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MGT 601
“Why Innovation is Your Ticket to
Success” Barry Bland
California Intercontinental University
MGT 610: Mastering Leadership
Introduction
With over a 100 plus-years of breakthrough innovations such as the revolutionary Scotch-
tapes, Post-it notes just to mention a few; by 2005, the 3M company was undergoing serious
financial difficulties from cost-cutting, employee layoffs sluggish growth, when Sir George
Buckley took over as the new CEO of the company. Prior to Sir George Buckley’s reign as CEO,
the company’s earnings were improving. However, the firm’s capital spending decreased by
65%, while research and development (R&D) was decreased by at least 25%. After months of
trying to get to the bottom of the root causes of the 3M company, Sir George Buckley discovered
that the company was basking in its old glory instead of introducing new products. The CEO
suggested that if 3M was to be successful, it would need to invest at a minimum 14% of its
revenue in the new products development. “Companies looking to build a strong R&D culture
first tailor what is measured, monitored, and controlled to suit their long-term outcomes and then
strike the right balance between performance and innovation” (Carey et al., 2018). The major
drivers of economic growth are technological change and innovation in todays business through
competitive process (Castro and Desender, 2010). “Developing and bringing to market
innovative products ahead of competitors can generate various benefits in economic, preemptive,
technological and behavioral factors” (Castro and Desender, 2010, p.36). This paper will attempt
to use the case study article to build an analytical essay while incorporating two to three
additional articles in building a sound analytical essay. The position of this essay is in favor of
using innovation to advance organizational growth. New product development is key to
organizational growth. Investing in research and development (R&D) in today’s business is
, paramount to the overall success of any given organization. “In countries that are close to the
technological frontier, with robust systems of science and innovation, R&D plays a central role
and there is a stronger link between R&D, innovation output, productivity, and firm growth
(Agusti et al., 2018).
Innovation and Growth Challenges
Another shocking discovery by Sir George Buckley was the fact that the previous
executives and board members failed to connect innovation and growth rather paid more
attention to earnings per share growth with economic value-added, which measures the
effectiveness of 3M’s capital. The CEO practically claimed that innovation and growth was being
deliberately undermined. More so, the organization’s researchers were not provided with the
required resources it needed to bring about breakthrough product innovation. After the
discoveries of the root causes of 3M, CEO Sir George Buckley reintroduced the New Product
Vitality Index (NPVI) metric with the sole purpose of looking back at historical data. “But this
14% only holds the company’s year-over-year growth flat. To grow at a 4% compounded annual
growth rate above what the market was growing required an NPVI in excess of 30%” (Carey et
al., 2018). The CEO concluded that the organization’s core products were not generating
adequate income because they were products of yesteryears (30% of its products). “Some
important divisions’ NPVIs were even zero, where new product development and innovation had
been eliminated. That meant 3M’s core product lines were wasting away faster than new product
lines could replace them” (Carey et al., 2018).
Turnaround
Due to years of setbacks, the executive team and employees were dispirited and
immediately the CEO knew it was going to be a challenge to put the organization back on track.
Nonetheless, he was determined to do whatever necessary to making 3M corporation once again
a profiteering organization. According to Carey et al. (2018), “the five critical principles that led
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