3M was a phenomenally successful company for more than 100 years. Our company grew consistently and increased dividends for 66 years. People hoped and wished to join the company - many applied and only a small percent were accepted. Sales consistently grew and margins were big. Most companies would have been thrilled with half of our margin. New products were released consistently. Technology was leveraged from one division to another creating new to the world products. Those people lucky enough to join our company, never thought of leaving. Turnover was low. Everyone had a fair chance to advance. Employees felt like they belonged and were included.
Now the sales for our products are falling. We are actually shrinking. Our employee environment is toxic. Our earnings are falling. We are terminating 8,500 employees and more coming - stay tuned. Employee survey results have plummeted. We are being asked to do everything we did last year and have added assignments from the person who was just job eliminated. Rinse and repeat. Those that are not Job Eliminated are so excited to find an opporunity outside of 3M. Turnover is high. There was a collective hash tag that developed in this year representing frustration of employees and attempt to become a positive and supportive environment. #3Mersunite
What's next for 3M? It's dire. More job eliminations. Heavier workloads. More turnover. More toxicity. Falling sales. Falling income. 3M dividend will be cut in the next 18 to 24 months due to cashflow issues. Watch the stock price fall after that.
All companies have failures. This is a fiasco. A failure is simply a temporary absence of success. What we have here is a fiasco. A fiasco is a disaster of mythic proportions.
WHAT HAPPENED? HOW DID WE GET HERE? WHAT WENT WRONG? WHERE DID WE GO WRONG? Was it A3M, was it new outside leadership, was it SAP implementation?
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We have a senior director who go to his position by coordinating reports and updates - all the way up.
Many got multiple level promotions because of BT as well. Great gig if you could get it.
Many colleagues got 1 or 2 free promotions as a result of A3M. Lucky chaps
BT/SAP - promises of huge savings and benefits never realized, but huge costs as well
A3M - dimantled the ownership/accountability/engagement across 3M
It’s easy to spot the common denominators in failing big companies. I doubt I’m the first to observe it.
Promoting managers that are:
Entitled
Lazy
Stupid
Then, of course, zero accountability.
It only takes a couple generations of this type of management to sink a company.
3M belongs to same case study book as Kodak. Once innovative company, now Goner.
3M to be a Harvard case study. "How to ruin a great company in less than 10 years".
How does collapse happen ??
First slowly and then suddenly.
When you have excessive corporate greed, nepotism at the highest levels and mediocrenon leader managers running the show...this is what you get.
Future MBA class case studies will include 3M failure in addition to GE, HP, DuPont failure case studies about how to ruin mighty American enterprises in record time.
The whole philosophy of 'cut the fat' that 3M leadership has right now is frankly the simplest root cause of 3M's demise. Much like in people, a company trying to have zero 'fat' is quite literally fatal. 3M leadership basically has the organization equivalent of an eating disorder where they think 3M is 'fat' when it is basically 'starving' to death.
Keeping up with this analogy to 3M's last 25 years of history:
When McNerney came in, 3M probably was a bit 'overweight' in all fairness, call it the 'dad-bod' phase, not great, not terrible. The great growth in the 80's and 90's product hits was slowing, and it was time to slim down and tone up a little.
However, instead of a healthy change, McNerney went on a crash diet. Stop everything except going to the 'gym' (Six Sigma) and eating 'protein bars' (Optical uber alles).
McNerney did cut some fat, I'll admit it. He also cut a lot of muscle too, he was too focused on 'bench press' and 'curls' (OSD & Pharma) and was skipping 'leg day' (IATD, Medical, ASD, etc). More critically he left 3M leadership with a mental illness that all spending was evil, and only 'top' priority programs had any value at all. This is the equivalent of giving 3M an eating disorder. (If you look at Boeing, he gave them the same basic disease...)
Buckley tried to help, but the disease had already set in. He didn't do enough to stop the stupid decision making that started under McNerney. In hindsight, George should have gotten rid of a whole generation of MBBs, many of whom came to be on COC later.
