Tara Browne

Page |1 Identify, research and report on a corporate organisation considered to be an exemplary Entrepreneurial organisation. INTRODUCTION The Minnesota Mining and Manufacturing Company, more commonly known as 3M, was born as a small-scale mining venture in 1902. Over the past 114 years, 3M has proven itself to be a global entrepreneurial powerhouse whose products improve the daily lives of people around the world (3M.com, 2016). These products are a result of 3M’s strong focus on research & development which directly feeds into its innovation and creativity in product development. 3M’s historical culture of innovation and creativity is responsible for the company’s success in today’s fast-moving, economically competitive business world. 3M currently holds over 100.000 patents (3M.com, 2016) and, boasts a product list of over 30.000 separate products, many of which are product category leaders (Koh et al., 2010). Trying to find a “one-size fits all” definition of entrepreneurship is nearly impossible; however, there are repeated elements in organizations consider entrepreneurial as well as the literature based on studying these organizations, which make an entrepreneurial organization recognizable (Burns, 2013). Burns writes that an entrepreneurial organization will be creative and innovative (2013, p. 469). Dutta (2009) describes entrepreneurial organizations as organizations which promote entrepreneurial activity through adapting structure, management and processes in order to gain competitive advantage. In essence, an entrepreneurial organization can be boiled down to an indissoluble mixture of creativity, innovation and workplace culture. The following will illustrate 3M as an entrepreneurial exemplar through its use of creativity and innovation, and workplace culture. Page |2 3M: AN INDISSOULABLE MIX OF CREATIVITY, INNOVATION AND WORKPLACE CULTURE Creativity, innovation, and invention are inseparably linked together (Burns, 2013). Burns (2013) cites Bolton and Thompson (2004), stating that “creativity is the starting point whether it is associated with invention or opportunity spotting. This creativity is turned into practical reality (a product, for example) through innovation. Entrepreneurship then sets that innovation in the context of an enterprise (the actual business), which is something of recognized value” (Burns, 2013, p. 386). Burns adds that creativity, even without a viable product application, can serve a business by feeding back into the innovative process, helping to generate viable products in the future. Figure 1, below, illustrates Burns theory of creativity, innovation and entrepreneurship. Figure 1: The link between “Innovation, Creativity and Entrepreneurship”; Burns, 2013, p. 38 Blauth also found an inseparable correlation between creativity, innovation and entrepreneurship. Blauth et al. (2014) adds to Ambile’s (2013) findings that creative function is a Page |3 combination of internal and external factors consisting of work environment and individual characteristics (Blauth et al., 2014, p. 496). The researchers note that in an environment which supports creativity, there are both resources available for individuals to use in order to be creative, as well as upper-level management encouraging creative expression (Blauth et al., 2014, p. 496); and encourage creativity and innovation, 3M’s upper-level management has done and will continue to do. In the 1940s, McKnight, the first chairman of 3M in 1949 and a superb business philosopher, built a management culture that focused on innovation. McKnight held the philosophy, “Hire good people and leave them alone.” His philosophy still continues to this day (Gundling, 2000) with a managerial atmosphere that encourages risk-taking and forgives failure, fostering a culture of creativity and innovation. Larry Wendling, 3M’s vice president, has also done much to encourage the philosophy of creativity and innovation; strengthening 3M’s entrepreneurial foundation (Alderson, 2014). For many years, this philosophy and foundation has been well supported and executed. 3M’s success can be traced back to its original nascent principles and process.’ These processes’ still exist with much success today, owing to 3M’s collective innovative mind (Ambile, 2013). An appropriate corporate culture is vital in the development of an entrepreneurial organization (Burns, 2013, p. 471). An entrepreneurial culture develops when members of the organization are able to anticipate and adapt to environmental changes. In turn, these entrepreneurial cultures show superior performance because of their adaptability in comparison to their non-entrepreneurial counterparts (Kumar and Haran, 2006). The culture in 3M is unique and seen as one of the leading examples of achieving a successful and innovative culture within an entrepreneurial organization. According to Burns (2013) the culture in 3M evolved out of its place Page |4 of origin and has been called ‘Minnesota nice’. Furthermore, Burns (2013, p. 92) says that the culture has been described as “non-political,” “low-ego,” “egalitarian” and “non-hierarchical” as well as “hardworking” and “self-critical” . The extent to which a company is entrepreneurial depends on its workforce and the attitude of individuals. Cuervo et al. confirms this, writing: “The crux of corporate entrepreneurship is, then, that opportunity for the firm has to be pursued by individuals within it, who may have perceptions of personal opportunity more or less at variance with opportunity for the firm” (2007, p. 164). In other words, an entrepreneurial organization can’t exist without an entrepreneurial workforce or entrepreneurial individuals. Effectually, 3M’s entrepreneurial workplace culture is the engine of the organization. Ackenhusen et al (1994) found a strong link between 3M’s ability to continuously create innovative products and its entrepreneurial culture. According to Ackenhusen et al one of the most visible drivers of innovation was a rule that was laid down in the company’s early days known as “the 15% rule” which gave every technical employee 15% of their working week to pursue whatever project he or she desired (1994, p. 2). The best known product to spring from someone taking advantage of the 15% rule was the Post-It® note product (Ackenhausen, 1994). A product developed from the “adhesive” sector’s research and development. 3M’s Post-It® note still dominates the market to date. Ackenhausen (1994) also found that 3M’s upper-level management encouraged “a healthy disrespect for the rules”—as can be attested to by the 15% rule. Findlay and Lumsden consider the release of creativity to be related to an individual’s personality traits that, when given the free time and free rein, the individual utilize in the development of creative ideas and solutions (1988). 3M leaders believed that if employees weren’t afraid of being punished for stepping outside the bounds, this new found freedom would encourage innovation and the pursuit of ideas and projects Page |5 which would have otherwise been overlooked. When each employee follows this cultural convention, it turns into a significant competitive advantage for 3M. These conventions empower the employees to break the mould with their creativity; this culture of creativity in turn opens new ways of thinking and creating new ideas without any pressure from the top management. According to Blankhorn and Fleisher (2005) 3M’s operational structure plays an integral role in the company’s formal mechanism of nurturing an innovative environment. Following such a unique multi-level reporting matrix structure prevents the company from adopting a product or regional focus and instead encourages management as a whole to attend to the needs of consumers both on a local level and worldwide (Blankhorn and Fleisher, 2005). Its innovative organisational processes positively adapt the business’ production and process’ to adjust to an ever-changing, competitive market (Gundling, 2000). 3M has found four essential elements when it comes to managing innovation: development of products and services, survival on their market and industry, satisfaction of customers and employees, and competitiveness between companies (Crawford et al., 2003). Developing products and services occurs as new ideas are shared across the company and the fertilisation of the novel idea takes root (Schumpeter, 1942). As a firm driven by developing high tech innovation, 3M believes that the key to successful innovation is encouraging people to be creative and discover new ideas, whether or not they work (Thomke and Nimgade, p. 20). Fostered but not controlled but upper-level management, 3M’s workplace culture encourages effective, honest, and efficient communication between all corporate intrapraneurs and their managers. Early on, 3M recognised that open communication encourages 3M’s entrepreneurial employees to share vision and find motivation for their work (King and Lenox, 2001). 3M believes employees’ dialogue reaches down diverse channels, disseminating across the Page |6 entire company. 