Reference no: EM132214797

Case Study:

How 3M Gave Everyone Days Off and Created an Innovation Dynamo

Before Google and Hewlett-Packard, 3M was offering employees time off to explore their own projects — netting 3M's most famous products to date.

In 1974, 3M scientist Art Fry came up with a clever invention. He thought if he could apply an adhesive (dreamed up by colleague Spencer Silver several years earlier) to the back of a piece of paper, he could create the perfect bookmark, one that kept place in his church hymnal. He called it the Post-It Note.

What you might not know is that Fry came up with the now iconic product (he talks to the Smithsonian about it here) during his "15 percent time," a program at 3M that allows employees to use a portion of their paid time to chase rainbows and hatch their own ideas. It might seem like a squishy employee benefit. But the time has actually produced many of the company's best-selling products and has set a precedent for some of the top technology companies of the day, like Google and Hewlett-Packard.

The 15 percent program seems squishy, is now key to 3M's business strategy.

Today, 3M is a multinational powerhouse, with more than $20 billion in annual sales across a product line 50,000 deep, from adhesives to optical film. It boasts 22,800 patents, many derived from its 15 percent program. The program has been key to 3M's business strategy and could be a model for other companies eager to innovate. Says Kurt Beinlich, a technical director for 3M: "It's really shaped what and who 3M is."

Founded in 1902 in a little town on the shores of Lake Superior, 3M started out in the mining business as the Minnesota Mining and Manufacturing Company. With mining hopes dashed, the founders bought a sandpaper factory and struggled for years over how to run it. New investors had to pour in cash to keep it afloat. Eventually, one of them, Lucius Ordway, moved the company to St. Paul, where 3M hit upon some key inventions, among them: masking tape and cellophane tape.

3M launched the 15 percent program in 1948. If it seems radical now, think of how it played as post-war America was suiting up and going to the office, with rigid hierarchies and increasingly defined work and home roles. But it was also a logical next step. All those early years in the red taught 3M a key lesson: Innovate or die, an ethos the company has carried dutifully into the 21st century.

15 percent time is extended to everyone. Who knows who'll create the next Post-It Note?

"It's one of the things that sets 3M apart as an innovative company, by sticking to that culture of giving every one of our employees the ability to follow their instincts to take advantage of opportunities for the company," says Beinlich, who tries to get most of his 70-person technical lab team to participate.

How is the program implemented? In Beinlich's telling, workers often use 15 percent time to pursue something they discovered through the usual course of work but didn't have time to follow up on. And even that depends on other factors — how closely managers keep tabs on projects, for one. What's more, 15 percent time is extended to everyone, not just the scientists (you can hear the cheers in marketing), the idea being: Who knows where the next Post-It Note will come from?

There is failure. As a company culture, it's accepted, if not entirely embraced. In Beinlich's department, engineers designed a heat-repelling cover to protect car finishes from welding sparks. But there just wasn't a market for it: Automotive workers didn't want to shell out for another product when they could keep layering blankets to protect finishes like they always had. "When we found that out, we celebrated that we had found something that was innovative and had its place. But we said OK; let's move on," Beinlich says.

The 15 percent program has clearly inspired other organizations. Google's 20 percent time famously gave birth to G mail, Google Earth, and G mail Labs. (Google would neither confirm nor deny that the idea for its program came from 3M, but it's hard to imagine otherwise; after all, 3M's program had been around 50 years before Google even filed incorporation papers.) Likewise, Hewlett-Packard Labs offers personal creative time.

Still, it's a rare perk at most companies, technical or not. For starters, it's expensive. 3M invests more than $1 billion in R&D alone; 15 percent of that starts to be a sizable outlay. Author Scott Berkun writes about business innovation. He says these policies only work when the outcomes are backed. "Many companies have tried to emulate the 20 percent time idea" but failed because they remained conservative about supporting the new ideas, he says. And experts agree that this kind of nudging probably works best at companies where there's a high level of creative competitiveness; that is, where impressing peers is just as important as the innovation itself.

Some have tried to emulate 3M's program but failed because they wouldn't support the new ideas.

3M's got that in spades. Once a year, about 200 employees from dozens of divisions make cardboard posters describing their 15 percent time project as if they were presenting volcano models at a middle school science fair. They stand up their poster, then hang out next to it, awaiting feedback, suggestions, and potential co-collaborators. Wayne Maurer is an R&D manager in 3M's abrasives division and calls it a chance for people to unhinge their "inner geek." He elaborates: "For technical people, it's the most passionate and engaged event we have at 3M."

Past projects have included making clear bandages, optical films that reflect light, and designing a way to make painter's tape stick to wall edges (to protect against paint bleed). All these products are on the market now.

Sometimes ideas can languish for years. One worker had a hunch that if he reshaped particles on sandpaper, they wouldn't dull so quickly. But that was 15 years ago, and the technology and feedback weren't there to advance it beyond an interesting idea. Two years ago, the same worker started looking at the problem again during his 15 percent time. He made a poster. This time, he got different feedback with the help of new employees and new technology. They discovered they could retain a particle's sharp, pyramid-like shape just by changing the mixing order. Now 3M has a winner in the Cubitron II, a sandpaper that acts more like a cutting tool and one that still stumps copycats, despite that it's been on the market since 2009. If not for the 15 percent time, this worker's idea might've never taken off.

Another obvious benefit of this "think time" is in recruiting. Specialized workers are highly prized and fought for. Companies that offer roughly the same salary as another, can tip the scales with paid personal time. (The snow in Minnesota might be another issue.)

"What you're offering is essentially freedom, and that is very attractive for the right person," says Henry Chesbrough, a professor at the Haas School of Business at UC Berkeley, and the father of open innovation business practices.

Paid personal time is, of course, just one way to help a company innovate and, given the expense, it's not best for everyone. Chesbrough says advances in technology can be achieved if companies generally soften boundaries between where ideas come from and how they take root. A company can limit risk by letting internal ideas spin off into external companies, which might be bought back. On the flip side, internal groups can pursue external ideas. Perhaps the real lesson is that the best ideas can come from anywhere. And an innovative company will find a way to champion them.

You are expected to answer the following questions referring to the 3M case study above, other sources of research

1. Explain the purpose and functions of HRM with specific reference to Human Resource Management Practices at 3M. Explain and assess how these functions assist 3M in their HR planning and resourcing, to eventually help them achieve their core organizational objectives?