Case Studies in Entrepreneurship
3M has been known for decades as an entrepreneurial company that pursues growth through innovation. It generates a quarter of its annual revenues from products less than five years old. 3M started life as the Minnesota Mining and Manufacturing Company back in 1902. Its most successful product - flexible sandpaper - still forms an important part of its product line but this now comprises of over 60000 products that range from adhesive tapes to office supplies, medical supplies and equipment to traffic and safety signs, magnetic tapes and CDs to electrical equipment. Originally innovation was encouraged informally by the founders, but over more than a ...view middle of the document...
The company began to realise that many small niche markets could prove to be more profitable than a few large ones. In the 1990s this began to change somewhat to the extent that some technologies became more sophisticated and the investment needed to develop new products increased. Therefore the return required became larger and markets needed correspondingly bigger. Luckily the world was increasingly becoming a global market place. At the same time, competition was becoming tougher and the rapidity of technological change and shortening of product life cycles made 3M recognise the need to dominate any market niche quickly. Speed of response was vital. By the 1990s, many of the market niches 3M was pioneering were turning out to be not that small at all, particularly in the global market place. So, the approach remained the same, but the speed of response and size of market niche, world-wide, increased.
Entrepreneurship and Small Business
Case Studies in Entrepreneurship The company really started to diversify when it entered the tape market in the 1920s, but even this built on its expertise in coatings, backings and adhesives. What is more the way the first product evolved demonstrates perfectly how an entrepreneurial architecture works. By being close to its customers 3M saw a problem that it was able to solve for them through its technical expertise. In selling Wetordry™ to carbody finishers, an employee realised how difficult it was for the painters to produce the latest fad in car painting - two tone paintwork. The result was the development of masking tape - imperfect at first, but developed over the years ‘out-of-hours’ by an employee to what we know it to be today and from that technology developed the Scotch™ range of branded tapes. So, the third strategic thrust was developed having identified a market opportunity through closeness to the customer, diversify into these related areas. Once 3M found a niche product to offer in a new market, it soon developed other related products and developed a dominant position in the new market. In the 1990s 3M came to recognise that it did best when it introduced radically innovative products into a niche market in which it already had a toe hold. This experience also taught 3M the value of research but in particular to value maverick inventors who were so attached to their ideas that they would push them through despite the bureaucracy of the company. It was in the late 1920s that it developed the policy of allowing researchers to spend up to 15% of their time working on their own projects. To this day, it tries to make innovation part of the corporate culture by encouraging staff to spend 15% of their time working on pet ideas that they hope one day will become new products for the company. They can also get money to buy equipment and hire extra help. To get an idea accepted, they must first get the personal backing of a member of the main board. Then an interdisciplinary team...