On January 1, 2OO1, 3M announced that W. James early 1920s.

A rnajor milestone occurred in 1925 when

McNerney Jr. was elected the chairman and chief execu- Richard G. Drew, a young lab assistant, invented rnasking
tive officer of the firm. At the annual shareholders meet- tape-an innovative step toward diversification and the
ing in May 2OO 1 , McNerney announced that "at the top of first of rnany Scotch brand pressure-sensitive tapes.
rny agenda is a headlong and companyruide implementa- In the following years technical progress resulted in
tion of the Six Sigma approach to process and business Scotch'. Cellophane Tape for box sealing. Customers
improvement . . . l've seen firsthand how Six Sigma can began to find many additional uses, including consumer
energize an organization, increase sales and cash flow, applications. Drawing on expertise in bonding mineral grit
satisfy customers better, and strengthen management to sandpaper, 3M brought out new adhesives to replace
development." tacks in bonding upholstery and sound-deadening mate-
McNerney initiated a massive training program for hun- rials for the auto industry's new metal-framed cars.
dreds of senior executives. Senior executives were charged The roofing granule business (ceramic coated bits of
with leading the training effofts for all of middle managers rock) was developed in response to a need to make
and coming up with a list of 1O0 key six sigma projects. asphalt shingles last longer. In the early 1940s, 3M was
According to sorne sources, McNerney had already divefted into defense materials for World War ll, which was
"sold" 3M's board of directors on the concept before he followed by new ventures, such as Scotchlite'. Reflective
took the position. Sheeting for highway markings, magnetic sound recording
Historically, 3M competed primarily on product leader- tape, filament adhesive tape, and the start of 3M's involve-
ship and quality-and almgst never on price. Many 3M ment in the graphic arts with offset printing plates.
managers believed that the firm was already a quality In the 1950s, 3M introduced the Thermo-Fax" copy-
company, with many high-quality products such as Post-it ing process, Scotchgard'" Fabric Protector, videotape,
Products and Scotch tape commanding very high market Scotch-Brite'" Cleaning Pads and several new electro-
shares in their respective markets. However, 3M's finan- mechanical products.
cial performance was "flat" and was not expected to In the 1960s, dry-silver microfilm, photographic prod-
improve unless some major changes were rnade. The ucts, carbonless papers, overhead projection systems,
decision had already been rnade to deploy a Six Sigma and a rapidly growing health care business of medical
program. The question for the senior management of the and dental products were introduced.
firm was how to use the Six Sigma program as a key lever Markets were further expanded in the 1970s and
for transforming the firm to become more competitive. 1980s into pharmaceuticals, radiology, energy control,
the office market-and globally to most every country in
HISTORYI the world.
3M was founded in 1902 at the Lake Superior town of The 1 990s set new sales records of over $ t S billion
Two Harbors, Minnesota. Five businessmen agreed to annually, and abclut 30 percent of sales came from
rnine a mineral deposit for grinding-wheel abrasives. But products created within the past four years. 3M's growth
the deposits proved to be of little value, and the new has come through a desire to participate in many
Minnesota Mining and Manufacturing Company quickly markets where the company can make a significant con-
moved to nearby Duluth to focus on sandpaper products. tribution from core technologies, rather than be domi-
Years of struggle ensued until the company could mas-
nant in just a few markets.
ter quality production and a supply chain. New investors In 2OOO, 3M was a diversified technology company with
were attracted to 3M, such as Lucius Ordway, who moved leading positions in electronics, telecommunications, indus-
the company to St. Paul in 1 910. Early technical and rnar- trial, consumer and office, health care, safety, and other
keting innovations began to produce successes and, in markets. lt had 2000 sales of $16.7 billion, a 6 percent
1916, the company paid its first dividend-6 cents a share. increase. During 2000, 3M generated $5.6 billion (nearly
The world's first waterproof sandpaper, which eased 35 percent of sales) from products introduced during the
the health problem of sanding dust, was developed in the previous four years, with sales over $ t .S billion frorn prod-
ucts introduced in 2000. Under McNerney's tenure, sales
1
Source: http://wwvr.3m.com/profile/looking/glance.jhtml, May continued to increase, as shown in Exhibit 1. International
1 5, 2001 , and the 3M annual report for 2000. sales constituted over 5O"/" of total sales.

