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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"He's not afraid to do the hard things - cutting factories, reallocating resources from here to there. Those are decisions that have to be made...on an economic basis."

- Clay Hoes, a stock analyst at American Express Financial Advisors in Minneapolis, in 2002.¹

"3M people wake up every morning thinking about what new product they can bring to market. Innovation is in their DNA - and if I kill that entrepreneurial spirit I will have failed. My job is to build on that strength, corral and focus it."

- James McNerney, the then CEO of 3M, in 2002.²

"I could see him (Jim McNerney) doing anything."

- Jack Welch, former CEO of the General Electric Company, in 2004.³

3M's New CEO

In December 2005, 3M Company (3M) announced the appointment of George Buckley (Buckley)⁴ as its new CEO. Buckley took over from board member Robert Morrison, who had been acting as the interim CEO after his predecessor W. James McNerney Jr. (McNerney) left in July 2005 to become the CEO of the Boeing Company (Boeing).

When McNerney joined 3M in late 2000, he was the first outsider to become the CEO of the company in almost a century. Before joining 3M, McNerney had been the CEO of General Electric Company's (GE) Aircraft Engines division.

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At the end of his career at GE, McNerney had also been part of the three-way race to succeed the company's legendary CEO Jack Welch, when the latter retired in 2000. After losing to Jeffrey Immelt (Immelt) in the succession race, McNerney accepted the offer made by 3M's board.

3M was a diversified company known for its innovativeness. Over the years, it had nurtured an egalitarian culture that valued creativity in its employees. This was thought to be the main reason behind the company's success in coming out with new products on a regular basis through the years. However, by the 1990s, 3M's performance had started declining. Although the company continued to introduce new products, few made an impact on the market. Consequently, most of the company's earnings were coming from tried and tested products that had been launched several years earlier. The lack of new products soon became a matter of concern for 3M's top managers.

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1] Andrew Haeg, "A Leaner 3M," Minnesota Public Radio, April 22, 2002.

2] Carol Hymowitz, "Winning the Support Of the Rank and File," The Wall Street Journal Online, April 24, 2002.

3] Michael Arndt, "3M's Rising Star," BusinessWeek Online, April 12, 2004.

4] At that time Buckley was the chairman and CEO of Brunswick Corp. Buckley, who had become Brunswick's CEO in 2000, had led a successful restructuring effort at the company, by selling off some non-performing sports goods brands and building up the company's pleasure boat business.