INNOVATION… A Survival Issue.

1. INNOVATION…A Survival Issue. Inventors and Entrepreneurs Special Interest Group of Technology Advocates of San Antonio TASA April 11, 2007 Dr. Geoff Nicholson (retired) VP 3M International Technical Operations

2. Challenge Put almost 40 years …into 60 minutes

3. “Research is the transformation of money into knowledge.” Customer “Innovation is the transformation of knowledge into money.”

5. SOME WORRISOME INDICATORS US is today a net importer of high-technology products Its share of global high technology exports has fallen in last 2 decades from 30% to 17% Trade balance in high technology manufactured goods shifted from +$33 billion in 1990 to -$24 billion in 2004

6. SOME WORRISOME INDICATORS Fewer than 1/3 of US 4th and 8th grade students performed at or above a level called “proficient” in mathematics “Proficiency” considered ability to exhibit competence with challenging subject matter Alarmingly, about 1/3 of 4th graders and 1/5 of 8th graders lacked competence to perform basic mathematical computations

7. SOME WORRISOME INDICATORS US 12th graders recently performed below the international average for 21 countries on test of general knowledge in mathematics and science Advanced mathematics assessment was administered to US students who were taking or had taken pre-calculus, calculus, or Advanced Placement calculus and to students in 15 other countries who were taking or had taken advanced mathematics courses Eleven nations outperformed the US, and four countries had scores similar to the US scores NO NATION SCORED SIGNIFICANTLY BELOW THE US!

8. SOME WORRISOME INDICATORS In 1999, only 41% of US 8th grade students received instruction from a mathematics teacher who specialized in mathematics… …considerably lower than the international average of 71%

9. SOME WORRISOME INDICATORS Germany 36% of undergraduates receive degrees in science and engineering China the figure is 59% Japan 66% US corresponding figure is 32%

10. SOME WORRISOME INDICATORS In 2004, China graduated over 600,000 engineers India 350,000 America about 70,000

11. “Don’t bet against yourself – you risk winning”

12. “One of life’s greatest pleasures is doing what people say cannot be done”

13. We must be driven to solve customer problems • Both perceived • And un-perceived

14. 3MCustomer Inspired InnovationYour Invitation To Create The Future

15. Customer Inspired Innovation Market/Industry Foresight Articulated Needs SatisfyThe Customer Customer Insight Creative Foresight Opportunity Dev. Un-Articulated Needs Delight The Customer Unique Core Capabilities

16. You Need Freedom to Achieve Your Goals Empowerment • 15 percent rule • “It is always better to ask for forgiveness than permission” • Learn to live with failure but not accept it

17. CREATION of NEW TECHNOLOGY Individual Small Group Large Group High Risk Medium Risk Low Risk High Failure Low Failure Initial Modification Product to Application of Technology the Customer of Technology No Management Involvement High Management Involvement Accurate Schedule No Schedule High Discipline Order No Discipline Chaos

18. The 3M TECHNICAL ENVIRONMENT • 3M technical people encouraged to develop their own ideas in environment of innovation and creativity • Failure is an accepted and essential part of progress • 3M is open, informal, and on a first-name basis • 3M has grown primarily through the process of evolutionary spin-off • Technology base of 3M is very diversified - a strength, but also a challenge • Synergy is one of our greatest strengths • Technology exchange is essential part of 3M success • New products are key to our success - requiring 30% of sales each year in new products

19. KEYS TO NEW PRODUCTS • Culture • New Product Expectation • Permissive Attitude of Management • Needs/Technology Driven • Product Champions • Multi-Technology • Technical Assessment • Bootleg Slack/Boundary Crossing • Recognition/Rewards

20. RULES TO AVOID INNOVATION • Be suspicious of every idea that originated below you • Insist that people go through all levels with a new idea • Express criticism and withhold praise • Make a decision to reorganize in secret and maximize surprise • Be control conscious • Never forget that people at the top know everything

21. WRONG MANAGEMENT SIGNALS • It’ll never work. • We explored that thoroughly 10 years ago. • OK, if we can get somebody else to pay for it. • We’re too shorthanded to work on blue sky ideas. • It’s not in the business plan. • It’s not your job to talk to customers.

