Minnesota mining and manufacturing, known as 3M, is one of the most innovative and influential companies in its industries. After a deep stagnation, the company dramatically strengthened its market position after the McNerney arrival. This person applied many important techniques and improvements so that his performance analysis is actual for these days. Besides the number of implementations made by the supervisor, increasing human capital and building a strong organizational culture are the most important innovations, because of which 3M possesses a competitive advantage.
Firstly, there were some internal factors that led the company to success before McNerney’s arrival. To begin with, the diversity of its specialization hedges the business from the risks of economic cyclicity in some industries. Moreover, for nearly 60 years, the corporation remained the leader in inventive research and development performance, which allowed it to gain large profits from the “fancy” products: Scotch Tape or Post-It Notes (Regani, 2007). Consequently, the conjunction of effective diversification and innovativeness gave the 3M a strong competitive advantage and led it to the “big” market.
Secondly, when McNerney came to the corporation, he did a great amount of work on the main 3M’s profit locomotives. For example, his organizational culture-changing significantly impacted the company’s revenues and the workforce’s effectiveness. The director began to control the researcher’s work by providing a discipline concept, which stopped the tendency of creating out-of-demand products (Regani, 2007). From the other perspective, the right research emphasis resulted in creating and improving many of the 3M’s merchants.
Following this, the company increased its revenue from $16 to $16.3 billion, even though the restructuring activity also influenced this tendency. The main essence of McNerney’s actions was that the enterprise executives did not focus on the results and ignored an interaction with creative people by thinking that they would make everything independently.
Moreover, his actions were similar to those which were analyzed in the previous class studies. To illustrate, Cohn et al. (2008) described a situation when managers left researchers alone and thought that they would “spontaneously generate new ideas much as a magician pulls a rabbit from his hat.” On the other hand, the most important process of innovative work includes teamwork, when people listen to the ideas, assess them, and discuss their performance possibilities in case of team acceptance.
Thirdly, while many novelties were provided during the McNerney managing, the results from working on human capital increase made the biggest impact on the corporation’s performance. To start with, immediately after his assignment, the director made a difficult but crucial decision on the number of human resources: he dismissed more than 6,000 people from 3M to remain controlling a company’s cash flow in difficult situations (Regani, 2008). On the other hand, this controversial step resulted in workforce concentration.
Following this, on average, human capital became more qualified and motivated to work for the potential market successor. In order to increase the efficiency of human resources, McNerney made another important attempt: he opened a school of leadership, providing 17-days intensive courses for selected employees. Moreover, the CEO implemented a 15 percent rule that allowed workers to pass more than one-sixth of their work time on product improvement (Regani, 2008).
This crosses with an article dedicated to the workforce’s potential. In this article, it is stated that “the question now is not whether people have the right skills, it is whether they have the potential to learn new ones” (Fernández-Aráoz, 2014). From this perspective, the leadership program disclosed and increased the workers’ growth potential and resulted in creating the same potential for the company’s growth.
While analyzing the inter-department communication efficiency, McNerney realized that the lack of it might destroy its workforce productivity. Consequently, the directors insisted on the R&D department interaction with other departments, such as the marketing and manufacturing departments. This gave the scientists some information about the client’s preferences and improved the company’s market position. For example, during the cooperation process with the manufacturing department, the salespeople realized that “the manufacturers wanted a wider viewing area, … and a deeper black in the background color” (Regani, 7).
When the scientists received this important information, they immediately began to research how to optimize the optical film features to help TV manufacturers increase their effectiveness. This approach reminded the case study from the course when a professional services firm applied a “Social network analysis” in their work process (Dewhurst et al., 2013). The consequence was that the company realized that the workforce was constrained due to the extra control of experts’ accessibility for interaction.
Finally, it is important to analyze the impact on discipline implementation in the company’s working process. To start with, some companies, especially from the IT industry, use the contrary techniques to provide creativity increase: they give absolute freedom to their employees (Fuller et al., 2020). While examining the 3M’s R&D effectiveness, it appears that scientists did not have so many possibilities due to the financial and territory constraints when the company opened a new leadership academy (Regani, 2008). However, the supervisor’s approach helped scientists to focus on the important and market-needed products instead of creating unprofitable concepts.
In conclusion, McNerney applied two of the most important techniques in 3M, which gave it a significant competitive advantage: organizational structure optimization and human capital value increase. While the previous 3M’s success was dedicated to the diversity of products and R&D effectiveness, McNerney’s implementations highlighted the importance of communication and discipline. Besides the freedom in IT companies, providing the R&D constraints was the right decision due to the profit increasing from focusing on the right ideas.
NB:
- I did not cite the page number in Fernández-Aráoz, C. (2014, July 1) because this is online article so that I can not define the page number.
- I made the direct quotation (Regani, 7). Because I could not find the rules in APA7 for the direct quotation.
References
Cohn, J., Katzenbach, J., & Vlak, G. (2008). Finding and grooming breakthrough innovators. Harvard Business Review, 1(1). Web.
Dewhurst, M., Hancock, B., Ellsworth, D. (2013). Redesigning knowledge work. Harvard Business Review, 1(1). Web.
Fernández-Aráoz, C. (2014). 21-st century talent spotting. Harvard Business Review, 1(1). Web.
Fuller, J., Raman, M., Bailey, A., & Vaduganathan, N. (2020). Rethinking the on-demand workforce. Harvard Business Review, 1(1). Web.
Regani, S. (2007). James McNerney and 3M: making a good company better? ICMR Center for Management Research.