From Scotch Tape to Red Tape: The Decline of 3M's Creative Culture

From Scotch Tape to Red Tape: The Decline of 3M's Creative Culture

3M has a storied history as an innovation powerhouse. From bandages to specialized abrasives and nano-materials, the company's portfolio has long been as diverse as it was groundbreaking. The secret sauce? An open innovation culture, set in motion by William McKnight. Joining 3M as an assistant bookkeeper in 1907 and rising to president by 1929, McKnight's championed pro-innovation practices, such as allowing 3M scientists the freedom to dedicate 15% of their work hours to passion projects. Researchers were also encouraged to share findings, collaborate, and even wander through labs to spark serendipitous conversations– like the one that ultimately led to the Post-it Note.

These management practices were the product of a clear set of principles favoring delegation and experimentation, which McKnight spelled out in a 1948 manifesto:

As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women, to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.

Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it dictatorial.

It’s essential that we have many people with initiative if we are
to continue to grow. Hire good people and leave them alone.

The McKnight principles seem to have lost their luster, according to an excellent Wall Street Journal piece published this week. The article includes eye-opening stories from scientists such as Bob Smithson, who recalls when researchers would meet in the lunchroom at 11 a.m. daily for informal chats. These conversations were invaluable, contributing to the progress of several of Smithson's projects, but they've become a rarity. Robert Kieschke, a former research director with 20 patents under his belt, adds that the focus has shifted to pursuing safe bets. “If you start forcing people to eliminate risk, then all you end up doing is what has been done before or what everyone else is doing,” said Kieschke.

It's hard to pinpoint when 3M's innovation culture began to degrade, but James McNerney's tenure as CEO certainly didn't help the cause. McNerney introduced "Six Sigma," a data-driven methodology aimed at eliminating defects in any process. This might work in manufacturing, but applying it to the creative process is like asking Picasso to paint by numbers (for more, see this short piece I wrote about it a couple years ago). George Buckley, who succeeded McNerney, dialed back many of his predecessor’s initiatives, but the slide continued after Buckley retired. Under Inge Thulin, who held the CEO job from 2012 to 2018, 3M more than doubled its dividend and spent billions on share buybacks, while research spending went up modestly (the trend hasn't reversed much in recent years).

The result: a stalled growth engine and lackluster performance. The company has abandoned its longtime goal of generating around 30% of revenue from recent products, and 3M's share price of 3M has been cut in half since 2018. As one institutional investor summed it up: "They’ve lost their way, unfortunately."

3M's story serves as a cautionary tale for companies that are tempted to trade their creative soul for short-term gains. It's also a heads-up for executives who might overestimate their knack for “picking winners and losers [from the C-suite], when in reality we need to generate more products so we can get into test markets to see what works,” as 3M distinguished scientist Robert Asmus put it.

So the next time you find yourself reaching for a Post-it Note, remember the creative spirit that brought it to life—and consider whether your own organization is nurturing innovation or stifling it in the name of control and efficiency.