Four Secrets to 3M’s Business Development Strategies
3M has long been a leader of great business development stategies, and their recent activities have only reinforced how highly I think of this company. The people who criticize this company for being too conservative don’t understand just how aggressive they truly are.
3M is profitable, year after year. They did $29.6 billion in sales in 2011. They’re global, and constantly pursue innovation.
So why are people so critical of them? Do investors fear they’re another Kodak in the making? Or, do people just want something sexy like a secret algorithm or a hoodie culture?
I don’t know, and to be honest, I don’t care. If you’re looking for an industrial company that’s innovative, I challenge you to find anyone who compares with 3M.
And what’s so amazing about their secret to success is no secret. It’s what they’ve been doing consistently, year in and year out. Here are four not-so-secret business development strategies that jump out at me, and how 3M puts them to work.
- They make sure they’re open to new things. At a recent press conference, outgoing CEO George Buckley noted that the percentage of 3M’s sales generated by products less than 5 years old was 21 percent. Now it’s 32 percent. “Innovation is unquestionably back at 3M,” he said. Innovation is easy when you’re in start-up mode. But when you’re a big company, it takes discipline and a strategic focus. 3M has got it.
- They’re global, and we’re not just talking about markets. Look at the people working at 3M. New CEO Inge G. Thulin is from Sweden, and travels “70% of the time.” 80% of the company’s execs were born outside of the US. Yet with all the foreign-born talent, their focus isn’t just on people who come from abroad. “It’s not always important to have been born in a certain part of the world to understand the business there.”
- They’re global, and we’re not just talking about talent. Yes, they have personnel from all over, but more importantly, they’re investing in markets all over. Approximately two-thirds of the company’s profits come from overseas. That’s a staggering figure, but it’s also a statement about the reality of our world: If you’re not thinking globally in some capacity, you’re missing out on a huge opportunity.
- They move quickly through strategic M&As. 3M recently announced a foray into developing natural gas fuel equipment, obviously not an area of core expertise. When they see innovation or opportunity, they pursue it aggressively with an M&A. Recently, George Buckley upped their acquisition development model from 3 to 4 percent of revenues.
Why do I bang the drum about 3M? I’m not a stock broker, although there are plenty in the investment community who like this company.
No, I like 3M because their secret to staying in the lead is that there really is no secret. There’s only will, determination and focus.
I love to analyze the best of the best. Can you think of any other companies comparable to 3M in this regard?
(Photo by sean baracoder)
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