22. McKnight Principles “Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow.” W. L. McKnight, 1948

23. Why Innovate? Innovation Innovation Innovation Innovation Growth Survival Competitiveness Personal Satisfaction

25. viscous adhesive BACKING REGULAR ADHESIVE TAPES INCREASES WITH TIME TO MAXIMUM adhesion time

26. ADHESIVE SPHERES BACKING SURFACE ADHESIVE SPHERES BACKING Post-It Note ADHESIVE SURFACE SEPARATION BACKING

27. ADHESIVE SPHERES ANCHORED BACKING SURFACE SEPARATION Post-It Note ADHESIVE BACKING NO CHANGE WITH TIME adhesion time

28. “Post-it” NotesHistory • Accidental technology discovery • Patent filed U.S. – S. Silver • Appln. of uniqueness – G. Nicholson • Product invention – A. Fry • Market research, championing – G. Nicholson • 1980 National product introduction

29. “Post-it” Notes Uniqueness Unlike all other pressure-sensitive adhesives the adhesion level is constant with time. Look for the value of the uniqueness!

30. “Post-it” Notes Market Research Good when quantifying EVOLUTIONARY products. No good when quantifying REVOLUTIONARY products.

31. “Post-it” Notes Market Test • 4-City Test • Product placed in distribution – counted 4 weeks later • Convinced division vice president to visit test cities and sell. • Commitment to go with the program. BUSINESS SUCCESS (Nicholson to Japan)

32. “Post-it” Notes “Tolerance” All major new product successes at 3M are killed at least three times by management. “Tools” Six Sigma, DFSS and other tools used effectively and intelligently, and at the right time accelerates decisions and product to the customer.

33. Post-it Notes SIX PHASES of a PROJECT • Enthusiasm • Disillusionment • Panic • Search for the guilty • Punishment of the innocent • Praise and honors for the non-participant

34. To Activate Innovation You Need To … • know where you want to go – VISION • know where rest of the world is going – FORESIGHT • have ambition – STRETCH GOALS • have freedom to achieve your goals – EMPOWERMENT • draw from and work with others – COMMUNICATION,NETWORKING • be rewarded for your efforts – there is nothing more rewarding than RECOGNITION from your peers.

35. STRETCH GOALS • Goal 5-8% • Stretch Goal 8-10% • Organic Growth Annually

36. EMPOWERMENT is … “The first principle is the promotion of entrepreneurship and insistence upon freedom in the workplace to pursue Innovation Ideas.”

37. The 15% RULE Encouraged to Explore! Encouraged to network and Collaborate! Encouraged to Experiment!

38. REWARDS and RECOGNITION • Carlton Society • Circle of Technical Excellence and Innovation • Dual Ladder

39. TRAITS and CHARACTERISTICS 3M Innovators… • Are Creative • Have Broad Interests • Are Problem Solvers • Are Self-Motivated, Energized • Havea Strong Work Ethic • Are Resourceful

40. 3M Innovators are Creative • Inquisitive, Ask Questions • Explorative, Look for Solutions • Insightful, Intuitive Thinkers • Ideas Flow Easily • Visionary

41. 3M Innovators are Problem Solvers • Experimental style – do it first, explain it later! • Tinker with things (hands on) • Not afraid to make mistakes • Willing to do the unobvious • Practical • Take multiple approaches to a problem • Technically competent – as defined by hiring manager

42. 3M Innovators are Self-Motivated, Energized  Self-starters, driven  Results-oriented – Doers  Passionate about what they do  Accomplishment – urge to succeed  Emotional, enthusiastic  Sense of humor  Sense of social responsibility  Sense of contribution, value and purpose  Courage, self-confidence  Take initiative  Energize others around them

43. 3M Innovators Have a Strong Work Ethic • Committed • Hard Working • Work in Cycles • Flexible work habits – not structured • Drive toward work completion • Pursuit and dedication to results • Tenacious

44. 3M Innovators are Resourceful Get things done through others Network

45. Discovery and inventions are made in the laboratory by experimentation, not on computer screens. Computers give us the knowledge to make discoveries.

46. LEVERAGING Leveraging Across Technologies – Integrating 3M technologies to create new innovative products that change the basis of competition.

47. LEVERAGING Leveraging Across Countries – Applying 3M technological breakthroughs in as many geographic areas as possible

48. Why Laboratories Outside the United States? Serve our customers Grow our business Know the competition Access to global technology The innovation factor

49. Final Message No matter where you are… Innovate for the customer Network across the globe Have Fun!

50. “Even if you are on the right track, you’ll get run over if you just sit there.” Will Rogers