Thulin was the 'steroids' chapter of this story. He 'juiced' the books to look 'buff' for Wall Street, while simultaneously damaging the major vital organs. (Sales, R&D, etc.)
Roman frankly to this day still doesn't see 3M for what it is. He, to this very day, still thinks of 3M as the 'overweight' company that was there when McNerney started. He still cannot see the truth: a skin-and-bones starving company that is not long for this world.
From Monopol with no competition to Global world with competition : the way to success is different and 3M did not adapted it's modal and poor communication being still convinced a tech can sell a value for a customer :), too late in the unserstanding of the customer power to choose and change for alternatives. I addition 3M continue to think in divisional silos where competition provide a full offer adapted to the usage.
- Mid '80s - late '90s: Jake/Desi and leadership team post-Lehr were too slow to evolve past "make a little/sell a little" mindset. Missed pleading of leaders like Eaton who begged 3M to embrace emerging digital business opportunities early on & acquire software companies. Five years later Imation is spun off and with it maybe the last great, homegrown leader (Monahan).
*'2000 - '05: BoD overcorrects to Desi and his primarily Good ol' Boy OC by bringing in Jimmy in hopes of making 3M "se-y" in the now fully digital world. Amongst all of the damage he did, look closely at E&CB as the canary in the coal mine. It had OI of 20% and $2B+ in sales despite being a late entry to many of their markets. Another great leader (Andrews) is forced out for having the spine to tell Jimmy that he had no plans to implement Six Sigma in E&CB. Jimmy hands the reins of the business with some of the most cutting edge R&D portfolio and lab personnel over to "Up" Chuck R, who was really impressed with his wealth & portfolio. "I always make my numbers" was his credo. He was a warm body who wasn't going to do anything to jeopardize any of his deferred comp in the twilight of his career. He holds fort until the Jimmy's first golden boy (Sauer) can get his MBB then put it to use by taking over E&CB long enough to slash more. Brad goes back to StP to bring his toxicity to the medical business. One of Jimmy's first hires from GE (Harlan) has made enough impact in finance and 3M Sumitomo to be given the E&CB position. Oh yeah, 3M stops providing a pension while also NOT providing financial incentives for a generation of young talent to even look their way for a career. The culture effectively becomes a version of the Hunger Games with the LSS/HiPo/ALDP acolytes fighting one another for their own fiefdoms.
*'06 -'11: Jimmy runs off to fleece more millions from Boeing. 3M survives the "temporary Bob" debacle. Buckley comes in and brings an engineer's approach to the mess with more checks in the win than loss column. Forced out at 65 due to mandatory retirement.
*'12 - '18 : Inge brings his suave, international persona to the 14th floor. Harlan (now running C&O) bolts for Dow as soon as Inge is lined up to replace Buckley. Meanwhile, E&CB continues to whither at the vine while the BOC alternates between inexperienced/incompetent leaders (Delgado, Ashish) with old guys padding their pension (Kelly). Hey, as long as EMD keeps selling boat loads of Super 33+ who needs to invest in new products, right? Besides, Inge is too busy convincing the board to borrow billions for stock buybacks in order to keep the price inflated, keeping the already obscenely wealthy in tall cotton. Oh, there's still some money for a fancy new LEED-certified lab building and to buy some opinion surveys that make 3M "look" cool, but the saying here is "all hat, no cattle."
*'19 - now : we're living it now. The BoD wanted someone who looked good in front of a camera for the first time in 15 years. Mikey was going to learn on the job and his strong OC filled with the spawn of Jimmy's regime plus some hired g-ns would surely all help with the heavy lifting. Lulz.
tl;dr - 35 years ago with billions in cash reserves and unparalleled lab capabilities & distribution channels, 3M stuck with the old & safe rather than investing in the new & bold while simultaneously beginning the systematic choking off of the growth engine, the R&D labs. They hired a con-man to try & play catchup while needlessly beginning an affair with the Wall Street analysts and allowing short term results to decimate long term growth. The board no longer had the stomach for the heavy lifting required to continue on the path towards a healthy company, so they replaced a workman CEO with another smoke & mirrors guy, who in turn gave a flaming bag of dog doo to a guy who is better suited to hosting Good Morning Twin Cities than running a business let alone a company.
