3M Post-it Note Case Study PDF

3M and the Post-It Note Company Background: 3M is a diversified technology company which operates in seven different business segments: Consumer and Office, Display and graphics, Electro and Communications, Health Care, Industrial, Safety, Security and Protection Services and Transportation. Today...

3M and the Post-It Note Company Background: 3M is a diversified technology company which operates in seven different business segments: Consumer and Office, Display and graphics, Electro and Communications, Health Care, Industrial, Safety, Security and Protection Services and Transportation. Today 3M boasts sales of over $20 billion (2004 figure). However the company started out from far more humble beginnings. Minnesota Mining and Manufacturing Company (3M) was founded in 1902 in Two Harbour Minnesota. It was founded by five businessmen to mine mineral deposits in the area. However the mineral deposits turned out to be of little worth, so in 1905 3M moved to Duluth, and later St. Paul, to concentrate on developing and manufacturing sandpaper products. During 1914-1915, the company experienced high levels or customer complaint in relation to the garnet (abrasive material) falling off the 3M sandpaper. From investigation, it turned out that the garnet had been contaminated with olive oil during transport from Europe and that this prevented the glue from bonding the garnet to the paper. The difficult was that 3M had 200 tonnes of contaminated raw material remaining and its writing off had the potential to sink the young company. However through ingenuity and experimentation, 3M discovered that they could roast the garnet to remove the oil and decontaminate the raw material. It ingenuity and inventiveness when faced with adversary became the norm within the company and as a consequence has facilitated the company grow into the company it is today. 1 The current position of 3M as one of the worlds largest companies did not happen overnight and certainly not by accident. Since 1916 the company has not rested on its laurels. Diversification and innovation have been integral to the company’s growth over the years. From its beginnings as a mineral mining company it quickly began producing sandpaper and further diversified into a number of unrelated markets such as cleaning product ( Scotch –Brite) and health care (CFC free inhalers) to name but two. It is due to 3M’s involvement in several product markets that have allowed it to expand regardless of whether one of the markets they are involved in slows down. “3M has a tolerance for tinkers and a pattern for experimentation that lead to a broadly based, diversified company today. To borrow a line from “Finian’s Rainbow,” You might say we learned to “follow the fellow who follows a dream” -Gordan Eangdahl retired vice president, Human Recourses 3M Diversification has been made possible by the innovative outlook of the firm. 3M has been responsible for some groundbreaking inventions over the years including masking tape (Richard Drew in 1925) and post-it notes (Arthur Fry in 1974). This has not happened due to chance or luck. Indeed innovation has always been actively encouraged within the 3M company. At 3M there has been a long standing rule that employees should be allowed to dedicate 15% of their time towards individual projects. By doing so the company actively encourages innovation as well as providing an added sense of worth to its employees. William L. McKnight, who served as chairman of the board from 1949 to 1966, introduced this concept at 3M. He was a firm believer in the concept that a company was only as good as its employees. He encouraged management to delegate responsibility and encourage employees to exercise their initiative. He believed that 2 management that is destructively critical when mistakes are made will only succeed in killing initiative and that organizational growth was based on having a high number of people generating initiatives to ensure continued growth. His management theories are still the guiding principles for 3M today and in 2005 alone the company filed 487 US patents. “Every business we’re in today is based on having invented something new to the world and taking that invention to customers around the world. 3M has spent a lot of time, money and effort to create a culture of invention” The Post-It Note: Of all the new product launches at 3M, the story behind the post- it note is one which embodies 3M’s unrelenting drive towards innovation. This sticky paper which has become one of 3M’s most recognised products across the globe. However, the path from initial discovery to eventual market domination was neither a straight forward or simple one. If 3M could have foreseen the eventual results of the Post-It project, they would have had no qualms about supporting its development. However, the concept of people paying a dollar for ‘scratch paper’ seemed ludicrous to many within the organisations and even the initial market research pointed to the product being a ‘flop’. The