I recently read an interesting article in Business Week on the shift in strategic focus at 3M, the venerable industrial concern over a century old. It illustrates how Board and shareholders can change their mind ! As a coincidence, a similar article was yesterday published in les Echos (page 23) : "3M veut redevenir maître dans l'art d'innover".
Back in 2000, James McNerney was picked up as CEO of 3M, coming from General Electric where he wasn't offered the top job after the retirement of Jack Welch. His very nomination made the stock climbed 20% in a few days !
Wow, expectations were extremely high that McNerney's GE background would boost 3M to new highs. A 20% stock increase in a few days simply meant that people were convinced he, as an outsider from the temple of management, was the right man at the right place. Supposedly, more efficiency was what 3M badly needed and McNerney was the guy to handle that !
He made quick decisions, axed 8,000 jobs, 11% of the total workforce, intensified the performance review process and installed the Six Sigma program, a series of management techniques designed to improve efficiency. Worked well, and stock price went upward at the beginning.
But 4 and a half years later, the stock has languished for some time, and McNerney suddenly left to take the top job at Boeing.
Board now realizes that this all-for-efficiency focus has eventually killed creativity and innovation, and that innovation should be the true ADN of 3M.
True, the art of innovation has little to do with the art of efficiency ! At some points 3M's Board believed that efficiency was what company badly needed, they put in a CEO in adequation with this belief, but now they start to realize that it may not have been such a good decision, or at least it has some negative long term effects which quickly need to be adressed.
Being a seasoned, well-formatted, efficiency-driven GE top executive is not necessarily the best way to boost innovation and creativity and drive shareholders' value up. Good that 3M's Board has eventually picked-up this !
Maybe the problem is they thought efficiency improvement was only about cost killing?
Looks like short term vision to me.. Not very surprising he left the board..
Posted by: Stephane | June 29, 2007 at 01:33 PM