How to achieve the financial performance of a successful technology company: Think like 3M

As I mentioned in my previous blog entry, I’ve identified three themes companies employ to successfully  compete in a digital economy. This is the first: Relentlessly innovating and executing on those ideas.

Everyone loves a founder’s story. They often tell about experiencing some type of everyday problem and through a serendipitous event, a solution is imagined. This solution along with an unbelievable amount of hard work formed the genesis of a now highly successful company.

Sarah Blakely, founder of Spanx tells her story as a one-woman innovation wonder as do the founders of Uber, Airbnb and countless other start-ups. These journeys are driven by the sheer will of individuals who have the passion to see their ideas become successful.

Digital giants continue this tradition even as they have grown. Companies such as Amazon, Google and Tesla generate and experiment with new ideas that rethink their customers’ experience by using the advantages of technology to deliver scale, scope and speed.

For entrenched incumbents who have invested their treasure optimizing processes and raising barriers according to the rules of an outdated supply chain playbook, the future can be worrisome. They are now held captive by the fort that previously protected them.

Fortunately for incumbents, this scenario is not permanent. Just as Amazon and Google have remained innovative and adaptive as they grew, a few companies such as 3M have maintained their spirit of innovation (and outsized financial returns) for decades. By studying 3M’s method of innovation, it becomes clear that it has figured out how to create its own serendipity to generate new ideas as well as emulate at scale the same passion to execute as found in a start-up.

3M’s ability to innovate and execute is well documented. It often ranks highly as an innovative company. I won’t duplicate other’s good work, so you can read what I found to be some of the more interesting articles for yourself. There were two key findings for me. First is that 3M is organized to create and then execute on new products beginning with customer interactions all the way through to revenue conversion. It’s not a single department’s responsibility to innovate, it’s the way the entire company operates. Secondly, 3M has also put the mechanisms in place to stop funding projects and put people back to work on productive projects just as effectively as it begins new projects. Clogging the system with poorly performing ideas hurts performance as much as never funding good ideas.

With the barriers to all types of technology continually falling, a company’s biggest differentiator becomes orchestrating these technologies through its ecosystem to redefine what it delivers to its ultimate consumer. To do this successfully requires the ability to forget the current supply chain rules, have a deep understanding of the processes available to deliver product and services and an intimate understanding of the needs of its customers. That knowledge lies somewhere within your workforce. A leader’s job is to unlock that knowledge and act on it. How close is your company to executing innovation at the level of 3M or Google? How exposed is your company to a new competitor figuring it out first?

 

Some reading on 3M innovation

https://hbr.org/2013/08/the-innovation-mindset-in-acti-3

https://www.fastcompany.com/3003229/how-superbulb-massively-brightened-3ms-innovation-pipeline

https://www.inc.com/linkedin/don-peppers/downside-six-sigma-don-peppers.html

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