3M Optical Systems: Managing Corporate Entrepreneurship MST550 – Capstone Professor Jack Raiton HBSP Case #395-017 Discussion Questions 1.What practices make 3M such an innovative company? 2.What is Any Wong’s role as the OS Unit’s general manager? How effective has he been? 3.
What is Paul Guehler’s role as division vicepresident? How effective has he been? 4. What should Andy Wong do with the computer screen AFE? If he gets the AFE, should Guehler fund it? Case Outline • • • • • • • • • • The Situation Background of 3M Corporation Internal Context at 3M Corporation Background of Optical Systems (OS) The Product is Born The Product is Reborn Wong’s Options Guehler’s Options Wong’s Role/Effectiveness Guehler’s Role/Effectiveness Desimone’s Role The Situation The 3M Corporation’s Optical Systems (OS) business unit needs to decide if they should proceed with the deployment of a new computer privacy screen despite two previous marketing failures. Background of 3M Corporation 100 Years of Innovation Highly Diversified Global Company • “High-Tech”: Spends twice the U. S. Industry Average on R&D (6-7% of sales) • Strong emphasis on new products and technologies • Fosters individual’s innovation within the workforce (“15% rule”) Internal Context at 3M Corporation • Respect for the individual – “Stimulate ordinary people to produce extraordinary performance” • Supportive policies/practices – 15% bootleg rule – “Make a little, sell a little” • High standards, stretch objectives – 10% sales growth, 20% PBT, 27% ROCE – 30% sales from new products
Internal Context at 3M Corporation…cont. • Acceptance of “well-intentioned failure” • Share/leverage resources – “Technology belongs to company” Background of Optical Systems (OS) • OS Track Record (1979-1990) – Formed in 1979 through consolidation of several 3M optical technologies – Experienced 11 year microlouver development effort with minimal products – Lost between 3 to 5 million dollars per year – “Technology in Search of a Market” • OS Changes Focus (1991-1992) – In 1990 new top management appointed – Focus on applications for technology
The Product is Born • In late 1990, the OS Team launched the computer privacy screen • Product used “microlouver” technology to offer privacy of screen information • By early 1991 the OS Team saw poor market reaction due to the large number of sizes needed and high purchase price • Product was modified and re-launched in late 1991 with minor changes, but to no avail The Product is Re-Born • Through prior-product analysis, market research, and harnessing some of 3Ms other technologies, a 3rd generation was created and readied for market in 1992. It combined features of competitor’s such as anti-glare, anti-static and anti-radiation • Was ready for decision on “Authority to Proceed” Wong’s Options Go •Learning from two previous launches •Met rigorous threephase process •Team closest to market, competition, technology (trust them, don’t second-guess) •Committed team (motivational impact) •Last chance for OS •Wong must be the champion Postpone/Cancel •Poor market research •Poor product concept •Price too high •Unrealistic market share forecasts •Unrealistic risk assessment •Needs more data, further study
Other Options •Self fund •Mentor’s support •Outsource Guehler’s Options Approve • Project passed three-phase review – Shouldn’t second-guess now Reject/Send Back • Recognize as “well intentional failure” • Has other high-profile “Pacing Projects” • Problems with product, price, marketing strategy • Lacks internal support • Cost relatively low ($750K) • OS unit believes, committed • Don’t want to kill OS unit – Big project in pipeline (Needs 30% new products) Wong’s Role/Effectiveness • Attracting good people – Noirjean, Melby Developing/motivating his team, building unit’s capabilities • Creating, pursuing growth opportunities • Keeping management “in the boat” Guehler’s Role/Effectiveness • Empower frontline manager to find/develop attractive opportunities • Coach/nurture/support frontline managers to develop confidence and capabilities • Set standards/goals for and develop selfdiscipline among frontline • Balance between discipline and support Desimone’s Role • Sets, communicates, monitors standards and objectives • Protects, reinforces norms and values – Respect for individual Primary focus on organizational context more than strategic content