3M's Organizational Culture

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    Post Graduate Diploma in Management (Infrastructure Management) PGDM ( IM ) : 2016-18   Trimester  –   II   Organizational Behavior  –   II ( OB  –   502 ) Assignment : 3M’s Organizational Culture   Submitted To:   Prof. Jallavi Panchamia Dated : January 8, 2017 Name Roll No. Keyur Patel 25 M.Saad Attarwala 26 Mohmed Safvan 27 Parth Shah 28  “Recruit the right people, provide them with the right environment to work and let them do their thing.”   Abstract: The case examines the organizational culture at 3M and the way in which it facilitated innovation at 3M. The policies and mechanisms adopted by 3M's management to encourage the spirit of innovation in its employees are also discussed. The case takes a close look at 3M's environment of innovation; the culture of knowledge sharing; and the reward system. It also discusses the steps implemented by the new CEO, James McNerney, to accelerate growth at 3M. The impact of cultural change at 3M on the spirit of innovation is also discussed. Company’s Background : 3M was set up in 1902 in Two Harbors, US by five businessmen as the Minnesota Mining and Manufacturing. Its first venture was mining corundum. With $30 billion in annual sales, 3M employs 88,000 people worldwide and produces more than 55,000 products, including: adhesives, abrasives, laminates, passive fire protection, dental and orthodontic  products, electronic materials, medical products, car-care products, electronic circuits, and optical films. 3M has operations in more than 65 countries including 29 international companies with manufacturing operations and 35 companies with laboratories. 3M products are available for  purchase through distributors and retailers in more than 200 countries, and online directly from the company. In 1904, due to a new abrasive replacing corundum, 3m decided to go into manufacturing of sandpaper. In 1907 received its first shipment of garnet and started sandpaper production. 3M  became debt free and reported its first dividend of 6% per share in 1916. In the 1920s it introduced waterproof sandpaper and scotch masking tape and also entered the English market. It also established labs and sales and marketing networks across Europe. In 1937, 3M decided to invest 5% of its sales in R&D to encourage innovation. In 1946, it got listed on the NYSE. In 1949 it 3M offered its employees stock options. 1951, the Technical Forum was set up to encourage the technical staff to share ideas. It also used to invite Nobel Prize winners to forum meetings to discuss their research findings. In 1963, the Carlton Society to honor technical employees for their achievements. The Technical Circle of Excellence and Innovation to honor employees was also set up to honor employees whose innovations had considerable influence on the company’s products,  processes or programs. Furthermore, its Pathfinder Program honored  sales, marketing, logistics and finance and production teams for developing innovative methods for launching new products in the market. In 1977, 3M launched ‘Challenge 81’ a program that aimed at achieving 25% of the company’s annual sales from products that had been in the market for less than 5 years. In the 1990s it was increased to 30% and total years reduced from 5 to 4. In the 1970s and 80s 3M diversified into medical, radiology, energy control and other various fields. In 1980,it introduced Post it Notes, one of its most successful products. In 1984, 3M launched a new program to support innovation  –   The Genesis Program. It was all about optimizing the innovative spirit at 3M. It provided financial support to employees to encourage entrepreneurship for projects in the research stage. In 1986, 3M came up with Alpha grants for non-technical people who wanted to bring in innovations in administration, marketing and other non-technical areas. In 1999, to increase pace of growth 3M was organized into six business segments  –   Industrial, Transportation, Graphics and Safety, Health Care, Consumer and Office, Electro and Communications, and Specialty Material. In 2001 James McNerney took over as the Chairman and CEO of 3M and announced several initiatives to revive the stagnating growth of the company. He initiated cost cutting measures, rationalized purchases and implemented process improvement programs in the company. He reportedly cut down the no. of research projects from 1500 to 700. He further fired over 6500 employees. He also shifted from a seniority based pay structure to a performance based pay structure which diverted the focus of the employees from experimentation to a more result oriented approach. 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.  OB Theories Linked with 3M’s Culture :    Openness:  It is defined as a spontaneous expression of feelings and thoughts and the sharing of these without defensiveness. It applies in both directions, receiving and giving of ideas, feedback and feelings. In 3M’s organizational culture openness is quite high . This can be inferred from case which mentions that 3M setup a ‘Technical Forum’ was set to encourage the technical staff to share ideas. It also used to invite Nobel Prize winners to forum meetings to discuss their research findings.    Experimentation:  It means using and encouraging innovative approaches to solve  problems, using feedback for improvement and encouraging creativity. Experimentation was quite was quite high  in 3M. It gave its employees the freedom to conduct research in areas of their choice. 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 1980s, 3M formed a 16- member ‘Innovation Task Force’ to examine the innovative spirit in the organization.    Confrontation:  It can be defined as facing, rather than shying away from problems. It also involves taking up challenges. This factor was quite high  in 3M. 3M encouraged employees to work on problems that challenged their intellect.    Autonomy : It is the freedom to plan and act in one’s own sphere. It also means respecting and encouraging individual and role autonomy. The degree of Autonomy in 3M was quite high . It gave its employees the freedom to conduct research in areas of their choice even if that research was not related to their official projects. Furthermore, 3M employees were allowed to spend 15% of their working hours on independent projects.    Personal Growth   was encouraged in 3M through the 15% rule. According to the 15% rule, 3M employees were allowed to spend 15% of their working hours on independent  projects. Also numerous awards were setup to reward the technical as well as non-technical staff for innovations which further led to their personal growth. 3M also approached a Dual Ladder approach which enabled technical employees to move up the career path without comprising their research/professional interests.    Innovation and Risk Taking   was quite high  in 3M, this fact can be attributed to the fact that experimentation was encouraged in 3M. Also, 3M’s success was attributed by its commitment to innovation. 3M fostered a climate of innovation.    Initially, Outcome orientation   was low in 3M because experimentation was encouraged in 3M. It gave its employees the freedom to conduct research in areas of their choice even
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