James McNerney and 3M: Making a Good Company Better?

            
 
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Case Details:

Case Code : LDEN047
Case Length : 19 Pages
Period : 2001-2006
Pub Date : 2007
Teaching Note : Available
Organization : 3M Company
Industry : Diversified
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts Contd...

Six Sigma

McNerney launched Six Sigma at 3M in February 2001 (Refer to Exhibit III for a note on Six Sigma). The program was introduced across the company, and a large number of employees, including several from the top management, were trained in Six Sigma methodologies (Refer to Table I for the Six Sigma Structure at 3M)...

Cultural Changes

3M's culture changed under McNerney. Previously, the company had had an informal culture where employees and their work were not regulated too much. This informality and the resulting flexibility were strengths for the company as they allowed employees to be creative. However, the very same openness and informality were also identified as the main reasons for its difficulties in later years...

A Popular Leader

Despite being the first outsider to become the CEO of 3M, McNerney was successful in making a positive impact at the company. He was also popular with the company's board and employees and Wall Street analysts. The key to McNerney's popularity was thought to be his people-oriented leadership style and team management skills. 3M insiders said that McNerney was more like a teacher or a coach than a hard-driving boss. "Some people feel you either have a demanding, command-and-control management style or you have a nurturing, encouraging management style. I believe you have to have both...

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Looking Back

McNerney left 3M in mid-2005 to join Boeing. During his tenure as CEO, 3M's sales increased from $16 billion in 2001, to $21 billion in 2005. During the same period, net income more than doubled from $1.4 billion to $3.1 billion. 3M's share price also rose by 34 percent during McNerney's term. In addition to this, the company managed to shorten its new product introduction cycle time by nearly 18 months...

Big Shoes to Fill

In light of McNerney's popularity and success at 3M, it was believed that his replacement Buckley might have a difficult time meeting employee and market expectations. At the end of Buckley's first year as the CEO of 3M, the company posted revenues of nearly $23 billion and a net income of $3.9 billion. During 2006, Buckley reportedly spent nearly $900 million on acquiring 19 companies, most of which were small outfits (one was a German firm that made personalized passports, while another was a Brazilian company that made earplugs, eyewear, and hand cream)...

Exhibits

Exhibit I: A Snapshot of 3M's Financial Performance
Exhibit II: 3M: Annual Income Statement
Exhibit III: A Note on Six Sigma
Exhibit IV: McNerney's Pay and Options at 3M
Exhibit V: 3M's Business Segments (as of early 2007)

 

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