3M: an Innovative Organisation

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Main factors that make 3M an innovative organisation

The 3M story is a story of innovation that transformed failure into success. It also is a story of well-motivated individuals who knew how to create original ideas and make them commercial products customers need.

Innovation is the life-blood of 3M. The people behind the organisation are innovative from the very start. They were five businessmen who didn’t recognise the meaning of failure. From the start, they knew they had to apply innovations because as they decided to dig deeper into the realm of business, they had to encounter difficulties. They didn’t find the right ore mine for their product; instead they found something else.

The founders were looking for a mineral deposit so that they could process it and make it their primary product. But the mineral ore proved to be zero, or perhaps a sham, a wrong information that the original founders may have gotten into. They could have surrendered, put their cards on the table or inform the shareholders and the other stakeholders that to continue would mean more losses for the company. So, it was better that they pack up early, go their own separate ways, start anew and spend or divide what was left of their money.

But they did not surrender. They did not translate failure into despair; instead they looked for other ways to find new product or new business for their struggling new company. Failure motivated the young founders of 3M to be creative and innovative, slowly allowing the small organisation to move, to survive for years until it grew into a global organisation, becoming a hundred-year-old company now experienced in the art of business.

The company now manufactures products like sandpaper, fibre optic cables, commercial and industrial products, health care products, and has focused on customer needs. With creative ideas and new technological inventions from a pool of creative people, the company now owns hundred of patents and intellectual property rights. Among these patents are the Scotch-Brite™ and Post-it®, as well as other brands and logos attributed to the company. (3M company information: history 2012)

3M allows employees to have occasional interaction with people of different cultures. Challenges and difficulties come along with the opportunity. These difficulties range from adjustment to and learning with the new culture which is far distinct from the native culture. Performance is affected when employees fail to adjust with the new culture. Trainings and seminars (on-the-job trainings) are compulsory preparations. This includes cross-cultural training and knowing the unexpected.

Discuss another innovative application or product of a different organisation and state why this product is successful

An example of a product that is considered innovative and successful is the hybrid car Prius invented by Toyota. It is actually an electric car which runs on gasoline and electricity.

As we know Toyota has introduced the concept of kaizen and kanban. These are Japanese terms introduced in Japanese management. Kaizen means improvement that is continuous and gradually introduced. Kanban refers to the process in production where some steps are changed or modified to provide more innovations in production and to avoid unnecessary functions. (Lynch 2008, p. 773)

Toyota used these methods in the manufacture of the hybrid car Prius. Toyota has manufactured millions of cars but the production of Prius consolidated all expert ways of car production and Toyota’s pool of engineers and technicians. The making of Prius enabled the Toyota management team to introduce traditional and innovative technique never before introduced in car production.

But it tarnished a little of Toyota’s image as a hybrid manufacturer because of some defects in the brake pedals which forced the company to withdraw millions of cars worldwide. But Toyota maintains that they had tested Prius many times and introduced quality management before it was made commercially viable to the public.

Prius is the first hybrid project that really caught the eyes of the world, and when Toyota said that it is the car of the 21^st century, management was sure they were telling the truth. (Ichijo & Kohlbacher 2008, p. 174)

Prius as the car of the future started from a mere idea and innovation of other Toyota cars to a contribution of inputs and expert knowledge from the organization’s database and expertise of Toyota engineers. How it failed is not a question here, but how it succeeded at first is what is significant. Prius was a promise fulfilled by Toyota to help reduce materials detrimental to the environment and to see to it that manufacturing plants are environmentally friendly.

Toyota’s decision to push through with the Prius project was motivated by their desire to help in minimizing global warming, thus the need for low-emission vehicles. It gave Toyota an opportunity to break old technical systems with revolutionary, environmentally friendly technologies. It had long worked to reduce emissions in internal combustion engines. Toyota has been into the program of Zero Emission Vehicle, and one of Prius’s features is its being fuel efficient. (Dyer & Nobeoka 2000, p. 345)

Prius engineering program is done almost entirely in-house, but it is a radical innovation. It was then mass produced – the first hybrid car to be mass-produced. Before the complaints and problems surfaced, Prius proved the practicality of hybrid cars. Toyota’s Electronic Vehicle Development Department started the systematic study of the hybrid system, combining an engine and a motor.

This technique of imbedding knowledge in a product yielded economic returns and internal knowledge for the company technicians and engineers, while only utilizing external knowledge later. Toyota did not anticipate that a problem as simple as the brake pedals would tarnish its reputation. There is the presence of the success curse in a company that has enjoyed continued successes right from the start.

The importance of the commercialisation process for innovative organisations like 3M

The company encourages continuous flow of ideas. People at 3M don’t hold their ideas to their own but instead allow the company to take hold of their ideas, put these ideas to work, make them concrete and real turning them into products.

The next step is to allow a brief trial-and-error and test if a prototype is possible. Prototyping is one of the initial steps into commercializing one’s idea. One can imagine that a prototype at last is proof that an idea can be turned into a product. So, before while imagination and creativity were the only ones involved now success in turning that idea into a commercialized product is nearing its fruition.

