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

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McNerney, son of Walter McNerney, a professor of health studies, was one of five siblings. He was an all-rounder at school and college, playing baseball and ice hockey as well as achieving academic excellence. McNerney attended Yale University, where he obtained an undergraduate degree in American Studies, and Harvard University, from where he received an MBA...

When McNerney became the CEO of 3M, he was viewed by many as a change agent. It was generally believed that while 3M was still a good company, it had lost much of its innovativeness. The company's labs were still coming up with new products, but there were no breakthroughs, as most of the products were not relevant to the needs of the market...

Restructuring Soon after taking over as the CEO, McNerney embarked on a restructuring plan to make 3M nimbler and better equipped to respond to the market. He reshuffled 3M's business portfolio to increase the investments in growth businesses like healthcare, while closing or downsizing old and slower growing businesses like 3M's sandpaper unit. As a part of the restructuring effort, McNerney took the rather controversial step of cutting jobs to control costs and streamline operations...

3M was a company known for the strength of its R&D, which was also the main factor behind its innovativeness. However, it was widely believed that over the years, the company's R&D had been losing its focus. As 3M grew, the company's approach to R&D became haphazard. Products were invented and then remained in the labs until a use could be found for them. There was little effort made toward identifying the requirements of the market and developing products that would meet these needs. This lack of market orientation was one of the reasons for the company's slowing growth in the later part of the 1900s...

Under McNerney, 3M increased its focus on China. The company had entered the Chinese market in 1984, by establishing a sales office in Shanghai. Over the years, it had launched many of its popular products in the country. In the late 1990s and early 2000s, the Chinese economy was booming, which made the country attractive to many foreign companies...

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