600-700 word compare and relate speech for 5 minutes. I want you to prepare a Five minutes speech on the question below. The company given to me is 3M and you'll have to relate using Decision Making M

3M’s Conundrum of Efficiency and Creativity

Companies known for their innovative character, like Minnesota Mining and Manufacturing (3M), share at least four fundamental characteristics: (1) Putting people and ideas at the heart of the management philosophy. (2) Giving people opportunities and latitude to develop, try new things, and learn from their mistakes. (3) Building a strong sense of openness, trust, and community throughout the organization. (4) Facilitating the mobility of talent within the organization.1 3M believes in the power of ideas and individual initiative; and “recognizes that entrepreneurial behavior will continue to flourish only if management is willing to accept and even applaud ‘well-intentioned failure’.”2 Innovation, the traditional hallmark of 3M’s business operations and success, is “a process that thrives on multiple, diverse, independent and rapid experimentation, in a failure-tolerant environment that values and accommodates constructive conflict.”3

Richard McKnight, 3M’s president in the company’s early days, “recognized that it was the individual inventor, enabled in pursuing his ideas, who could help the company develop new organizational knowledge with which to meet emerging customer needs. As a result, McKnight created the company’s 15 Percent Rule, which still encourages technical employees to spend as much as 15 percent of their time pursuing their own ideas.  Among the most successful of the products developed through the 15 Percent Rule are masking tape in the 1930s, Scotchgard fabric protector in the 1950s, and Post-it Notes in the 1970s.”4

The creative and innovative orientation of 3M  and in particular a tolerance for failure, defects or errors  came under serious attack in December 2000, when former General Electric executive James McNerney took over as CEO of 3M. McNerney immediately began implementing Six Sigma,5 a type of management program that is designed to identify problems in work processes, and then use rigorous measurement to reduce variation, eliminate defects, and increase efficiency. Under McNerney’s leadership, profits initially grew at about 22 percent annually but then sputtered. Some experts were critical of McNerney’s unyielding commitment to Six Sigma, wondering if it was stifling 3M’s creativity and innovation. 6

When initiatives such as Six Sigma become embedded in a company’s culture, as they did at 3M, creativity and innovation can easily get squelched.7 In mid-2005, when McNerney departed 3M to take the CEO’s job at Boeing, he left his successor, George Buckley, with the difficult question of “whether the relentless emphasis on efficiency had made 3M a less creative company.”8 According to management guru Tom Peters, McNerney’s implementation of Six Sigma at 3M “more or less closed the lid on entrepreneurial behavior.”9 Vijay Govindarajan, a professor at Dartmouth’s Tuck School of Business, observes that when more emphasis is placed on a program like Six Sigma, the more likely it is that breakthrough innovations will be harmed.10 Art Fry, the inventor of 3M’s Post-It notes, says, “[y]ou have to go through 5,000 to 6,000 raw ideas to find one successful business” but the Six Sigma program would ask “why not eliminate all that waste and just come up with the right idea the first time?”11

Some experts maintain that Six Sigma can absolutely co-exist with innovation in that Six Sigma can eliminate mundane, repetitive, and tedious tasks that impede creative thinking and innovation.12 However, others assert that “[s]ome of the aspects that make Six Sigma powerful may in fact reduce its overall effectiveness. The methodology employs rigorous statistical analysis to identify defect areas, the correction of which produces better quality, lower costs, and increased efficiency. But while Six Sigma may be very effective at controlling processes, elements that are harder to control, such as employee behavior and innovation/ideation, can hinder long-term success.”13

Six Sigma focuses on efficiency and quality in order to enhance profits, but the lifeblood of long-term profitability for most, if not all, businesses is innovation. Indeed, “to compete in the coming decades, creativity is one process that can’t be left for later.”14 The proper balance between creativity and efficiency is essential. Effective innovation “requires a delicate balancing act between play and discipline, practice and process, creativity and efficiency, where firms need to ‘learn how to walk the fine line between rigidity  which smothers creativity  and chaos  where creativity runs amok and nothing ever gets to market’.”15

Interestingly, over 60 percent of all corporate Six Sigma programs fail to produce the desired results.16 When stacked up against the corporate need for creativity and innovation, this poses a significant challenge for executives and managers. Indeed, “[m]anaging the yin and yang of efficiency and creativity is one of the greatest challenges facing managers around the world. The 3M story illustrates that.”17

This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business Administration, Valparaiso University.