This case was written by Professors Arthur Hill, Kevin Linderman, and Roger Schroeder of the Curtis L. Carlson School of
Management at the University of Minnesota. The case was prepared as the basis for class discussion rather than to illustrate ei-
ther effective or ineffective handling of a business situation. All of the content for this document was taken from public sources.
Copyright @ 2OO7,2O1O, and 2016. Reprinted with permission.

-"$ffir$$riiii
 Part Seven Ca,se Stuclics

EXHIBIT 1 3M sales historv.

25,4

20.0

15.0
e
tt) 10.0
3)

(n
5.0

0.0

Headquartered in St. Paul, Minnesota, the company A typical Six Sigma project lasted six months and was
had operations in rnore than 60 countries and serued cus- expected to make significant improvernents both in cus-
tomers in nearly 200 countries. 3M was one of the 30 tomer satisfaction (internal or external customer) and in
stocks that make up the Dow Jones Industrial Average and cost savings. The improvements were standardized and
was also a component of the Standard & Poor's 500 Index. reviewed periodically to insure continuing benefit to 3M.
The savings from the project were also carefully tracked
SIX SIGMA by the financial organization in 3M.
3M was applying many of the standard approaches to The second use of Six Sigma was to design new
Six Sigrna that had been developed by Motorola origi- products using the Design for Six Sigma methodology.
nally in 1985 and then extended to Allied Signal and GE
This process started with identification of the customer's
in the mid-9Os. Since then many other cornpanies had requirements and then translated those requirements
also adopted Six Sigma, as indicated in Appendix 1.
eventually into product specifications. The process
The 3M approach to Six Sigma included two different included not only designing the product, but reducing
improvement models. the inherent risk in the design processes by verifying
1. For existing processes, the five-step DMAIC model the design with potential customers. Various tools such
was used. as Quality Function Deployment and Computer simula-
2. For new product development DFSS (Design for Six tion of design characteristics were used during the
Sigma) was used. design process.

For existing processes Six Sigma was aimed at making

THE SIX SIGMA PROGRAM AT 3M
significant improvement in processes that were strategi-
3M's 2000 annual report included the following para-
cally selected by upper management. After selecting a
graphs praising the virtues of the Six Sigma program:
process for irnprovement and assigning a senior execu-
tive to act as the "Champion," a Black Belt was assigned Proces s lmprovement' Process improvement
to lead a process improvement team. The Black Belt was means nothing if it doesn't lower costs, increase
assigned full-time to project improvement and trained in sales, satisfiT customers, develop managers,
the methods of Six Sigma and Statistics. The project increase cash flow and make the whole organiza-
team, under the Black-Belt's guidance, then worked on tion faster. 3M is quickly moving from multiple
process improvement using the following DMAIC model. quality-management systems within the company
to one: Six Sigma. A uniform, companywide
The Six Sigma "DMAIC" improvement model approach shared by employees, customers and
suppliers will both advance our competitiveness
D Define ,'Requirements, goals, problerns, scope and improve our efficiency.
M Measure Validate problem, inputs, key steps,
: effiCiency data
3M Accelerotion; This initiative targets generating
even greater returns on our over $ 1 billion invest-
A Analyze Develop/validate hlpothesis, identify
root causes, assess process design ment in R&D. The senior management team will be
I lmprove
T:,'.:': '?:l ::1":':l?"1:11':1
applying Six Sigma tools to drive time out of product
development and comrnercialization cycles. Further,
solutions, implement new process
we will work as a team to sharpen our corporate
C Control Establish standard measures and
focus on growth areas with the greatest returns for
reviews to maintaln performance
our investors.
 Tlre Evitlntirn of Lecm Si.l Sigrna at 3!vl, Iru:.

