Innovation versus Six Sigma at 3M
An eye-opening cover story about innovation and cost-control is in this week's BusinessWeek ("At 3M, A Struggle Between Efficiency And Creativity", 6/11/07)
3M has long been celebrated as the source of one brilliant invention after another, from Post-It notes to masking tape and from Thinsulate to LCD films. The materials SPECIALIST was celebrated as an innovation hotbed by business gurus like Tom Peters and Jerry Pornas.
But by 2001, shareholders were beating on the company for its static stock price. Finally, the company hired one of Jack Welch's key associates from GE, W. James McNerney. McNerney went like gangbusters. He slashed and burned, we introduced GE-like Six Sigma programs, handed out black belts, and he drove up net revenue and stock prices. Having reached his goals, he peeled off to Boeing.
But, according t the article, 3M is hurting this year. Its operations are far more efficient, but this is company that has thrived on having a variety of new and sometimes breakthrough products coming to market. No longer. Financial results are down, and the general sense is that 3M is doing everything more efficiency except innovation. Six Sigma is great for speeding up the assembly lines or minimizing errors, but fails at producing new ideas.
As the article notes,
The goal was to speed up and systematize the progress of inventions into the new-product pipeline…THE impact of the Six Sigma regime was that more predictable incremental work took precedence over blue-sky work.
As one ex-3M employee states in the article "we all came to the conclusion that there was no way in the world that a Post-it note would ever emerge form the new system." That sentiment is backed up by a study by Wharton and Harvard professors, which showed that after the introduction of quality management system to the R&D department of a number of innovative companies, the number of incremental patents rose quickly while the more original patents plummeted.
This article makes points that fit in well about what we have already concluded about oligopolies and innovation. The management moves that cheer stockholders and financial analysts, when taken too far, can lead to the long-term decline of the company in question. A big company is often a bad place to make real breakthroughs in, unless like the old Ma Bell, like Xerox PARC, of 3M, innovators have some protection from the Six Sigma menace.
3M is retreating from Six Sigma in the labs, and other companies are starting to realize that quality management can become an obsession, one that drives away creative people and forces others to play it safe.
