Home Computer Science Technological Entrepreneurship: Technology-Driven vs Market-Driven Innovation
Case Aims: To demonstrate that excessively structured management systems can have an adverse impact on leading-edge innovation.
Founded in 1902, the American 3M Corporation established a reputation for outstanding innovation. However, in the late 1990s, 3M experienced declining performance, probably reflecting that it had become too big and risk adverse (Radjou et al. 2012). 3M hired Jim McNerney as its new CEO. Having previously worked at GE, he brought with him a disciplined attitude aimed at creating a more efficient organisation to be achieved through the use of the Six Sigma management philosophy. This highly structured system emphasises predictability and certainty, and is considered to have contributed to significantly improving profitability.
When the Six Sigma techniques were utilised in 3M's R&D laboratories, the aim was to systematise and standardise the cause innovation processes to make them faster and more cost-effective. Innovators responded to the new philosophy by focusing on improving existing products and avoided involvement in high-risk, leading-edge research. By 2005, 3M's revenue from new products had fallen from the traditional 30 % to only 21 %. McNerney's replacement George Buckley perceived the negative aspects of the Six Sigma process and began to de-emphasise the concept within the organisation. One important move was to re-instate the 15 % rule, which gave 3M innovators the flexibility and freedom to pursue radical ideas without fear of censure from senior management. Buckley noted, 'Perhaps one of the mistakes we made as a company—it's one of the dangers of Six Sigma—is that when you value sameness more than creativity, I think you potentially undermine the heart and soul of a company like 3M' (Hindo 2007, p. 3).
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