product became a success in the market because certain key individuals believed in the product’s potential and ‘put their necks on the line’ to make it happen. The 3M adage of ‘its better to ask forgiveness than permission’ and the practice of ‘bootlegging’ were specific projects were progressed by individuals with passion for them, irrespective of management’s views, created an environment that allowed the project survive and be nurtured to success. The ‘post-it’ actually began with an experiment by Spencer Silver that resulted in 3 the creation of a low grade adhesive (1968). However it wasn’t until 1980, that the discovery, reinvigorated by Arthur Fry (1974) was launched on the market as the post-it note. In 1968, Silver was working on developing new types of patentable adhesive. He was essentially looking for an adhesive that was unique in comparison to other adhesives on the market at that time. It was as a result of one of these experiments that he discovered a low grade adhesive. The glue had certain unique characteristics such as the low bonding power that prevented it from sticking properly and thus allowed one surface be bonded to another, then removed and reused again. In simpler terms it was glue that didn’t stick very well. Silver knew he had invented something entirely unique. The next problem was what function could be fulfilled by a glue that didn’t stick? He eventually came up with the idea of using the adhesive on a bulletin board. However this idea fell flat. Sales of the product were disappointing and the product was scrapped by 3M. Spencer tried to think of more practical uses for the adhesive as well as putting this question to others at 3M. He gave seminars on this low grade adhesive so as to keep the idea in people’s minds. It was at one of these seminar that Arthur Fry was present. A Moment of Divine Inspiration: Spencer Silver’s low grade adhesive had metaphorically speaking been left on the shelf for the best part of five years when the idea of Arthur Fry to use the adhesive to produce post-it notes arrived. The story of how the idea came about was a mixture of knowledge, ingenuity and necessity. Arthur Fry was a devote Presbyterian and attended a weekly church service. He was a member of the choir and before each service would mark the relevant pages of his hymn book with pieces of paper or bookmarks. However, this proved unsatisfactory as these 4 pieces of paper would fall out when he stood up to sing!. One day while attending church, his creative process reached the ‘eureka’ phase as he realised could use Silver’s adhesive to stick his bookmarks to the page, ensuring they would stay in place and could yet removed without damaging the book and re-affixed elsewhere. From this moment on Silver Spencer’s unique discovery had been transformed into a potential product that Fry believed the public would latch onto. Despite his belief in the ‘post-it’ product, he realised he could not devote all of his time to progressing the project as he had various other projects which demanded his time. However 3M’s ‘15% rule’ allowed him dedicate time to the project. Fry acquired some of Silvers adhesive and began making an initial prototype. He then handed out samples of the sticky paper to individuals working at 3M to see how this new product might be used and what internal customers thought. He returned a couple of weeks later but people did not want more samples. While the sticky bookmarks were being used, he discovered that people were simply using the same note over and over again. By reducing the size of the paper used in the prototype, Fry was able to reduce the amount of times the sheet could be reused (due to less space to write on) and thus increase the consumption of sheets. In another moment of inspiration Fry realised that a post-it note could be put to other uses rather than just as sticky bookmarks. Fry was reading a report that had been given to him by management. He had a question in relation to some of the data that appeared on the report. He decided to place a post-it on the report with the question he had about the data with an arrow pointing at the data in question. When the report arrived back on Fry’s desk his manager had written his response to the question on the post-it. When they next met they mentioned the implications of their correspondence via post-it note. 5 They realised that this was a whole new way to communicate. Fry became excited by the idea. It transformed a simple scrap of paper into a mobile bulletin board. Additionally this was a product that people would definitely use up which would increase demand. The Set- Backs Fry continued to send out samples of the post-it notes to employees at 3M but this time they were being used up. People were coming to him looking for more samples. Fry’s invention now had a cult following yet he was still unable to devote many working hours to the project. His superiors allowed him to charge any project related expenses to a miscellaneous account, but he still had to be satisfied with treating this as