3M Initiatives2 It requires a thorough process and product under-

standing and is clearly focused on customer-driven
Under the direction of our new Chairrnan, Chief
expectations.
Executive Officer, W. Jarnes McNerney Jr., 3M has
begun the task of implementing initiatives that will She went on to share the following ideas:
lead 3M to provide a better service to its customers.
Six Sigma Has a Focus on Processes
Today's changing and demanding world demands
the best of each element in 3M, always keeping in Six Sigma is an orderly and consisfent approach to
rnind our real reason for being, our customers. a recurring significant business activity. Exarnples
These initiatives are focused towards long-term and of a significant business activity inc'lude new
short-term competitiveness because we are inter- product introduction, lab experiment, handling
ested in making our clients think of us as the agile a customer call, approval of documents, manufac-
company that we are, always willing to provide the turing a product, filling an order, etc. All of our
best products and seruices. business activities involve a process-recognized
Six Sigma-lmplemented in our company, it or unrecognized, efficient or inefficient. The better
strengthens all aspects of our business. Pursuing our business processes, the better able we are to
quality improvement under one single program, Six consistently and reliably keep our promises.
Sigma, 3M has been an excellent supplier to the Excellent business processes are essential for
various markets in which we participate by providing sustainable growth.
new and innovative products. Our customers Ms. O'Connell described 3M's method for selecting
demand and deserve that we do it even better processes for irnprovement as follows:
and faster through 3M Acceleration.
E Productivity-The future of commercial activities
. Processes selected rnust be linked to the Strategic
through electronic media is already present. We are Business Plan.
changing the way we work to be rnore efficient, . Selection is prioritized based on value to the busi-
productive and to render better service as suppott ness, resources required, and timing. Factors consid-
to our custorners. To achieve this we must have ered in selection include groMh, cost reduction and
the tools to be better connected, and this allows cash savings.
us to be ready in the rapidly growing "new" way of . All improvement processes are approved by
doing business. management.
Supply-lf we purchase in smarter and more sys- . They are formally tracked for savings and defect
tematic ways we will obtain cost reduction for 3M. reduction.
Taking this in mind, our presence and strength in . The team leader and management are held
product purchasing will be translated to the genera- accountable.
tion of accessible and beneficial products for our
customers. Exhibits 2 and 3 show slides that 3M uses to cornmu-
nicate their simple approach to Six Sigma. Exhibit 2
lndirect Costs-Good management of costs is criti-
emphasizes that a strategic perspective drives project
cal for a sound and successful business plan, espe-
selection. Exhibit 3 suggests that the right results are a
cially in critical times. At 3M, now and in the future,
function of getting the previous steps right.
we seek adequate indirect cost reduction on many
In answer to the question of "why Six Sigma," Jeanne
levels to be able to still be the preferred supplier to
O'Connell responded with the following four reasons:
our customers.
. Common approach with common goals.
JEANNE O'CONNELUS TALK TO THE CARLSON
. Institutes a common language.
SCHOOL OF MANAGEMENT
In a talk that Jeanne O'Connell, Director of Six Sigma
. Develclps transferable skills.
Operations at 3M, gave at the Carlson School of Man- . Most effective way to increase and accelerate our
agement in November 2OO 1 , she provided the following business performance and customer quality.
definition of Six Sigma at 3M:
Ms O'Connell noted that 3M is moving aggressively
Six Sigma is a methodology for pursuing continuous to drive process improvement across the company.
quality improvement and reducing inherent variability. We started at the top with 3M senior leadership and are
building on 3M's commitment to irnprovement. More
2 Sou rce : httpi/www. 3 m.com/i ntl/mx/e ng Ii shve r/m exi co/q u i en es. than four thousand people will have been trained by
htm, September B, 2001 . end of year 2AO1.
 Part Seven Ca,se Srudies

EXHIBIT 2 31\4's simple approach to Six Sigma.

