3M R&D3M R&D…How 3M manages Innovation

Jan PinksterTechnical Director R&D – 3M FRANCE

Innovation Innovation DayDay IBMIBM

3M Facts3M FactsYear End 2005Year End 2005

© 3M 2004. All rights reserved.

SalesWorldwide ………..……$21.2 billionInternational …………….. 12.9 billion

EarningsOperating income……. .…. $5.0 billionEconomic profit…………... $ 2.0 billion

R&D Labs in 34 countries

R&D ExpendituresFor 2005 …...…………….… $1.2 billionTotal last 5 years ….………… $5.8 billion

EmployeesWorldwide …...………………….. 69,435United States ..……………………. 33,033Scientists worldwide..………………. 6,300

Electro and Communications Business

Consumer andOffice Business

Display andGraphics Business

Health CareBusiness

Industrial & TransportationBusiness

Safety, Security and Protection Services Business

Six Six «« BigBig BusinesseesBusinessees »»

Tradition of Innovation

1904 : First sandpaper production1926: Scotch™ Masking Tape for two-tone paintjobs in the automotive industry1939: The first retroreflective traffic signs go up1947: Introduction of Scotch® Magnetic Audio Tape1954: Scotch® videotapes for first TV recordings1956: Scotchgard™ Protector for fabric and upholstery1960: The world’s first overhead projector1967: Development of the first disposable respirators1972: Data Cartridges – a breakthrough in the field of computer data storing1980: Post-it® Notes revolutionize the office world1984: Medical Laser Imager – high-quality images from digital data1995: 3M™Trizact™ Structured Abrasives using microreplication technology1997: 3M™ Volition™ LAN Cabling for Optical fiber networks2006: Fully enhanced Membrane Electrode Assembly for fuel Cell technology

CreativityCreativity andand DiversityDiversity::

TheThe CoreCore ofof 3M business 3M business modelmodel

McKnight PrinciplesMcKnight Principles

“Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow.”

W. L. McKnight, 1948

Culture of Innovation Culture of Innovation – 15 % of 3M scientists’ time spent on

individual projects ending up with major innovations like: Scotch® AdhesiveTapes, Post-it® Notes, Immune Response Modifiers…

Innovation objective Innovation objective untiluntil 20032003– 40% of sales with products launched in

the past four years– Now also 10% less than 1year

Mission & VisionMission & VisionMissionMission

The 3M Tech Forum is a principal organization for productive technical interaction at the interpersonal "grass roots" level. Through networking and communication, the Forum fosters an environment of creativity and cooperation that leads to innovation and growth.

VisionVisionThe 3M Tech Forum will be:

a dynamic global organizationa leader in worldwide communication and technology exchange a catalyst for professional growth and development of all technical employees a voice of the 3M technical community effective in stimulating 3M growth and recognized for upholding 3M values

Tech Forum ChaptersTech Forum ChaptersAdhesives/Adhesion

Analytical

Applied Science

Biotechnology

Business Intelligence

Electronics

Global Technical

Global Product Stewardship

Imaging

Inorganic Materials

Intellectual Property

Processes

Product Design and Development

Project Management

Radio Frequency ID

Sensors

Software & Systems

Surface Tribology & Abrasive Resources

Tech Service

Life Sciences

Microreplication

Modeling and Simulation

Nanotechnology

New Business Development

Nonwovens

Optics

Organic Chemistry

Photochemistry

Physics

Polymer

Purpose of Tech ForumPurpose of Tech ForumTech Forum….

Leads 3M in global technical communication and networkingCreates an environment of networking and cooperation across department, division, business and country boundaries

Acts as the voice of the technical communityConduit that allows open two-way dialog between technical employees and executives to promote a healthy technical organization

Provides leadership opportunities for technical employeesDevelops future technical and business leaders for 3M

Brings the latest external technical information into 3M by dentifying, sponsoring, and hosting academic and industrial invited speakers

30 Chapters covering all major 3M core technologies play a critical role in bringing relevant outside technology into 3M

Offers broadly useful technical education and professional development opportunities for technical employees

How do we do this in 3M ?How do we do this in 3M ?