Discussion Questions:

1. What are the relative advantages and disadvantages of a company being committed to achieving efficiency through a program like Six Sigma versus encouraging and reinforcing creativity and innovation?

1. How would you describe 3M’s efficiency and creativity conundrum in terms of programmed and nonprogrammed decisions?

1. How would you describe 3M’s efficiency and creativity conundrum in terms of the rational, bounded rationality, and Z model of decision making?

1. What role(s) do intuition and creativity play in the decision making that is evident in 3M’s efficiency and creativity conundrum?

1 B. Leavy, “Leader’s Guide to Creating an Innovation Culture,” Strategy & Leadership 33(4) (2005): 39.

2 B. Leavy, “Leader’s Guide to Creating an Innovation Culture,” Strategy & Leadership 33(4) (2005): 39.

3 B. Leavy, “Leader’s Guide to Creating an Innovation Culture,” Strategy & Leadership 33(4) (2005): 42.

4 K. Baskin, “Storied Spaces: The Human Equivalent of Complex Adaptive Systems,” Emergence: Complexity and Organization 10(2) (2008): 9.

5 B. Hindo, “At 3M, A Struggle between Efficiency and Creativity; How CEO George Buckley Is managing the Yin and Yang of Discipline and Imagination,” Business Week (4038) (June 11, 2007): 8.

6 C. Del Angel and J. Froelich, “Six Sigma: What Went Wrong?,” Customer Relationship Management 12(11) (November 2008): 14; C. Del Angel and C. Pritchard, “Behavior Tests Six Sigma,” Industrial Engineer 40(8) (August 2008): 41.

7 B. Hindo, “At 3M, A Struggle between Efficiency and Creativity; How CEO George Buckley Is managing the Yin and Yang of Discipline and Imagination,” Business Week (4038) (June 11, 2007): 10.

8 B. Hindo, “At 3M, A Struggle between Efficiency and Creativity; How CEO George Buckley Is managing the Yin and Yang of Discipline and Imagination,” Business Week (4038) (June 11, 2007): 8.

9 Anonymous, “Scrutinizing Six Sigma; The Story on 3M’s Evaluation of the Program Triggered a Vigorous Debate among Readers,” Business Week (4041) (July 2, 2007): 90.

10 B. Hindo, “At 3M, A Struggle between Efficiency and Creativity; How CEO George Buckley Is managing the Yin and Yang of Discipline and Imagination,” Business Week (4038) (June 11, 2007): 10.

11 Hindo, B. (2007) At 3M, A Struggle between Efficiency and Creativity. Business Week, IN: Inside Innovation supplement (June 11), No. 4038, p. 14.

12 Anonymous, “Scrutinizing Six Sigma; The Story on 3M’s Evaluation of the Program Triggered a Vigorous Debate among Readers,” Business Week (4041) (July 2, 2007): 90; Sanders, S. (2007) The Quality / Creativity Paradox. Quality Progress (August), Vol. 40, No. 8, p. 1.

13 C. Del Angel and J. Froelich, “Six Sigma: What Went Wrong?,” Customer Relationship Management 12(11) (November 2008): 14.

14 P. Georgescu, “Creativity to the Rescue,” Fortune 156(8) (October 15, 2007): 74.

15 B. Leavy, “Leader’s Guide to Creating an Innovation Culture,” Strategy & Leadership 33(4) (2005): 42.

16 C. Del Angel and J. Froelich, “Six Sigma: What Went Wrong?,” Customer Relationship Management 12(11) (November 2008): 14.

17 B. Nussbaum, “The Fragility of Innovation,” Business Week, (4038) (June 11, 2007): 3.