MM 5011 Knowledge Management and Innovation

Group Assignment Lessons Learned at 3M: Profile of an Innovating Company

Syndicate 2 X.46 (Great Leaders Syndicate) 29111311 Haidir Afesina 29111328 Hendra Winata 29111329 Mita Listyatri 29111338 Andek Prabowo 29111344 Aprian Eka Rahadi 29111384 Chairunnisa Mirhelina 29111387 Franciscus Xaverius Kresna P 29111393 Agung Indri Pramantyo

MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS AND MANAGEMENT INSTITUT TEKNOLOGI BANDUNG 2012

Company Overview 3M was formerly known as the Minnesota Mining and Manufacturing Corporation, founded in 1902 by five businessmen from Two Harbors, Minnesota. A long-term tradition of innovation since the company`s inception. Having more than 60,000 products that it sold in 200 countries with over 88,000 employees. It was determine The Ten Most Admirer Corporations by Fortune magazine`s annual poll of American CEOs. The case highlights the role of William L. McKnight in creating legacy of technological innovation, market responsiveness and institutionalized entrepreneurship. However, it required the adaptation from its next generation CEO to the company`s unique culture with the environment changing. Objective To decide what changes are required on the new policies from its unique cultural norms that helped 3M grow Problem Desi Desimone, the CEO, faced the challenge managed the company innovation-powered growth and expansion effectively as it become bigger and wider Fact#1 Bootlegging activity Encourage employee to spend up 15% of their time on projects of their own choosing. Lesson Learned Encourage initiative and climate of creativity Once the employee understands their own style preferences, they could approach the task of challenging (Bessant and Tidd, 2011). Other Company Experience Taken from Innovation to The Core by Skarzynski and Gibson (2008), at Google, employees are given 20% time and space for reflection to stimulate ideas during working hours. Fact#2 25% of its sales should come from products introduced within the most recent five-year period. Lesson Learned Be specific, stretch targets Target setting has to be agreed in advance and to be communicated with the criteria of being objective, measurable, achievable but challenging (Drummond, Ensor and Ashford, 2008). My Experience Based on Andek experiences at Pt.PP, the project manager and the core team have to forecast any upcoming project along with its anticipation. There is no such a thing called bias or unclear. Also targeting some promising and prestigious future projects to be taken.

Fact#3 Carlton Society An honor reserved for those who made exceptional scientific and technical contributions to the company, and for the team effort will recognized through the company`s Golden Step Award Program. 1

Lesson Learned Respect the dignity and worth of individuals with reward and recognition Innovative organizations hire, reward, retain and encourage innovative people (Christensen, Dyer, and Gregersen, 2011). My Experience Based on Fezi experience at Hotel Mulia, there are program called Mulia Shines and Mulia Star. Mulia Star a reward for staff who has outstanding grooming, hospitable and team player. Peer and management vote it. Mulia Shines is a reward for staff who receive compliment from the guess for his sincerity such as found guest`s money and give to the lost and found counter. Both award reward money and certificate. Fact#4 Technical Forum The purpose is to represent the concerns of the scientific community to top management. Lesson Learned Allow communication for the input and different perspectives in informal way Innovation is social activity that involves many people share ideas and perspectives (Bessant and Tidd, 2011) My Experience Based on Agung Indri experiences at PT Pertamina Gas, Western Java Area, there is forum called SS (Sumbang Saran). The team from QCC (Quality Control) and PKM (Project Quality Control) from every department within Western Java are having monthly meeting. It shared business performance issues but in informal way in order to create a family environment. Fact#5 Annual Technology Fair An event that organized to learned the company`s latest development directly from their colleagues. Lesson Learned Create a climate of sharing Conducive learning environment at work place is essential in the process of knowledge management in order to stimulate people`s idea and motivation (Nonaka cited in Tjakraatmadja and Lantu, 2006). My Experience Based on Fezi experienced at Hilton Bandung, there was an event called Esprit party. It was a monthly event that every department will update their business performance, introduce new program and also having music or games performance. An interesting part was when department share the issues and ask the audience to give ideas in order to solve the problem. Those who are applicable will get a souvenir.

Fact#6 Well-intentioned failure McKnight said mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job 2

