"To be creative is to be courageous. Those who lack courage or fear solitude cannot be creative".

At 3M, early leaders established a relatively successful approach to Managed Innovation by favoring independent R&D programs. 3M CEO William McKnight declared the companys rationale more than 50 years ago when he said that, "As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. Mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their jobs." 3Ms innovation success subsequently relied on long-term, individually directed exploratory research projects. Management for such projects, particularly in their early incubation stages, has been governed by two maxims: "Hands off!" and, "Dont ask, dont tell!" But shareholders concerns have changed, and 3M was forced to expand its innovation toolkit. This included more systematic approaches to innovation and methods that include more direct links with management

Lead User System

One approach is called the Lead User System, which has reliably produced profitable new products, services and strategies for 3M. It does this at a rate that beats the "natural" odds. Eric von Hippel of MIT initially developed the Lead User System. The system balances the needs of shareholders and management (with their bottom-line-oriented view of the world), against the needs of "fuzzy front-end" innovation developers. Lead User Teams are made up of four to six individuals with a diverse set of skills. Teams with members from both technical and marketing functions are necessary. Depending on its focus, a team might be populated with members from procurement, manufacturing or any other functional area. All team members are taught techniques for creating profitable solutions to unarticulated customer needs, well in advance of the competition. Lead User Teams are told to welcome ambiguity and uncertainty. They are taught to set their sights on exploring the areas where the possibilities for discovery are greatest because the pre-existing knowledge is most slim. The teams must learn to recognize these gaps in understanding as prime locations for generating new products and concepts. All of this is done with the acceptance that these gaps tend to arise in areas where the team members have little experience. The teams are shown how to seek, value and protect ideas that dont reflect "business as usual," be it new technologies, applications, strategic relationships, channel partnerships, or service offerings.

Because the opportunities are typically so remote from their every-day experience, team members start by getting acquainted with "what we dont know." Team members then work to increase their knowledge base at a greatly accelerated pace, primarily through their contacts with "Lead Users" and "Lead User Experts." The Lead User System achieves success by approaching innovation in a disciplined way. The cross-functional teams go through a set of phases, retrieving information from specific sources and then collaborating with these sources to create new products, services and strategies. Typically, teams conclude their work by bringing Lead Users and Lead Use Experts together with 3M development specialists for a workshop dedicated to collaborative solution design. After the workshop, the teams go back and finalize their prioritized plan for moving from concept to realized stages of development. The Lead User System is now one of the more productive and cost-efficient innovation methods in use at the company today. The system accomplishes in months with four to six people what otherwise has sometimes taken far longer to obtain: profitable, commercial products that tap unarticulated customer needs. And the products and services the Lead User System creates are more novel, more likely to "change the basis of competition" a watchword phrase at 3M.

Company Profile
Large (70K employees, $15bn sales), global operations (200 countries), multi-product (50K range), multi-market business.

Innovation Hall of Fame

This company has been around for just over 100 years and during that period has established a clear reputation as a major innovator. Their technical competence has been built up by a long-term commitment to R&D on which they currently spend around $1bn p. a.; this has yielded them a regular position in the top 10 in US patents granted. They have launched a number of breakthrough products which have established completely new markets and they have set themselves a consistent stretch target of getting 30% of sales turnover from products launched during the past four years

Innovation Strategy and Leadership

The company has always valued innovation and this has been a consistent and key theme since their inception; their hero figures amongst previous CEOs have been strongly associated with enacting and supporting the innovation culture which characterizes the firm. Their overall innovation strategy is focused on two core themes deep technological competence and strong product development capabilities. They combine these to enable them to offer a steady stream of breakthrough products and line extensions/product improvements. A great strength is the integrated input from the technical and marketing side which enables creative association, coming up with new and often powerful combinations of needs and means A number of key strategic enablers include:

