3M Research Paper.docx

3M Research Paper.docx

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3MResearchPaper

SecretaryofDefense

CorporateFellowsProgram

FINALREPORT

3MCOMPANY

ColDavidW.Ziegler,USAF

May2002

the3mcoMPANY:

SHARPENINGTHEBUSINESSEDGEANDIMPLICATIONSFORTHEDOD

by

DavidW.Ziegler,Colonel,USAF

AResearchReportSubmittedtotheDirector

InPartialFulfillmentofFellowshipRequirements

Advisor:

Mr.EricBriggs

WashingtonD.C

May2002

Disclaimer

TheviewsexpressedinthisacademicresearchpaperarethoseoftheauthoranddonotreflecttheofficialpolicyorpositionoftheUSgovernmentortheDepartmentofDefense.InaccordancewithAirForceInstruction51-303,itisnotcopyrighted,butisthepropertyoftheUnitedStatesgovernment.

Contents

Page

Contentsiii

Illustrationsv

Prefacevi

ExecutiveSummaryvii

3MTheCompany1

3M'sBusiness1

MarketCentersandProducts1

OperationsandRevenue2

3M'sOrganization2

3M'sDecentralizedRoots2

3MTheStrategy3

RecoveringGrowth3

3M'sFiveCoreInitiatives4

Sourcing4

IndirectCosts6

e-Productivity7

3MAcceleration10

SixSigma11

SixSigma12

SixSigma'sRoadto3M13

Motorola13

AlliedSignal13

GE.13

SixSigmaat3M14

CorporateGoals14

TheD-M-A-I-CProcess14

EngagingtheCorporation20

ExpandingtheDefinition22

PerformanceManagementat3M23

AYearintheLife24

StartingtheProcess24

TheDraftC&DS25

StratificationofEmployees26

ManagementTeamReview（MTR）28

FeedbackofResultstotheEmployee29

HealthofOrganization（HOO）30

PerformanceManagementandRetention31

AClimateofInnovation32

AVisionforInnovation32

InnovationandtheBottomLine32

TheFifteenPercentRule34

EquippingThroughEducation34

TheTotalClimateforInnovation34

PatriotsWithoutUniforms35

RecommendationsfortheDepartmentofDefense36

Introduction36

SpecificRecommendations36

RecognitionDuring2001andEarly200244

2001RankingsandRecognition44

Early2002RankingsandRecognition45

InnovationChronicles47

DickDrewandtheInventionofMaskingTape47

PatsyShermanandtheDiscoveryofScotchgard™FabricProtector48

ArtFryandtheInventionofPost-it®Notes49

Bibliography52

Illustrations

Page

Figure1ProcessMap16

Figure2CauseandEffectsMatrix17

Figure3FailureModeandEffectsAnalysis18

Preface

AsaSecretaryofDefenseCorporateFellow,Iwasassignedtothe3MCompany'sheadquartersinSt.PaulfromAugust2001toMay2002.

TheSecretaryofDefenseCorporateFellowsProgram（SDCFP）placesseniormilitaryofficerswithindustry-leadingcompaniesfortheirseniorserviceschoolexperience.Duringtheyear-longprogram,theseofficersworkalongsideseniorexecutivestoobservehowCorporateAmericainnovateswithorganizations,informationtechnologiesandchangemanagementtechniques.

Asprogramobjectivesgo,3MwasideallysuitedtohostaSDCFPFellow.3M'snewchiefexecutiveofficer（CEO）recentlykickedofffivebroadinitiativestoimprovebusinessperformanceandfundamentallytransformthecompany'sworkculture.What'smore,byApril2002,thecompanyappearedtobewellonitswaytomakingthetransformationwork.Mypaperlaysout3M'sstrategyfortransformation,considersthebusinesspracticespropellingthecompanyforward,summarizesearlyresults,anddrawspotentiallyrelevantconclusionsfortheDepartmentofDefense.

Igratefullyacknowledge3M'ssupportduringmyfellowship.Theirenthusiasmfortheprogrammadeforarichexperiencebothpersonallyandprofessionally.IwouldespeciallyliketothankthosemostresponsibleforwhatIsawandIdidovermytenureasaFellow.HaroldLaskin,WaynePletcherandCathyMuggeeadeptlyopeneddoorstoprojectsthatquicklymademepartofthe3Mteam.SteveTrudeauwasaskillfulandpatientteacher,asIgrappledtounderstandCorporateAmerica’slexiconandpractices.JohnSchoenherrandLindaGodbouthelpedmeunlockthesecretsofSixSigmaandgenerouslyarrangedmyforayintotheworldofChampionsandGreenBelts.Inadditiontomycommercialcounterparts,thereareotherstothankinthegovernment.EricBriggsastutelyshepherdedtheprogramatsevencorporationsanddeftlybalancedguidancewiththeflexibilitytoaccommodatetheuniqueenvironmentofeachcompany.SeniorleadersacrosstheDepartmentofDefensekepttheprogramrelevantwiththeirprogramparticipationandsavvycomments.Finally,Iacknowledgethefaithfulcontributionsofmyfamily.Asalways,IcouldnothavedoneitwithoutmywifeJanandtheothermembersofour“corporateboard”Jordan,JessiandNate.Godcontinuestoblessusbeyondmeasure.