Process Input:
Strategic and annual business objectives and targets

Select the Select and Develop and Manage for

right projects train the inrplement excellence in
right people improvement opcrations
plans

Process Output:
Make the numbers

EXHIBIT 3 3M's simple approach to Six Sigma. . Six Sigma is too complicated and involves too rnany
statistics for our people.We need a simpler approach
The Right Froject to process improvement.
+ The Right People . Six Sigma doesn't work very well for service pro-
+ The Right Roadmap and Tools
cesses or transaction-based processes that have in-
+ The Right Support
tangible outputs and are difficult, if not irnpossible, to
= The Right Results rneasure. Six Sigma is better suited to manufacturing.
. Six Sigma is just the latest quality fad-it too will pass.
At one point in her talk, she said that "we want to LEAN SIX SIGMA
change the DNA of the organization" and she even ln 2OO4 3M expanded its program to Lean Six Sigma
hinted that they plan to make it a requirement for all The expanded program was documented in a 2OO-
(LSS).
executives to be black belts. page manual used for training purposes.a The idea behind
the LSS program was to bring four approaches together
THE SKEPTICS
that tearns could use to improve processes. Teams were
Six Sigma was off to a good start at 3M. After four years
encouraged to choose among these approaches based
of irnplementation, 3M had 3O,OO0 employees trained
on choosing the right approach, for the right project, at
and all salaried employees had completed Green Belt
the right time. Each approach had its own purpose, tools
training. Ove r 1 1,000 projects were completed and
and outcome. The four approaches are:
12,000 more were underway. The 2003 annual report
credited Six Sigma with increasing operating income by . Six Sigma: This approach is best suited to reduce
$SOO rnillion in 2OO2, and an additional $4OO million in variation in the process and improve the yield while
2OO3 with a similar projection of $400 million for 2OO4. reducing the cost. The process is flowcharted and of-
McNerney said, "3M is in the midst of a transforma- ten, but not always, sophisticated statistical tools are
tion . . . Six Sigma, 3M Acceleration and our other corpo- used for the analysis.
rate initiatives are now integrated into every business, . Lean is used to eliminate nonvalue added activities
every function and every subsidiary of 3M, and we from the process. lt improves the speed of the process,
expect they will generate both productivity improve- the throughput time, and often reduces inventory. Lean
ments and revenue growth for years to come."3 uses value stream mapping, Kaizen events, visual con-
However, Some cornpanies have not embraced the trol and the 55 tools for process improvement.
Six Sigma approach. Skeptics in these companies point . Process and Product Understanding (PPU): This
to the following issues in using Six Sigma.
approach is based on the need to gain a deep under-
. We can't afford to improve our processes to 3.4 parts standing of the custorner and the process. lt begins
per million defects as implied by Six Sigma. Also, our with a need to understand customer requirements. lt
customers don't need this level of quality. then proceeds to flowcharting, measurement analysis

4
httpl I nr u lti m ed i a. 3 m.co m/mws/m e d i a/6 3 00 8 0 O/l e a n-s x-s g m a-
i i

3
Press Release, February 1 B, 2005. g u d e b o o k. p d f ? &fn =
i L ean %2O Six%2 0 S g m a o/"2O Guid e b o o k. p d f
i
 The Evolutiut of Lecm.Sr.r-Sigrrru at 3M, Inc.

