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INNOVATION at 3M CORPORATION
Product Management Case Analysis
Rahul Thampy Dilip Jaiswal Alok Shenoy Ankur Jain Ritesh Jaiswal Rohin George Thomas
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
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Innovation at 3M Corporation
Innovation at 3M Corporation
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
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
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
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.