3M's Organizational Culture

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Case Details:

Case Code : HROB022
Case Length : 14 Pages
Period : 2001 - 2002
Pub Date : 2003
Teaching Note : Available
Organization : 3M
Industry : Mining and Manufacturing
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"3M! No doubt about it. You never know what they're going to come up with next. The beauty of it is that they probably don't know what they're going to come up with next, either. But even though you never predict what exactly the company will do, you know that it will continue to be successful."

- Bill Hewlett, Founder of HP, commenting on the company he admired most.¹

"My job is to add scale in a fast-moving, entrepreneurial environment. If I end up killing that entrepreneurial spirit. I will have failed."

- James McNerney, CEO, 3M in January 2002.²

"There is a change in culture, and it is cause for concern."

- Arthur Fry, inventor Post-it Notes, in June 2002 commenting on culture overhaul at 3M.³

"In a company that's really driven by creative thinkers - how do you do Six Sigma and creativity? You can't. And if you force that model on an organization, you're just bound to make it moribund."

- Ryan Mathews, business consultant and critic of Six Sigma management, in June 2002.⁴

One Hundred Years of Successful Innovation

It was celebration time at 3M! The company completed 100 years in business in 2002. For many, 3M represented the house of innovation (Refer Exhibit I). For 100 years, 3M formula for growth - recruit the right people, provide them with the right environment to work and let them do their things - resulted in around 55,000 products and over thousands of patents for the company.

Analysts attributed 3M's success to its commitment to innovation. They pointed out that 3M gave its employees the freedom to conduct research in areas of their choice even if that research was not related to their official projects.

By thus nurturing the talents of its employees and fostering a climate of innovation, 3M became one of the most innovative companies in the world.

In 2001, James McNerney Jr. (McNerney) took over as Chairman and CEO of 3M and announced several initiatives to revive the stagnating growth rate of the company. He initiated cost cutting measures, rationalized purchases, and implemented process improvement programs in the company. He gave a centralized direction to the company from its earlier laissez-faire working style. Analysts cautioned that the changes brought about by McNerney might harm the 100-year old culture at 3M that fostered innovation and sustained its growth over the years. However, McNerney pointed out that the changes brought about in 3M would provide the company a strategic direction in a volatile business environment without harming its organizational culture...

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1] James C. Collins and Jerry I. Porras, Built to Last, (Harper Business, 1997, First edition)

2] 3M: A Lab For Growth?, BusinessWeek, January 21, 2002.

3] 3M at 100 - On the Right Path for Growth? www.news.mpr.org, June 10, 2002.

4] 3M at 100 - On the Right Path for Growth? www.news.mpr.org, June 10, 2002