Technology platforms

Technology centers

Division Laboratories

Laboratories outside of United States

MeMetalMatrix

Composites

SuSurface

Modification

FsFiltration,

Separation,Purification

DoDental &

OrthodonticMaterials

AdAdhesives

RfReclosableFasteners

AbAbrasives

DdDrug

Delivery

MrMicro-

replication

PePredictive

Engineering& Modeling

RpRadiationProcessing

AcAcoustics

DmDisplay

Materials

NmNonwovenMaterials

PmPolymer

MeltProcessing

SmSpecialtyMaterials

AsApplicationSoftware

FiFilms

IrImmuneResponseModifiers

MdMedicalDataMgmt

MiMicrobialDetection& Control

PoPorous

Materials &Membranes

PcPrecisionCoating

CeCeramics

EpElectronicPackaging

FlFluoro-

materials

ImImaging

IsIntegratedSystemsDesign

MoMolding

PdParticle &DispersionProcessing

PrProcessDesign &Control

WoWoundMgmt

CpChemical

PowerSources

FcFlexible

Converting& Packaging

FoFiberOptics

IpInks &

Pigments

LmLightMgmt

3M Technology Platforms3M Technology Platforms

3M Technology Platforms

Adhesives

Abrasives

CeramicsElectronic Packaging

Microreplication

Light Management

Specialty MaterialsNonwovenMaterials

Architecture & Construction

Automotive, Marine & Aerospace

Electronics Manufacturing

Graphic Arts

Health Care

Home & Leisure

Manufacturing & Industry

Office

Safety: Transportation & Personal

Security (Worldwide)

Utilities & Telecommunications

Integr. Systems Design

Markets

Polymer Melt Processing

Technology PlatformsTechnology Platforms-- Multiple MarketsMultiple Markets

3M Technology Platforms MarketsAdhesives

Abrasives

CeramicsElectronic Packaging

Microreplication

Light Management

Specialty Materials

Nonwoven Materials

Polymer Melt Processing

Architecture & Construction

Automotive, Marine & Aerospace

Electronics Manufacturing

Graphic Arts

Health Care

Home & Leisure

Manufacturing & Industry

Office

Safety: Transportation & Personal

Security (Worldwide)

Utilities & Telecommunications

Integr. Systems Design

Technology PlatformsTechnology Platforms-- Multiple MarketsMultiple Markets

Mix TechnologiesMix Technologies

Micro-replication

Abrasive

Reflectivetraffic signs

Scotch™ tape

Scotch-Brite™ scourers

Respirators

Micropore™surgical tape

Post-it®notes

Prod

ucts

Adhesive

Films

Non-Woven

Result Broad Product Range

AbrasivesUse of microstructured surfaces to enhance abrasive life and work- piece surface finish

AdhesionStructured placement of adhesives to limit contact area and/or to permit air bleed

Light ManagementUse of microstructured surfaces to control direction of light path

RetroreflectionUse of microstructures to direct light back toward source

MicroreplicationMicroreplication

But people donBut people don’’t buy technology, t buy technology, they buy productsthey buy products

J. Ihlenfled

Ex. Vice President R&D WW

Technology centers – (600)Technology Development 3-10 years

Division Laboratories – (3000)Product Development Today’sProduct Engineering, Control BusinessTechnical Service 0-3 years

European Laboratories – (1200)Technical Service Today’sProduct Engineering Control BusinessProduct Development 0-3 years

Selected Technology centers 0-5 years

Japan laboratories (600)China laboratories (250)

R&D R&D OrganisationOrganisation 3M3M

Mission of Technical ServiceMission of Technical ServiceExcellent understanding 3M technologies so contribution to GROWTH in his business center by being interface customer - laboratory

Communication Customer NeedsCommunication Customer NeedsCommunicate local needsCommunicate customer processes, process mapingmarket needsReport communication network:

Solve, anticipate customer (expressed) needs with 3M solutions

““Even if you are on the right track, Even if you are on the right track,

youyou’’ll get run over if you just sit there.ll get run over if you just sit there.””

