Established in 1902, by 2006 3M was one of the largest technology driven enterprises in the United…

3M in 2006

Established in 1902, by 2006 3M was one of the largest technology driven enterprises in the United States with annual sales of $23 billion, 61% of which were outside the United States. Throughout its history, 3M’s researchers had driven much of the company’s growth. In 2006, the company sold some 50,000 products, including Post-it Notes, Flex Circuits, Scotch tape, abrasives, specialty chemicals, Thinsulate insulation products, Nexcare bandage, optical films, fiberoptic connectors, drug delivery systems, and much more. Around 6,500 of the company’s 69,000 employees were technical employees. 3M’s annual R&D budget exceeded $1.25 billion. The company had garnered over 7,000 patents since 1990, with 487 new patents awarded in 2005 alone. 3M was organized into thirty-five different business units in a wide range of sectors including consumer and office products; display and graphics; electronics and telecommunications; health care; industrial; safety, security, and protection services; and transportation (see Exhibit 1 for more details). The company’s one-hundred-year anniversary was a time for celebration, but also one for strategic reflection. During the prior decade, 3M had grown profits and sales by between 6 to 7% per annum, a respectable figure but one that lagged behind the growth rates achieved by some other technology based enterprises and diversified industrial enterprises like General Electric. In 2001, 3M took a step away from its past when the company hired the first outsider to become CEO, James McNerney Jr.McNerney, who joined 3M after heading up GE’s fast-growing medical equipment business (and losing out in the race to replace legendary GE CEO, Jack Welch), was quick to signal that he wanted 3M to accelerate its growth rate. McNerney set an ambitious target for 3M—to grow sales by 11% per annum and profits by 12% per annum. Many wondered if McNerney could achieve this without damaging the innovation engine that had propelled 3M to its current stature. The question remained unanswered, as McNerney left to run the Boeing Co. in 2005. His successor, however, George Buckley, seemed committed to continuing on the course McNerney had set for the company. The History of 3M: Building Innovative Capabilities The story of 3M goes back to 1902 when five Minnesota businessmen established the Minnesota Mining and Manufacturing Co. to mine a mineral that they thought was corundum, which is ideal for making sandpaper. The mineral, however, turned out to be low-grade anorthosite, nowhere near as suitable for making sandpaper, and the company nearly failed. To try and salvage the business, 3M turned to making the sandpaper itself using materials purchased from another source. In 1907, 3M hired a twenty-year-old business student, William McKnight, as assistant bookkeeper. This turned out to be a pivotal move in the history of the company. The hardworking McKnight soon made his mark. By 1929, he was CEO of the company, and in 1949, he became chairman of 3M’s board of directors, a position that he held until 1966.