Lesson Learned Valued mistakes as a learning process Innovation is the creation of new value through some intersection of business and technology that require risk taking to accept the failure (Davila, Epstein and Shelton, 2005). Other Company Experience Based on Kresna experience at Yamaha, the Yamaha engineer teams always try to produce and develop the latest engine. There was lots of investment for the experiment. Many times it was good on the paper but failed on the process, as they would like to create a safe and better one for the public. Fact#7 McKnight persuaded Oki to join 3M because of his background. Oki was able to create Wetodry that received well in public despite of his personality i.e. absentminded. Lesson Learned Recruit innovator HR function is not only to ensure recruit the right talent, develop and monitored, but also understand the personality and recognize the high potential (Mullins, 2007). My Experience Taken from The Other Side of Innovation by Govindarajan and Timble (2010), when Timberland set out to make a radical new running shoe for use on trails, the firm had to create a dedicated team by collecting the creative people and recruit people who has innovator characteristic, called the Invention Factory, to break out of the performance Engines predictable schedule for releasing new shoes every six months. Fact#8 Created Central Research Laboratory (CRL) It divided into 3 level of research. There are Division labs support existing product lines and technologies, Sector labs develop technologies to reach market 5-10 years, and Corporate research lab looks ahead 10-15 years. Lesson Learned Invest in R&D to look for new opportunity In a large company, recognizing the opportunity might involve a large R&D department and market research team that needs strong financial management (Bessant and Tidd, 2011). Other Company Experience Taken from 3M:Profile of an Innovating Company by Bartlett and Mohammed (1995), Corning lost money on the display business for 14 years before becoming profitable in 1999 and optical fiber took 20 years to become profitable despite the hundred of millions dollar of the company invested during the 1960s and 1970s, and more in 2001, the company put $250 million new factory for diesel business when the telecom business crashed and the emission regulation for 2007 were not yet in place (patient money concept).

Fact#9 Cooperating for Growth program The program that reinforce and broaden the role of specialized distribution units in selling products from multiple division through specialized channels. Lesson Learned Making and managing connections with distribution channel Making a good relation with distribution channel not only help to distribute the product but also as a network to customer`s insight in order to build relationship (Drummond, Ensor and Ashford, 2008). Other Company Experience Taken from Business Model Generation by Ostelwarder and Pigneur (2010), Bose successfully built relationship with customer through its distribution channel. They found out what the customer preferences and insight. It made them a headphone that understands what customers want especially their noisy cancelling headphones. Fact#10 Pacing Program The program that is focusing on the product and process in terms of volume impact so that the corporate will prioritize in both funding and management attention. Lesson Learned Analyze the key areas of business development It is essential in innovation strategy to prioritizing the key areas for development across the business to compete in the market and stay at the top (Bessant and Tidd, 2011). Other Company Experience Based on Fezi experience at Novotel Melbourne, the management and Food and Beverage department were having an intense meeting monthly just to do the menu engineering. It is important that hotel will only sell the products that bring most revenue. Many times a favorite product has to be taken out because it was not bring lots of revenue. Also the hotel dining competition in Melbourne was very tight as every week the Chef has to create new menu in order to stay on the top. Fact#11 McKnight had long preached that if 3M didn`t expand abroad, its competitors would using international market to build their strength to battle 3M at home. Subsidiaries were usually started small and built through selfgenerated and self finance growth, international extension Lesson Learned Our local competitor can defeat our business at home through their international expansion International corporate entrepreneurship is one of the strategies to compete with local competitor (Bessant and Tidd, 2011). Other Company Experience Based on Hendra experience at Telkom, Telkom saw that free competition in telecommunication sector in Indonesia where private and foreign competitor enter Indonesian Market with very competitive price ( like XL 4

Axiata from Malaysia and 3 from PT Hutchison CP Telecommunications Autralia). Telkom decide to expand the international business to fight and as revenue stream along with market share (although just small piece in beginning) through subsidiaries called PT. Telekomunikasi International. It build in 2010 and now operated in many countries such as: Singapore, Hongkong, Malaysia, Myanmar, Netherlands, Timor Leste, and Australia. Recommendation 1. International expansion Maintain and growth the market share and profit 2. Duration of new product development Filtering the idea of innovation that would be based on budget in order to enter the product development phase. Besides if they would like to make product that not their core competency, they should acquisition or joint venture with company that has relevant competency. 3. Cost optimization in production as 3M is already at mature phase and the growth level almost near to their saturation phase. References Bartlett, Christopher A, and Mohammed, Afroze (1995) 3M: Profile of an Innovating Company, Harvard Business School Case Bessant, John and Tidd Joe (2011) Innovation and Entrepreneurship (2nd Ed), Chichester: John Wiley & Sons Christensen, Clayton M, Dyer, Jeff and Gregersen, Hall (2011) The Innovator`s DNA, Boston: Harvard Business Review Press Christensen, Clayton M, Anthony, Scott D and Roth, Erik A (2004) Seeing What`s Next, Boston: Harvard Business Review Press Davila, Tony, Epstein, Marc J and Shelton, Robert (2005) Making Innovation Work, Wharton School Publishing Drummond, Graeme, Ensor, John and Ashford, Ruth (2008) Strategic Marketing (3rd Ed), Oxford: ButterworthHeinemann Govindarajan, Vijay and Timble, Chris (2010) The Other Side of Innovation, Boston: Harvard Business Review Press Mullins, Laurie J (2007) Management and Organizational Behavior (8th Ed), Harlow: FT Prentice Hall Skarzynski, Peter and Gibson, Rowan (2008) Innovation to The Core, Boston: Harvard Business Review Press Tjakraatmadja, Jann Hidajat and Lantu, Donald Crestofel (2006) Knowledge Management dalam Konteks Organisasi Pembelajar, Bandung: SBM-ITB Osterwalder, Alexander and Pigneur,Yves (2010) Business Model Generation, John Wiley & Son