Will RogersWill Rogers

Where New Growth Platforms AreWhere New Growth Platforms AreMaking A DifferenceMaking A Difference

Sensors / Diagnostics / Indicators

Track and Trace

Separation / Filtration

Identification / Authentication

Vehicle Management/ Intelligent Highways

$46B 10%

$6B 20%

$20B+ 10%

$5-10B 12%

N/A N/A

IB E&C HC TR C&O D&G SSPS OUS- Indicated areaof interest

Mkt.Size Growth

Nanotechnology $20B 20%

Growth Platforms Leveraged by Multiple Businesses

Corporate Research LabCorporate Research LabVisionVision

C & OC & O

D & GD & G

E &

CE

& C

TB & IB

TB & IBSS

&PS

SS&

PS

HCHC

TechnologyTechnology

CRMLCRML

SEMSSEMS

CR

AL

CR

AL CR

PL

CR

PL

Role of theRole of theCorporate Research LaboratoryCorporate Research Laboratory

Develop significant technology to drive/support 3M’s future businesses

Align technology with high growth markets

Provide technology to support Big B core growth

Externalize technology development/acquisition

Develop a global technology plan

Serve as an entry point for high potential technical staff on a global basis. Re-prime the hiring pipeline on a global basis

MeMetalMatrix

Composites

SuSurface

Modification

FsFiltration,

Separation,Purification

DoDental &

OrthodonticMaterials

AdAdhesives

RfReclosableFasteners

AbAbrasives

DdDrug

Delivery

MrMicro-

replication

PePredictive

Engineering& Modeling

RpRadiationProcessing

AcAcoustics

DmDisplay

Materials

NmNonwovenMaterials

PmPolymer

MeltProcessing

SmSpecialtyMaterials

AsApplicationSoftware

FiFilms

IrImmuneResponseModifiers

MdMedicalDataMgmt

MiMicrobialDetection& Control

PoPorous

Materials &Membranes

PcPrecisionCoating

CeCeramics

EpElectronicPackaging

FlFluoro-

materials

ImImaging

IsIntegratedSystemsDesign

MoMolding

PdParticle &DispersionProcessing

PrProcessDesign &Control

WoWoundMgmt

CpChemical

PowerSources

FcFlexible

Converting& Packaging

FoFiberOptics

IpInks &

Pigments

LmLightMgmt

AmAdvancedMaterials

BiBiotech

VpVacuum

Processing

PpPrecision

Processing

NtNano

Technology

3M Technology Platforms3M Technology Platforms

EBOEBO’’ss

EmergingEmerging Business Business OpportunitiesOpportunities

Innovation RealitiesInnovation Realities

Customer IntimacyInnovation is a Team SportTop Management: Covert Champions/Double AgentsMosaic ThinkingTools in the ToolboxIt Takes a Special Talent

“Make more, make new from what we can do”

The Innovation ImperativeThe Innovation Imperative

Innovation Personal SatisfactionInnovation SurvivalInnovation Competitiveness

Innovation Growth

Connecting customers to technology to change the basis of competition

Fluid, flexible, mobile resources

Passion for business building15% time: creative,

independent thinkingMindset for problem solving

Collaborative TeamsTechnology

Sharing/TransferExternal Technology

SourcingWorldwide Networking

Maintaining Our StrengthsMaintaining Our Strengths

Building Strength on Strength

Sending wrong signalsSending wrong signals

It’ll never work

We explored that thoroughly 10 years ago

OK, if we can get somebody else to pay for it

We’re too shorthanded to work on blue sky ideas

It’s not in the business plan

It’s not your job to talk to customers

Need to balance business goals with risk-taking

Requires higher level leadership game - following rules of resourcing and allocating wisely

Disruptive technologies challenge core business stability

Metrics are difficult to establish for very unique projects

Entrepreneurs have to compete with existing business for budget, operating resources, people

Leading Innovation: Leading Innovation: Some ChallengesSome Challenges

Rewards and RecognitionRewards and Recognition

Circle of Technical Excellence and Innovation

Dual Ladder

Genesis Grants

Carlton Society