DEGREE PROJECT IN TECHNOLOGY AND MANAGEMENT, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2017 Lessons from 3M Corporation: managing innovation over time and overcoming the innovator’s dilemma JOSEFINE COSTER KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT www.kth.se Lessons from 3M Corporation: managing innovation over time and overcoming the innovator’s dilemma. by JOSEFINE COSTER Master of Science Thesis INDEK 2017:33 KTH Industrial Engineering and Management Industrial Management SE-100 44 STOCKHOLM 1 Master of Science Thesis INDEK 2017:33 Lessons from 3M Corporation: managing innovation over time and overcoming the innovator’s dilemma. Josefine Coster Approved Examiner Supervisor 2017-06-26 Kristina Nyström Anders Broström Abstract This thesis explores how large global incumbents manage innovation over time and overcome the innovators dilemma with empirics from the 3M Corporation. The research question has been investigated through the application of the three perspectives described in Yu and Hang’s (2010) article: (1) The internal, (2) The customer and (3) The technological perspective. To gain a longitudinal perspective of 3M’s innovation management a combination of secondary and primary sources has been used. Findings suggest that the perspectives seem to possess some explanatory power and that the various enablers are connected, hence, stressing the need of more holistic theories including the various perspectives when regarding disruptive innovation and innovation management. Moreover, findings suggest that to enable disruptive innovation management and overcome the innovators dilemma, it is indeed important to have supportive human resources, a flexible organizational culture with the ability to unlearn, allocating resources between both sustaining and disruptive innovations, having an organizational structure allowing for different sizes and autonomy of units and facilitating various ways for knowledge sharing and collaboration. Additionally, having a broad customer orientation open to include new customers and emerging markets, along with tools to understand customers’ latent needs and to systematically search for and develop disruptive innovations specifically. Key-words: Disruptive innovation, Innovation theory, Innovator’s dilemma, 3M Corporation, Continuous innovation management 2 Table of Contents 1. Introduction ................................................................................................................................ 1 1.1 Background ............................................................................................................................ 1 1.2 Research question ................................................................................................................... 2 1.3 Sustainability aspects ............................................................................................................. 3 1.4 Outline of thesis ..................................................................................................................... 3 2. Literature Review ....................................................................................................................... 5 2.1 Innovation ............................................................................................................................... 5 2.2 Disruptive Innovation Theory ................................................................................................ 6 2.3 Firm survival .......................................................................................................................... 8 2.4 Challenges of Disruptive Innovations .................................................................................... 9 2.5 Incumbents failure to adapt and inhibitors to disruptive innovation .................................... 11 2.6 Research gap ........................................................................................................................ 12 3. Theoretical Framework ........................................................................................................... 13 3.1 The Internal perspective ....................................................................................................... 13 3.2 The External perspective ...................................................................................................... 15 3.3 The Customer and Marketing perspective ........................................................................... 15 3.4 The Technological perspective ............................................................................................. 15 4. Methodology ............................................................................................................................. 16 4.1 Case study as research design .............................................................................................. 16 4.2 Case selection ....................................................................................................................... 16 4.3 Data collection ...................................................................................................................... 17 4.4 Operationalization ................................................................................................................ 18 5. Empirical data .......................................................................................................................... 19 5.1 Case introduction of 3M ....................................................................................................... 19 5.2 The Internal perspective ....................................................................................................... 20 5.2.1 Human Resources .......................................................................................................... 20 5.2.2 Organizational culture ................................................................................................... 24 5.2.3 Resource Allocation ...................................................................................................... 25 5.2.4 Organizational structure ................................................................................................ 27 5.3. The Customer perspective ................................................................................................... 31 3 5.4 The Technological perspective ............................................................................................. 34 6. Analysis and discussion ............................................................................................................ 36 6.1 The Internal Perspective ....................................................................................................... 36 6.1.1 Human Resources .......................................................................................................... 36 6.1.2 Organizational Culture .................................................................................................. 38 6.1.3 Resource Allocation ...................................................................................................... 38 6.1.4 Organizational Structure ............................................................................................... 40 6.2 The Customer Perspective .................................................................................................... 44 6.2.1 Customer Orientation .................................................................................................... 44 6.2.1 Customer Needs ............................................................................................................ 45 6.3 The Technological Perspective ............................................................................................ 46 6.3.1 Systematic approach ...................................................................................................... 46 6.4 Discussion ............................................................................................................................ 47 7. Conclusion and suggestions for future research .................................................................... 51 7.1 Conclusion ............................................................................................................................ 51 7.2 Future research ..................................................................................................................... 52 8. Reference List ........................................................................................................................... 53 9. Appendix ................................................................................................................................... 60 4 Table of Figures Figure 1. The disruptive innovation theory ............................................................................ 7 Figure 2. 3M technology platforms..................................................................................... 20 Figure 3. Timeline over 3M Nonwovens technology ............................................................ 27 List of Tables Table 1. Operationalization ……………………………………………………………………60 Table 2. Summary of main findings ……………………………………………………………47 5 1. Introduction This section begins with a short background setting the scene for the research, followed by of the research question that this paper seeks to answer. Ending with a brief