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Some companies have proven that a corporate culture can promote and encourage innovation and, in the process, increase profitability. One such company is 3M.

  • 3M has been in business for over one-hundred years
  • For example, 3M had sales of $163 billion in 2002.
  • 3M works to create a culture of innovation throughout the entire company and at all levels.

They do this in a number of ways. First, although making incremental improvements to existing products and processes is encouraged, there are greater rewards for making breakthrough improvements.

3M Career Development and the 15% Rule

3MThe company has found that maintaining a corporate culture of innovation is difficult and requires work on the part of leaders. Professor Eric von Hipple, a specialist in innovation at MIT's Sloan School of Business, noted that 3M executives in the 1990's feared that too many improvements at the company were incremental in nature rather than revolutionary. The company had always prided itself for its cutting edge pace in product and process evolution. Leaders such as Vice President of Research and Development Jay Ihlenfeld began a program of developing their personnel by exposing them to other departments and divisions as well as providing them with training. People were allowed to select their own career and development tracks without risking losing compensation. This was a very popular move because people who were not interested in management careers could still achieve positions that would allow them to receive substantial compensation. Second, the company instituted the 15% rule. According to Ihlenfeld, this tool became a tremendous generator of creativity and innovation. The rule allows employees to use 15% of their time to work on any project that they want without getting management approval. After his idea has been developed, an employee can request funding from his department.

3M has developed an organizational culture and structure that is intended to foster technological innovation by in business units. The Optical Systems (OS) business unit is part of the Safety and Security Systems Division (SSSD) at the firm. While OS has been successful in developing new technologies, it has had significant difficulty in adapting these technologies to the perceived needs of the marketplace. At the current time, OS is focusing on the development of a privacy screen for use on computers. Two previous launches of the product have not been successful due to the failure of the product to anticipate problems with glare and sizing. Although OS believes that it has rectified the problems with the privacy screen, the managers of the unit have become increasingly risk adverse due to threats from SSSD that the OS business unit may be closed if the new privacy screen does not become rapidly profitable.

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