ExecutiveSummary

The3MCompanyisadiversemanufacturerwithtotalrevenuesofalmost$17Bfromoperationsandsalesacrossnearly300countries.Thecompanyhasbeenprofitablesince1916,whenitpaiddividendsthatcontinueuninterruptedtothisday.

Despitepastsuccesses,3Mistakingstepstosignificantlyimproveitsgrowth.UnderitsnewCEO,Mr.JimMcNerney,thecompanyispullingtogetheritstraditionallydecentralizedorganizationsaroundsharedcorporateinitiatives.Theinitiativesaimtomake3Mmorecompetitivebytacklingcompanyprocessesinprocurement,researchanddevelopment,andchangemanagement.Theseprocessesinclude:

（1）improvedprocurementusingglobalteams,betterdiagnosticspenddata,andless-expensiveoverseassuppliers,

（2）reducedspendingoncommoditiesandservicesthatarenotdirectlypartofa3Mproductoritscapitalbase,（3）e-Productivitythroughnewbusinessprocessespoweredbyelectronictoolssuchason-lineorderentry,supplier-managedinventory,e-Auctions,ande-Travel,（4）accelerationofthemostpromisingtechnologiestomarket,and（5）SixSigma.SixSigmais3M’snumberoneinitiative.Itisaveryeffectivedisciplineformanagingchangeacrossthecorporationateverylevel.

Inadditiontoitsfiveinitiatives,3Misfine-tuningthewayitmanagestheperformanceofemployeesandnurturesitswidelyrecognizedclimateofinnovation.Recentchangesmorequicklyidentifythecompany’stopandlowerperformerswithaneyeoncareerdevelopmentandimprovedperformanceinbothcases.Overthecourseofayear,3Msystematicallyevaluateseveryemployee,aswellasthebroader“peoplehealth”ofitsorganizations.

3Mcultivatesinnovationfromtoptobottom.Fromthetop,innovationisawatchwordin3M’scorporatevisionandcustomerpromises.Whenitcomestoprofits,corporateleadersexpecttheirbusinessunitstogenerate30percentofannualsalesfromproductsintroducedinthelast4years.Thesameleaderssupportthatexpectationthroughawell-establishedsystemofgrantsandseedmoneyforpromisingideas.3Mcomplementsthistop-downsupportforinnovationwithabottoms-uppush.Researchersareencouragedtospend15percentoftheirtimeonproduct-relatedprojectsoftheirownchoosing.Toenhancethequalityofthoseefforts,thecompanyliberallyfundseducationforallemployees.

Thispaperdrawson3M’sbusinessapproachtomakeninerecommendationsfortheDepartmentofDefense:

1.AligntheDODwithclearlyarticulatedinitiativesandgoals.Justas3Maligneditselfwithfivecentralizedinitiatives,theDODwouldgreatlybenefitfrominternallyaligningitsorganizationswithwell-articulatedinitiatives.

2.LeveragetheDOD’ssizetoachieveprocurementefficiencies.3Mbuysover$7Binrawmaterials,services,equipmentandsupplies.Undertheirsourcinginitiativethecompanyiscollectivelyworkingandontracktosave$500Mbytheendof2002.Federalregulations,decentralizedspendingauthorities,anddifferentServicesystemsconspireagainstcentralizedspendingstrategiesintheDOD.Wherelegalandfeasible,however,theDODshouldconsiderthesameactionsthatcorporateleadersarenowbeginningtolaunchincluding:

（1）globalspendmanagementteams,

（2）centralizationofpurchasingauthorities,（3）automationofspenddatacollection,and（4）expandedbusinesswithlessexpensiveoverseassuppliers.

3.Attack“indirectcosts”acrosstheDOD.3Mreducedindirectspendingby$500Min2001comparedto2000.Theyapproachedtheinitiativethroughcross-functionalIndirectCostReductionteams.ThesameapproachcouldaidtheDODinitsowneffortstoreduceindirectcosts.

4.Investsmartlyine-Productivity.3M’se-Productivityinitiativeisaboutusingelectronictechnology,suchaselectronicdatainterchangeandtheInternet,toimprovebotheffectivenessandefficiency.Implementing3M’sapproachwouldleadtheDODto:

（1）automateitspurchasesfromthepointofinitialordertoreceiptofgoodsandservices,

（2）morecloselycollaboratewithsupplierstomanageinventories,（3）judiciouslyusee-Auctionsforappropriatespendcategories,and（4）conductallaspectsoftravelon-line.

5.Releasethepowerofacommonorganizationalapproachtochangemanagement.SixSigmais3M’snumberoneinitiative.Itisachangemanagementdisciplinethatengagestheentirecompanytopursuecommoncorporategoalsthroughacommonproblemsolvingprocess.There’snoquestionthatchangemanagementdisciplines,suchasSixSigma,canpromotepositivechangeintheDOD.Thefundamentalquestion,fortheDOD,iswhetheritcouldcreatetheconditionsrequiredforsuccess.

6.Institutionalizeprogramstoimprovethelowertierofperformers.AswiththeDOD,3M’sperformancemanagementsystemisdesignedtofindanddevelopitstoptalent.UnliketheDOD,3Mrecentlyformalizedquotasforitslower-tierperformersitssupervisorsmustranktenpercentoftheiremployeesinthe“lower”performancecategory.AsimilarpolicyintheDODmightleadtomoreproductiveemployeeswhoaremoreloyaltotheinstitutionthatcamealongsidetohelpmakethemmoreeffective.

7.En