Before manufacturing that product, all possible scenarios, advantages and disadvantages, and unseen loopholes should be taken into consideration so that making the product a success will finally become a reality. Then, by all means manufacture that product, the fruit of the team’s efforts, of brainstorming and discussion, of countless sleepless nights, and so forth.

At 3M, a product is always the result of quality innovations. This product is applied with total quality management, continuous innovation and best practice. Sophisticated tools and technology are used along the arduous task of making the product meet customers’ requirements.

Marketing the product is another thing but it is one of those challenges 3M people are adept and do not take for granted. The product is applied with the necessary marketing mix such as product, price, place, and promotion. Creative employees have added the fifth P which is people.

These are applied and executed at 3M, but 3M people have not forgotten the traditional parts of the marketing mix which are advertising, personal selling, public relations and sales promotion. These are marketing activities that have to be executed by the marketer and his/her team in order to introduce the new product.

Marketing research on experience focuses on what the customer wants. Benefits are in the form of satisfaction and customer experience of the product. Consumer behaviour for example has three aspects which are: creation of information, behavioural concept theory, and consumer attitude theory. These concepts provide consumer insight on consumer experience. (Schmitt 2010, p. 55)

Supply chain goes with the demand chain in order to see to it that complexities in the market are properly addressed. Demand chain points to a network of trading partners which include manufacturers and end users. It is also linked to the customers who have to be consulted on the product quality. It starts with the manufacturer, goes to the customer or end user but has to link back to the manufacturer because the customers’ ideas and opinion regarding the product are significant.

In a research conducted by Edward Morash and Daniel Lynch (cited in Jobber and Lancaster, 2003, p. 15), in which they involved surveys on global capabilities and performance measurement practices, they found that customer closeness is important in the new global setting. The research found that some supply chains are also experimenting with mass customization, which is a strategy that combines operational excellence with customer closeness.

A key performance indicator (KPI) is often used to measure the success of a certain activity in an organization. Write an essay to discuss the importance of KPI to organizations. Support your answers with examples of real organizations and from various business functions.

A key performance indicator is a measure indicating how an organisation scored on a particular part of its performance. A KPI represents an organisation’s success on a specific objective. In other words, when an organisation measures its overall performance, it identifies several success factors that comprise organisational objectives. A KPI is usually expressed in numbers or percentages. (Burby & Atchison 2007, p. 75)

A KPI can be defined in many ways in accordance with the organisation’s type of business, or activities and products. For instance, an organisation which is non-profit and whose objective is to provide aid to poor individuals and communities, its KPI is measured on the amount of aid, financial or in kind, to individuals and entities.

A KPI is a basis for an organisation’s future goals and projects. If an organisation does not have a measured KPI, it cannot tell how it has attained its goals. There are organisations that used many KPIs in their various businesses, products, or activities. A KPI is very important because it indicates how successful an organisation’s business is and how it scores in the different organisational activities.

A KPI is a measurement of what has been done in business or organisation. KPIs tell about the organisation’s goals and objectives. They are measured on a regular basis and not just once. Members of the organisation contribute to the creation of KPIs and agree on their significance.

An aspiring entrepreneur who sells appliances measures his KPI by the number of appliances sold for a month. He can accompany this with a short survey asking customer opinion why they preferred the particular appliances. The KPI survey will determine the entrepreneur’s decision in his next requisition from the appliance supplier.

Another important thing is that a KPI must be timely so that employees and decision makers know what to do. If it is a late KPI, it is useless. For instance, a KPI is needed on how a product will be introduced to a certain market segment. If the results are not immediately known, competitors will enter the scene and beat the organisation on this aspect of business. (Parmenter 2007, p. 151)

An organisation conducts KPI to determine the financial viability of a certain project, whether the operation has increased the revenue, or whether it has higher profit.

Internal activities in an organisation also need KPIs or performance measurement to determine the effectiveness of some functions, like knowledge sharing. Knowledge sharing as best practice cannot be easily attained. There are barriers to this kind of HRM exercise. Szulanski (1996) termed it the internal stickiness within the firm.

Organisations apply and transfer best practice among themselves, or within the firm, but barriers impede the transfer of knowledge from people to people, from department to department, or from branch to branch.

Experiences of some organisations like General Motors, IBM, and others, proved that it is not easy to transfer knowledge as best practice. Internal stickiness has been seen as an important topic of study. A KPI is needed and applied to determine how effective is best practice introduced within the firm. (Groysberg, Nanda, & Nohria 2005, p. 5)

Technology giants conduct periodic KPIs to their volume of sales to determine whether profit increased for the period or whether their products satisfy customers. If sales have increased for the period, it means their product meet customer demands. For example, Nokia reported a decline of 7% in mobile phone sales in 2009.

