3M 2011 Annual Report Download - page 4

2 Inspired Innovation
Our growth strategy over the past few years has been very
successful, reversing the course of earlier declining market
share and, as long as we stay this course, the future for 3M
is very bright indeed. But to fully understand the rationale
for our optimism, we must look beyond recent financial
results, as strong as they are.
First, rekindling the fires of innovation at 3M has increased
our New Product Vitality Index (NPVI) to over 32 percent.
We have reignited the fires of innovation at 3M, which were
clearly in danger of going out and, as one of my colleagues
said so well, we threw gasoline on them! By overtly
reinforcing the idea that innovation and new products
are the lifeblood of 3M, we reengaged our scientists and
refocused our investments in research and development.
What a marvelous job they and the process engineers who
work with them have done in response. 3M’s NPVI is now
back on track, as it was in the 1970s. You might call the
present the “new heyday” of innovation, and we couldn’t be
more pleased with the results.
For the second year running, in the recent Booz and Co.
survey, 3M was ranked the third most innovative company
in the world, behind Google and Apple. We see this as
strongly indicative of our progress in innovation and a
doorway to the future. We must not only create and invent
a new future, we must adopt it.
An innovative company cannot be built just on inanimate
lab work or mathematics alone. It is built on a belief in the
power of R&D, belief in the people doing that kind of work
and a deep conviction that the collective power of their
imagination and creativity will generate future opportunity
and financial betterment for the company. We don’t always
know how or when that opportunity will unfold, so it
requires an element of faith and it can occasionally be a
little scary.
The creativity from which product and process innovation is
born requires a finely balanced approach to risk, technology
and investments and it also requires a little freedom. We
offer that freedom to our researchers by allowing them
15 percent free time to work on whatever projects
they wish, ones of their own making. It is a powerful
concept we’ve had in place for decades and many of
3M’s legendary inventions came from it. It also requires
optimism about the future, solid knowledge of where
opportunities might lay, curiosity, belief in people and
good instincts. A company cannot get there by process
alone or by punishing what some might see as failure, it
needs a sprinkle of “magic dust.” At 3M, because of our
wide diversity of technologies and end markets, the term
“failure” is rarely applied to R&D, and invention here is
almost always repurposed and reused. It is my strongly
held view that innovation and entrepreneurship flourish
best in an environment of stimulation and encouragement
nurtured by leadership and driven by the CEO.
So innovation is unquestionably back at 3M, reflected in
our results to be sure, but also reflected in the morale
and excitement of our innovators everywhere. As long
as we support and encourage their creativity and at the
same time continue to run our manufacturing operations
at world-class levels, we have relatively few things to fear.
But we do have to understand and respect every single
competitor in every market – no matter how small they
are – and be better than our competitors at supplying what
the markets need. Small competitors in emerging markets
today are tomorrow’s multinational competitors. We ignore
them at our peril.
3M is today a formidable competitor in markets that not
so long ago were pools into which we merely dipped our
toes. Following a long tradition, newer businesses such as
renewable energy, electronics, software and filtration are
fast becoming core 3M businesses; enduring franchises
that will generate growth and profit for years to come.