a side project. Eventually, he succeeded in having a small team assigned to help him realise the inventions full potential and transform it into a commercial venture. The team were however up against some notable handicaps right from the outset. At 3M superior bonding power was the measure of an adhesives value. Fry was championing glue that didn’t stick very well which contradicted this philosophy. There was little faith in Fry’s project. Another stumbling block came when manufacturing and production people came on board. Everything at 3M was put on a roll. Post-Its had to be stacked one on top of the other in order for them to work. This meant that there would be serious problems when it came to manufacturing the product. Fry had perfected the art of producing the notes on a small scale but if the company wanted to mass produce the product it would require investment in custom built machinery. This would be costly and complicated. Fry took a more optimistic view of the situation as this meant that it would not be easy to imitate the product. This gave the company a strategic advantage. Fry tried to impress this idea upon his superiors. However engineers at 3M were 6 still only seeing the negatives that the project would entail. He had a great idea but was finding it difficult to sell that idea. He knew he was going to have to use all his sales skills and a lot of persistence if this project was to get off the ground. The Breakthroughs Eventually, 3M succeeded in developing suitable manufacturing equipment and processes to allow large scale production of the post-it. Parallel, they conducted market research with focus groups to estimate the reaction if the product was launched. This feedback was generally positive response regarding the concept but could not envisage spending an exorbitant price for what was essentially a piece of paper with a bit of poor quality glue. For many of the new products resistors within the company, this market feedback proved what they had believed all along. There simply was not a market for this type of product. Despite this, 3M decided to test-market the product in four cities: Denver, Richmond, Tampa and Tulsa. The overall result of this market research was again poor as people simply could not see themselves purchasing ‘scratch paper’. However Geoff Nicholson and Joe Ramey, two 3M executives who were internal customers of Fry’s prototypes, decided to conduct their own one day market research in Boise, Idaho. Their justification for doing so was that within 3M post-it notes were extremely popular and they found them invaluable. They planned an intensive market research expedition in Boise, where they flooded the town with post-its. Nicholson and Ramey’s efforts also involved educating consumers how to use the product. Despite their efforts, the response still was mixed. On the positive side, people were warming to the idea of using the product but the price was still an issue. Based on the complete market research, a decision was taken that 3M would give away millions of 7 post-it notes during the initial year of launch (1980-81) to convince consumers of the value of the product. This marketing plan proved to be a successful and once the free samples stopped, people began to purchase post-it notes. Conclusion By the end of the first year, 3M was seeing profits from their new product and by 1984 sales of ‘post-its’ were estimates at $45 million. From there on the product went from strength to strength with numerous product variations of the post-it being introduced and the ‘yellow pad’ infiltrating offices across the globe. Questions 1. How did 3M’s culture and management structures contribute to the development of the Post-It pad innovation? 2. Why did Art Fry put such great effort into a project that was not core to his job? 3. How did prototype and testing contribute to the development of the post-it note? 4. How did 3M approach the issue of market development relative to the technology development of the product? 5. What does this case tell us about knowledge management relative to the innovation process? Bibliography A Century of Innovation (2002); www.3m.com New Product Development: A Reader, Susan Hart, 1996 Pages 8 – 9 and 16 – 17 Operations Management, Nigel Slack 3rd Edition, 2001 Pages 546 – 547 8 Bouchey, Lisa M. “Post-it Pandemonium (Technology Information).” Office Solutions. Vol. 17, (9). Sept. 200: 6. Fry, Arthur. “The Post-It Note: an entrepreneurial success.” SAM Advance Management Journal, vol. 52 (3. Summer 1987: 4. Havener, Cliff and Margaret Thorpe. “Customers Can’t Tell You what They Want (Mythology of product development and marketing strategy).” Management Review. Vol. 83, n12. Dec 1994: 42. Mullin, Rick. “Analysts Rate 3M’s New Culture.” Chemical Week, vol. 163. Sept 26, 2001: 39. Prane, Joseph. “Post-It Notes Prove to be a Popular Invention.” Adhesives Age. Vol. 35 (2). Feb 1992: 52. www.wikipedia.com www.3m.com http://web.mit.edu/invent/iow/frysilver.html http://patft.uspto.gov/netacgi/nph-Parser?patentnumber=3691140 9