and control of the improved process. Using this "The company is doing very well. Sales outside the U.S.
approach the process should be made statistically grew frorn less than $tO billion in 2003 to $20 billion
capable of rneeting customer requirements. or over 65"/" of 2012 sales. We would like that to con-
. Business Process Redesign (BPR). This approach is tinue noting that pursuing acquisitions, funding product
used when the process is cross-functional and com- creatioh, dnd venturing deeper into emerging markets
pletely broken. A swim-lane process flow chart is will remain key priorities." Thulin told Reuters that Buck-
used to identify disconnects across functional bound- ley had squarely focused the company on innovation,
aries. The current "as is" process is defined and then pointing to the increase in the percentage of revenue
the ideal "to be" process is designed. Often pro- generated from new products from 2O"/" of sales to
cesses are completely redesigned as a result of this 30% during Buckley's tenure. Thulin said he plans to
approach, with the old process thrown out and a new continue to boost 3M's "innovation machine" in the
process designed that stretches across multiple func- coming years.s
tions in the organization.
At 3M all four of these approaches use the DMAIC pro- IS SIX SIGMA ENOUGH?
cess originally defined for Six Sigma. After defining a There have been vigorous discussions in the media and
project charter and assigning a project owner, the proj- Internet about whether Six Sigma is enough at 3M and
ect improvement team follows the steps of define, mea- other companies.6 The argument is about whether Six
sure, analyze, improve and control. Only the tools used Sigma tends to block innovation, creativity, and the
and the reasons for process improvement vary across development of new products. For example, some claim
the four approaches. that during McNerney's tenure at 3M, innovation suf-
Lean Six Sigma recognizes that not all processes are fered because Six Sigrna was emphasized over innova-
alike in their deficiencies and the extent of improvement tion, particularly in R&D. McNerney denied this and
needed. The Lean Six Sigma program continues to be claimed that Six Sigma did not stifle innovation or
implemented at 3M until the present time. replace creativity.T These qualities are still required to
develop breakthrough new products. Still there are
those who point to the lack of innovation when Six
THE McNERNEY ERA TO THE PRESENT Sigma is implemented because it tends to focus on
After taking over as CEO in 2001 , McNerney not only reducing defects and variance, while innovation requires
aggressively implemented Six Sigma but also made risk, creates possible inefficiencies, and can increase
other major changes. Coping with the recession of 2OO1 variance of processes.
and lagging profits, he laid off 8,OOO workers (about The argument is now taking two sides. One side claims
11"/" of the workforce) and slashed capital expenditures that innovation and improvement cannot coexist in the
from $geO million to $677 million by 2003. During his same organization. Others, such as O'Reilly and Tushman,
tenure, sales grew to $Zt billion in 2005 and profits argue that indeed an ambidextrous organization is
grew at an average of 22"/" per year. Wall Street liked required to achieve both innovation and improvement
McNerney's initiatives and the stock price increased. through balancing.s Balancing might be accomplished by
In 2OO5 McNerney left 3M to become the CEO of establishing separate departments or teams, some which
Boeing. The Board of Directors hired George Buckley, are charged with innovation and others with improve-
former CEO of Brunswick, to be the new 3M CEO in ment. Even then, top management must also be ambidex-
December 2005. Buckley has taken a different approach trous and carefully balance allocation of resources, team
to improvement at 3M. He continued Six Sigma in the assignments, and investment for both innovation and
manufacturing and administrative areas, but reduced it improvement to occur in the firm. The debate is still raging
in R&D. He also invested more in R&D and new manu- as to which is the right perspective. Does Lean Six Sigma
facturing plants. Under Buckley, encouraging risk taking stifle innovation and is Lean Six Sigma enough?
has renewed innovation and creativity. His mandate is to
bring back the legendary innovative spirit of 3M, while
preserving the operating efficiencies that McNerney
created. By 2012 Buckley had increased sales to 5
Source. Reuters February B, 2O12 article "3M CEO Buckley to
$2g.0 Billion and Net Income to $4.3 Billion. retire; Thulin to succeed hint."
In Feb 2012 Buckley retired from 3M and was 6Forbes/Reufers 51 13104, isixSigma.com 611 lO4, Business-
replaced by Inge Thulin as the new CEO. Thulin, a Week 611 1lO7 .

native of Sweden, joined 3M in 1979 in marketing and 7 http://www. isixsi g m a.comil i b ra rylcontent/cO4 06 1 7 a. as p.

sales, but spent considerable tirne in international oper- 8 C. A. O'Reilly, and M. L. Tushrnan, "The Arnbidextrous Organi-
ations. According to Reuters, Feb 8, 20 12, Thulin said, zation," Horvord Eusrness Revreur 82 (4) April 2OO4,74-81.
 Part Seven Case Studies

APPENDIX 1 Aclopters of Six Sigma.

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CHALLENGES AT 3M 3. Do you agree with any of the points made by

As the firm went through this major transformation, many skeptics about the original Six Sigma program at
questions went through the minds of 3M managers. 3M? Explain why they believe that skepticism is
warra nted.
1. What are the benefits and costs of a Lean Six Sigma 4. How will Lean Six Sigma affect the innovative
program and how should they be tracked? culture at 3M, and is Lean Six Sigma enough?
2. How should the various functional areas in the 5. How does Lean Six Sigma in 3M differ from
organization be included in the Lean Six Sigma traditional TOM programs?
initiative, and what role should senior and middle
management play in this change initiative?