3M has organised conferences, forums and trade fairs to enhance networking and information sharing. The firm recognises the profitable opportunity that networking avails when it comes to generating internal business platforms and gather external customer feedback (Dean and McMullen, 2007). When it comes to an individual’s traits which support creativity, Blauth et al. (2014, p. 496) express that patience, the willingness to take risks and even acceptance and desire to learn from failure are all indicators of a creative individual. Blauth et al. also notes that these characteristics are used to describe entrepreneurs as well (Blauth et al., 2014). As Ambile discusses, creativity is the inseparable precursor to innovation (1988, p.126). One cannot have an environment which fosters innovation yet not creativity. Given that innovation, creativity and entrepreneurship are linked together (Burns, 2013; Bolton and Thompson, 2004; Ambile, 2013), the practices which influence and guides 3M’s capacity for consistent innovation, also influence and encourage 3M’s creative capabilities. Creativity and innovation are the foundation of 3M’s organisational image; an image the firm prides itself on (Dean and McMullen, 2007). 3M seeks to continually inspire its employees through celebrating and encouraging their innovative achievements. The workplace culture which rewards innovative success has positively impacted the 3M’s entrepreneurial image and endeavours (Doornik and Roberts, 2001). 3M is synonymous with innovation and has been described as ‘a smooth running innovation machine’ (Mitchell, 1989). Every division within 3M is arranged specifically towards the market; focusing on meeting the requirements of customers (Conceição et al, 2011). Each division is allowed to use the technological resources of the 3M, but also has the responsibility of communicating the discovery of customers’ technological needs throughout the company Page |7 (Conceição et al, 2011). What’s more, Conceição et al. (2011) indicates that innovation in 3M is also driven by the collaboration of core technologies in order to create new products and applications. For the sake of fulfilling the needs of the customers, since mid-1990, 3M has emphasized that each year, 30% of its sales must come directly from new products introduced over the previous four years (Garud et al, 2011). Figure 2 below illustrates 3M’s “Innovation Model” (3M, 2011). The model serves to depict 3M’s ability to interweave its applications into new frontiers, leading to new applications and products. Figure 2: “3M Innovation Model.” (3M, 2011) When it comes to product creation, Boh et al (2013) finds that 3M employees work to discover what is different. What does a certain new invention or technology do that the previous inventions or technologies were incapable of doing? Moreover, they adopt a strategy of actively Page |8 championing one or more technologies in their core domain; applying, integrating and recombining this technology with a broad spectrum of areas and technologies (Boh et al., 2013). THE THROUGH-LINE: 3M IN THE 1990’S In 3M’s 2015 sustainability report, the report states that “3M’s primary growth strategy is organic, which is why research and development is the heartbeat of our company” (3M 2015, p. 32). This has been an established notion within 3M since its inception; however, when it comes to investing funding and resources, 3M is also incredibly savvy when it comes to investing the right amounts at the right time in order to gain a higher profit yield. At the beginning of the 1990s, 3M was investing $914 million dollars into its research and development sector. According to Burns (2013, p. 91) this is primarily due to the fact the company began to realize that many small niche markets could prove to be more profitable than a few large ones. This funding covered 3M’s basic scientific research and then the application of 3M’s scientific advances in the development of new or improved products (3M, 2015). In the mid-1990s this approach began to change. The technologies became more sophisticated and the importance of and money invested in developing new product increased (Burns, 2013, p. 91). Burns continues that at the same time, competition was becoming tougher and the rapidity of technological change and shortening of product life cycles made 3M recognize the need to dominate any market niche quickly (2013, p.91). This move was intuitive given the different product and market segments 3M was already operating in. Burns adds that in the 1990s 3M came to recognize that it did best when it introduced radically innovative products into a niche market in which it already had a toe hold (2013, p.91). Yet again, this underlines the cleverness and market savvy of 3M as well the effectiveness of the 15% rule when it comes to creating innovations quickly. Page |9 By the end of the 1990s, the R&D funding allotment had been reduced to $688 million. Over the course of a decade, 3M had reduced its initial R&D allowance by 24.73% (investors.3m.com, 2016). However, this initial influx of funding to the R&D sector and then slow scale-back of related funding saw a net sales surge of 17.23% by the end of the twentieth century (investors.3m.com, 2016). Figure 3 below demonstrates the development of the net sales and net income of 3M from 1991 to 1999. Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 Research and development- expenses (Dollars in Millions) Net Sales (Dollars in- Millions) Net Income- (Dollars in Millions) Figure 3: Compiled Data from 3M Report (Financials - SEC Filings, 1994 & 1997). Figure 4 and Figure 5 are illustrations of 3M’s ability to create and innovate over time. One of the unique characteristics of 3M is the way in which it adapts previous invented products to meet the present day consumer’s needs. Figure 4 illustrates 3M’s invention and adaptation of its Micro-Replication Technology (i.e.: overhead project lens) from its initial inception in the 1960’s to its present-day use. P a g e | 10 Figure 4: “Product and Technology Migration: Micro-Replication Technology.” 3M Innovation Story: Uncommon Connections, Innovative Solutions (2011, p.8) Figure 4 (above) illustrates 3M’s unique process of creation, invention and adaptation. From one product, in this case an overhead projector lens, 3M developed innovations for nine separate market segments. Around the 1990’s the projector lens technology experienced a boom in innovation. Three products (Re-closable Fasteners, Wide Angle DGS, and Optical Lighting Film) birthed nearly 40 different products. This was in response to the popularity of project technology in the 1990s. This 90’s illustration serves to support the notion that 3M has been continuously entrepreneurial and adaptive by nature since its beginnings. P a g e | 11 P a g e | 12 Figure 5 (ABOVE). “Nonwovens Technology Platform,” from A Century of Innovation: The 3M Story (3M.com, 2002, p. 180) Figure 5 serves as a macro-illustration of the majority of 3M’s inventions and their adaptations over time. Much like its smaller counterpart Figure 3, Figure 4 provides a visual understanding of the 3M’s ability to create, innovate and adapt its products to an ever changing market. For example, what started as Sasheen Decorative Ribbons in the 1950’s are now today’s Air Duct Wrap and Grease Duct Wrap. 3M is truly entrepreneurial in that its innovations have birthed seven different sectors: tape backings, wipes and abrasives, medical products, filtration products, insulation and sorbents (ref: Figure 5). In turn, these sectors have spurred the creation of multiple consumer brands. Figure 6 below illustrates how these sectors have spurred the consumer brands. Figure 6: “Transforming Technology into Consumer Brands.” 3M Innovation Story: Uncommon Connections, Innovative Solutions (2011, p.7) P a g e | 13 CONCLUSION The early 1990’s saw a massive reorganization of 3M’s European division in response to external competitive and customer pressure (Ackenhausen, 1994, p. 1). Even with the reorganization, 3M remained loyal to the principles and foundations set from the beginning. Throughout the years, 3M has intentionally kept its upper-level management size small, allowing more power to be spread through lower-management and divisions. As a senior member of 3M explained, “We did a study in the 1960s and 1970s of other organizations that were building up staff and we explicitly decided not to follow their lead” (Ackenhausen, 1994, p.1). To date, and true to form, in response to the recent Brexit, 3M said that it saw “no need to change strategy around Europe based on the outcome of Brexit” (Reuters.com, 2016, p.1). However, a strengthening dollar in the face of the Brexit fallout could lead to slowed growth given that 60% of 3M’s business comes from outside the borders of the United States (3M.com, 2016); a fact 3M will need to carefully consider if it wants to continue successfully growing its business in an uncertain Europe. Innovation doesn’t just mean coming up with new products. It can also mean adapting the ones you have to your customers changing needs (Australian Government, 2016, p.1). David (2006, p.430) concludes that “technological innovation involves developing new technologies that fits to into the prevailing market space, improving existing technology through the development of next generation, or enhancing the existing technology platform.”And this is exactly what 3M has been doing since their first product launch. They have been and always will be close to the customer and aware of his or needs; quickly supplying or adapting products to fill a customer need where an innovation is required For more than a century, 3M has built its business; expanding from the St Paul, Minnesota and wrapping around the globe. 3M has created a successful and P a g e | 14 continuously entrepreneurial organization off of new creations and adaptive innovation and it shows no signs of slowing down. 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