Answers to Innovation Management

1. There are many examples of successful companies. To what extent is 3M justifiably highlighted as the ‘innovating machine’? During the 1980s and 1990s, 3M delivered consistently good results and continued to deliver many new products across a wide range of industries. It was rightly classified as a highly successful and innovative firm. Indeed, it won the Fortune 500 most innovative company award for several years during this time. Furthermore, 3M’s performance has not been as strong as it was in the past. Some analysts have argued that it has not delivered in terms of return on its investment in R&D. 2. In the 3M case study, what is meant by the statement: ‘the message is more important than the figures’? This refers to ensuring that employees realize that the 3M reward innovation even if there are times when the guidelines, for whatever reason, may be ignored. While a business may not deliver 25 per cent of sales from new products, so long as it delivers 15, 16, 17 per cent, that will probably be acceptable. Hence, it is about ensuring that the culture of innovation is enforced. 3. Discuss the merits and problems with the so-called ‘15 per cent rule’. Consider cost implications and a busy environment with deadlines to meet. To what extent is this realistic or mere rhetoric? The idea that scientists can spend almost one day a week on projects that they find interesting seems a wonderful thing. What happens when there are turbulent times, unexpected events that cause disruption to the firm, surely then, critics would suggest employees would be required to drop what they are doing and ‘help out’. The firm’s response may well be that the 15 per cent is flexible and while they may be times when it is not feasible, over a long time frame, scientists are afforded approximately 15 per cent of their time. This is a flexiblility is about trying to ensure there is slack in the R&D environment for creativity. 4. Encouraging product and brand managers to achieve 25 per cent of sales from recently introduced products would be welcomed by shareholders, but what happens if a successful business delivers profits without 25 per cent of sales from recently introduced products? Take the Post-It notes business for instance – for many years in the early period of its development, it could barely keep up with demand for existing products; so the idea that it had to deliver new products was certainly difÏcult to achieve. Moreover, any firm would probably have said keep doing what you are doing, the profits are great. The point here is once again the emphasis on delivering innovation and new products, in particular, forced the firm to at least think of the future and start considering new products. Arguably, this helped the firm deliver a whole range of different versions of the original yellow Post-It note. 5. Some people may argue that 3M’s success is largely due to the significance given to science and technology and this is the main lesson for other firms. Discuss the merits of such a view and the extent to which this is the case. It is unquestionably the case that the firm has an impressive record when it comes to investing in science and technology over a 70-year period. But science and technology alone is not enough as many once-successful firms will testify. Indeed, in the late 1990s, 3M came under severe pressure from investors to show some return from its investment in R&D; this was because profits were sluggish and the new product pipeline was looking empty. 6. Explain how the innovation dilemma affected 3M. The Six Sigma programme is a series of management techniques designed to increase efÏciency. For the most part, the implementation of the Six Sigma programme was successful as it focused on the operations (manufacturing/logistics) side of the business. However, when 3M’s R&D personnel were asked to adopt Six Sigma processes, the results were less favourable. While established operational processes like manufacturing require strict monitoring, measuring, and a regimented set of procedures, the innovation process requires a different approach. 3M felt pressure to produce more new products faster. The result was a greater number of incremental product-line extensions than true new product innovations. Traditionally, 3M drew at least one-third of sales from products released in the past five years, but in 2006 that fraction has fallen to one-quarter of sales. In 2004, 3M was ranked No. 1 on the Business Week/BCG list of Most Innovative Companies. In 2007, the company dropped to number seven.