Lean six sigma was a problem because of how 3M used it. It wasn’t actually used for the purpose it was developed for (which is effective). It was used to reward favorites and “train” sycophants, oops, I mean leaders.
Wall Street styled excessive Corporate Greed!
Six Sigma happened. McNerney convinced old school 3M that value could be realized by cutting costs and he threw out this Kool-Aide to do it. He promised many and great promotions of all who drank from it. The promotions came. Black belts turned into managers then master black belts then directors and so on and so on. In 2008, 3M doubled down and added the most useless of all employees by creating the "Lean" group. These fools believed they could teach the culture of Toyota to 3M employees. Turn every process into an assembly line. All the Lean program did was create higher level positions for poor (or non-existent) performers to hide.
By 2014, all company growth had stopped. The focus was still to increase profitability by cutting costs. Nobody knew anymore how to grow a product because there wasn't a spreadsheet for that. Growing a company by cost cutting was definitely not working. Inge saw it, even called out why he wasn't seeing the "billions of dollars in savings" from LSS on his bottom line. He knew the company was dying. He began borrowing money to buy back shares, inflating the share price until his retirement when he immediately dumped all of his shares at $230-$250. Huge payday.
By the time the Roman Empire started, management ranks all the way to CEO were full of Kool-Aide drinkers. No problem was too large for a spreadsheet. Growth was still not happening (still no spreadsheet for that), and businesses were again doubling down on cost saving targets. More than $1B in LSS savings posted per year, but it still doesn't show up in the financial numbers. Roman sees the ship is sinking. First he tries to confuse wall street by purchasing Acelity. "I'll purchase growth!" he convinces himself. Next Roman and the COC break out the spreadsheets, devising the A3M plan. It doesn't work. They fail to realize that the 3M ship is so large & fat (thanks Lean!), that it can't change course quickly for A3M. The ship flounders for a few years.
In comes the wee Tireman. He convinces Roman that nobody at 3M ever knew what they were doing. "Bring in the consultants and we'll have a firewall!", screams the wee Tireman. Roman buys it. The consultants begin the dismantling of the company piece by piece. Dr-g delivery systems, body armor, food safety, and the grandaddy of them all, Healthcare. Through all of this, growth is still non-existent. Tireman slashes sourcing and threatens 3M suppliers. He ki-ls Six Sigma, laying off anyone labeled high potential in the process. He then lays off all of the newer employees, aiming to save on future promotions.
On top of all this, to no fault of McNerney, Thulin, Roman, Tireman or Monish, 3M has two major lawsuits to fend off.
Neutron man!
Have a read of a book called the man who broke capitalism. I think it tells you everything you need to know
A3M was the last straw I guess. Didn't realise than 3M has been a Sleeping Giant all along.
GE mentality, worship but no real understanding of McKinsey, no criteria for advancement to senior mgmt, too many bad outside hires which were not “high potential” talent but were thought to be, idea that you can rotate people with eng degrees and thus make them into competitive business people, over rated sub talent brought to HQ, etc. DFSS to make lab people into tech marketing, too much m/a, etc all detract from original mmm culture. Oh yes a-3m also.
It is like watching the US government. Who is really running the company?
I am a long timer here, and been through the CEO changes- Desimone, McNerney, Buckley, Thulin, and now Roman. I would say the initial was great, but cracks started to appear when McN time. Probably the financial engineering under Thulin has laid the situation worse which exploded under Roman. It looks unable to salvage this once great company.
Perhaps GE mentality