 Setting stretch targets such as x% of sales from products introduced during the past y years provides a clear and consistent message and a focus for the whole organization Allocating resources as slack space and time in which staff can explore and play with ideas, build on chance events or combinations, etc. Encouragement of bootlegging employees working on innovation projects in their own time and often accessing resources in a non-formal way the benevolent blind eye effect Provision of staged resource support for innovators who want to take an idea forward effectively different levels of internal venture capital for which people can bid (against increasingly high hurdles) this encourages intrapreneurship (internal entrepreneurial behaviour) rather than people feeling they have to leave the firm to take their good ideas forward In recent years they have seen their momentum falter, in part because of the sheer scale of the operation and the range of competition. Their response has been to identify a series of Pacing Plus programmes, which attempt to focus and prioritize around 30 key areas for development across the business essentially an innovation strategy. How They Did It Recognition and reward Throughout the company there are various schemes which acknowledge innovative activity for example, their Innovators Award which recognizes effort rather than achievement Reinforcement of core values Innovation is respected for example, there is a hall of fame whose members are elected on the basis of their innovative achievements Sustaining circulation Movement and combination of people from different perspectives to allow for creative combinations a key issue in such a large and dispersed organization Allocating slack and permission to play Allowing employees to spend a proportion of their time in curiosity-driven activities which may lead nowhere but which have sometimes given them breakthrough products Patience Acceptance of the need for stumbling in motion as innovative ideas evolve and take shape. Breakthroughs like Post-its and Scotchgard were not overnight successes but took 2-3 years to cook before they emerged as viable prospects to put into the formal system Acceptance of mistakes and encouragement of risk-taking A famous quote from a former CEO is often cited in this connection: Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow Encouraging bootlegging Giving employees a sense of empowerment and turning a blind eye to creative ways that staff come up with to get around the system acts as a counter to rigid bureaucratic procedures Policy of hiring innovators Recruitment approach is looking for people with innovator tendencies and characteristics Linkages and Networking The power of association deliberate attempts not to separate out different functions but to bring them together in teams and other groupings

 Encouraging broad perspectives. For example, in developing their overhead projector business, it was close links with users made by getting technical development staff to make sales calls that made the product so user-friendly and therefore successful Strong culture dating back to 1951 of encouraging informal meetings and workshops in a series of groups, committees, etc., under the structural heading of the Technology Forum established to encourage free and active interchange of information and cross-fertilization of ideas. This is a voluntary activity, although the company commit support resources, but it enables a company-wide college with fluid interchange of perspectives and ideas Recruiting volunteers. Particularly in trying to open up new fields, the involvement of customers and other outsiders as part of a development team is encouraged since it mixes perspectives With the above options in mind 3M has taken two main approaches to innovation: firstly defining needs that could use 3M technology knowledge by design; and secondly, developing new technologies that then require product applications to be found knowledge by emergence. l. Knowledge by Design In the area of needs seeking technologies, top management is involved by initially defining, through planning systems, those customers it wants to work with and then encouraging technical people to become part of those end-user customers adaptive systems. This way technical people are in a position to define the customers unarticulated needs which may lead to new innovations. An example here is 3Ms graphic business, which began when panels of flexible plastic material were screen printed to create advertising and informational displays on the side of truck trailers. From this experience, the business learned to use the material for graphics around petrol stations and on the sides of buildings, and then for floor graphics as advertisements in supermarkets. Another example, Thinsulate material, launched as a warm lining for ski and climbing jackets, has spread into camping gear, uniforms and acoustic dampening for cars a continual learning process combining what 3M has to offer with what the market might need. 2. Knowledge by Emergence As for the second approach where technologies, often emerging from serendipitous situations, are looking for a product definition, there are a number of examples. 3M obtained its first fluoro chemical patents in 1945. One hundred lab scientists worked on the programme until 1953 without any application being discovered, until during that year, a lab scientist, Patsy Sherman, dropped some chemicals on a tennis shoe and found that it was dirt resistant. The result was Scotchgard chemicals to protect textiles and Scotchban chemicals to protect paper. Another example is random web technology which was supported for six years before an application floor matting was developed. 15% Rule An important support for innovation is signalled by 3Ms 15% rule which states that 3M people can spend 15% of their time working on innovative ideas of their own choosing. This figure of 15% is not a hard and fast percentage. Not everybody uses it and some take far more than 15% time especially when a promising idea takes form as a likely product. But the message is clear; it is saying it is OK to try something not on the main line. The consequence of this 15% rule has been a number of important new businesses for the company

Grants Money as well as time is required for innovation. The 15% rule helps with the issue of time. Genesis and Alpha grants help with money. Technical people can apply for 3M Genesis grants to buy equipment to assist them in the development of their 15% ideas. Or they can use the grant to pay for temporary labour to do some of their existing work while they spend their own time developing their 15% project. The Alpha grant is for developing ideas, such as new processes, which fall outside the technical area.