We open Chapter 5 (Design of Goods and Services) noting that leading companies generate a substantial portion of their sales from products less than 5 years old. And The Wall Street Journal (Oct. 6, 2023) reminds us that “the 20th century belonged to the unruly minds at 3M,” with 30% of their profits from new products.
What a great company. From its early days, 3M gave its researchers a long leash to chase ideas, many to dead-ends. The hits, though, were indelible: Scotch tape. Masking tape. Videotape. Post-it Notes. N95 masks. Artificial turf. Heart medication. 3M patented adhesives and abrasives. Proprietary coatings and films —materials at the heart of highway signs, weatherproof windows and stain-resistant clothing and carpets. Its optical film brightened the screens of millions of laptops, smartphones and flat-screen TVs.
But of late, there are fewer new products and fewer still have been blockbusters–and the company has retreated from its traditional 30% goal. For decades, 3M released a cascade of new items on the market, confident most would be profitable and a few would become indispensable.
3M’s innovation principles took shape more than a century ago under its then president, William McKnight, who believed in worker autonomy and initiative. “Mistakes will be made, but if the man is essentially right himself, I think the mistakes he makes are not so serious as the mistakes management makes if it is dictatorial,” he said. He instituted the McKnight principles, one of which allowed researchers to spend 15% of their time on projects unrelated to their everyday tasks—even if their managers disapproved.
The principles championed collaboration, encouraging researchers to share findings. The Post-it Note came about after scientist Art Fry, bedeviled by paper bookmarks falling out of his church hymnal, remembered a semi-sticky adhesive discussed at a company seminar. The product was an instant success after it hit stores in 1980.
Now, researchers are encouraged to pursue incremental improvements to existing products rather than novel, swing-for-the fences breakthroughs. A recent CEO installed “Six Sigma,” a regimen used at GE to measure and standardize business practices (see Chapter 6) but loathed by 3M researchers as a creativity killer. Further, budget cuts have trimmed 8,500 employees this year.
Classroom discussion questions:
- What do you think of the McKnight principles?
- Why are new products so important?