats
Cheaper Competitors
Currency Rates
Raw material costs
Wrong acquisitions

9. SWOT Analysis
Strength
Organisational Structure
Weakness
Changes in CEO
Opportunities
New Product Development
Threats
Patent Protection

10. C-level & B-level Strategy
B Hiring an outsider (McNerney)
B Rewards and Recognitions
B Company Structure
C International Expansion
C Market Development
C 2X/3X Strategy

11. Recommendations
If I were CEO
But I'm not here just to criticize 3M's innovation factory. I'm also here to provide suggestions,
Increase R&D spending
In 2000, 3M spent 6.58% of revenue on R&D; in 2010, that number had fallen to 5.38%.
R&D covers regular changes in products required by regulators or for cost reductions, so each
dollar cut comes straight from new product potential.
Stop hiring CEOs from the outside
McNerney was brought in to clean up 3M's operations and in the process killed a lot of innovation.
You could argue that George Buckley has done a better job, but he hasn't exactly inspired the next Post-it Note.
Teaching the Chinese doesn't help anyone
3M is an R&D company, and moving manufacturing to China or other parts of Asia only teaches low-cost
countries how to make high-tech products. This isn't good for the long-term viability of 3M or the U.S.

12. That was a great year,
Thank you.
TEAM ROVA