Apple’s iPhone and Research in Motion’s BlackBerry were leading in the competition, a major threat to Nokia. Google’s Android, the mobile operating system, also became a threat as it was gaining advantage in the market. Nokia’s profit on handsets fell by 18.6% during the second quarter of 2009, quite a big margin. But it remained to be seen because Nokia led in the high-volume of sale of cheap handsets and devices in the developing countries. (Reardon 2009, p. 1)

Nokia had net sales of €40,984 million in 2009 compared to €50,710 million in 2008. It was also higher in 2007. The KPI data tell us that there has been a continuous shift in the volume of sales for Nokia. In 2010, with the appointment of Mr. Elop as the new CEO, Nokia began to make some improvement but not much. But it showed that the KPI for this period of transition enabled the company to make a decision and that is to appoint a new CEO. (Reardon 2009, p. 1)

Nokia made a decision to introduce a new product series, the N-97 which is said to be a success although it could not really compete with the already popular Apple and RIM devices which are said to be growing favourites of the young demographic. (Reardon 2009, p. 2)

Nokia hired Strategy Analytics to conduct KPI. According to the study, Nokia’s share in the global mobile phones sales had been maintained, or there was a wide control of 40.3 percent, a little down than the year 2008 which was 40.7 percent. In the United States, it lost its grip of the market – a big fall from 35 percent to 8.1 percent in April 2002. Apple, Samsung, and Research in Motion had the advantage. Their devices were more advanced than Nokia’s. (Reardon 2009, p. 3)

The next year, Nokia had a rebound of 70 million Smartphones sold globally while Apple only had 33 million iPhones sold. The new CEO promised a new rise for Nokia from its slumber. Report for 2010 registered positive with sales in the fourth quarter reaching €12.7 billion. (Reardon 2009, p. 3)

There are advantages brought about by the KPI results. This resulted in the selection of Mr. Elop as the new CEO. But Nokia’s experience in the Smartphone market was enhanced by the innovations its engineers introduced. Their biggest asset is Microsoft. Nokia and Microsoft naturally emerge as a formidable force in the mobile software. Google and Apple are major competitors.

It was only in the United States market that Nokia lost by ten percent. But in the overall leadership of handsets, it had a 38 percent share of the market. Nokia failed to gain the support of four big U.S. phone manufacturers which account for the big bulk of phone sales in the country.

Nokia is still the leader in the sale of low-cost cell phones worldwide. Nokia has introduced innovative products and many of these are still with the company. With the new leadership of Mr. Elop, observers and analysts have commented that the products will surely come to life again. One of the products is the touch-screen handset which can be connected to the internet. (O’Brien 2010)

Big and small organisations conduct periodic KPIs to determine market sentiments and market needs. As mentioned, there are many uses and advantages. Decision making is triggered by KPI results.

Nokia needed a periodic KPI for its series of mobile products. Like the other competitors, it has a lot to catch up. And all these organisations need KPIs that can provide a brief and accurate background of the market. It can provide them a chart for important decision making.

The Smartphone market is threatened by competing giants. The annual sales for this market are estimated at 400 million devices. Nokia has been telling the public that they are catching up with new products to beat Apple and Microsoft.

Nokia has struggled in the Smartphone market and in the mobile software sales. Its profits had been reduced with the entry of the Android operating system, along with Apple and BlackBerry. Nokia needs a strong asset to make its hold in the Smartphone market and retain its lead once again. (Reardon 2009, p. 3)

Nokia has produced the Ovi platform which is a service business and a new product, the Nokia Netbook. This kind of product needs regular KPI data, not just periodic, because it tells how the product has performed in the market and how the designated demographic has responded to the product.

References

Burby, J & Atchison, S 2007, Actionable web analytics: using data to make smart business decisions, Wiley Publishing Inc., Indiana.

Dyer, J & Nobeoka, K 2000, ‘Creating and managing a high-performance knowledge-sharing network: the Toyota case’, Strategic Management Journal, Strat. Mgmt. J., 21: pp. 345-367, via City University London database.

Groysberg, B, Nanda, A, & Nohria, N 2005, ‘The risky business of hiring stars’, Harvard Business Review, via City University London database.

Ichijo, K & Kohlbacher, F 2008, ‘Tapping tacit local knowledge in emerging markets – the Toyota way, Knowledge Management Research & Practice 6, pp. 173-186. Web.

Jobber, D & Lancaster, G 2003, Selling and sales management (sixth edition), Pearson Education Limited, England.

Lynch, R 2008, Strategic management, 5th edition, Financial Times/ Prentice Hall, USA.

O’Brien, K 2010, Nokia’s new chief faces culture of complacency. Web.

Parmenter, D 2007, Key performance indicators: developing, implementing, and using winning KPIs, John Wiley & Sons, Inc., New Jersey.

Reardon, M 2009, ‘Nokia’s Smarphone problem’, Signal Strength – CNET News. Web.

Schmitt, B. 2010, ‘Experience marketing: concepts, frameworks and consumer insights’, Foundations and Trends® in Marketing, vol. 5, no 2, pp 55-112, via City Universdity London database.

Szulanski, G 1996, ‘Exploring internal stickiness: impediments to the transfer of best practice within the firm’, Strategic Management Journal, Vol. 17 (Winter Special Issue), 27-43, via City University London database.

3M company information: history. 2012. Web.

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3M: an Innovative Organisation

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