Growth through Ingenuity and Enterprise
Q1. Main Factors That Make 3M an Innovative Organization
3M is regarded an innovative organization owing to the culture cultivated by the management that places innovation at the center of its operations. Since its establishment in 1902, 3M has survived stiff competition in the market through continuous innovations that ensure it remains ahead of both perennial and emerging competitors. One of the main factors that make the firm innovative is its strategy to develop original customer-oriented solutions through elaborate market research. This enables the firm to develop practical services and products that answer to the clientele demands. With this the company has continued to record continued growth and profitability. Innovation is described as transforming invention into a productive venture. As such, commercialization is an integral component of the innovation process. 3M has utilized this concept to continually develop inventions that have made it a market leader in a wide array of industrial, consumer markets, healthcare and commercial arenas. The development of all the products for these different markets has been achieved due to the innovative nature of the firm’s workforce. By identifying the specific consumer needs, the company has been able to respond with urgency to these demands. Through innovations, the firm has developed customer specific products and services. An example of a product developed by 3M based on consumer needs is the WetordryTM sandpaper specifically designed to answer to the demands of an emerging motor car industry (The Times 100, 2012).
Another factor that has made the firm remain innovative is the ability to build a strong competency in developing and adopting new technologies. By predicting and prospecting for emerging consumer demands, the company has built within its workforce an unparalleled culture of innovation which has over the years enabled it make major breakthroughs in manufacturing products such as the transparent tape branded as Scotch, fiber optic cables and myriad of pharmaceutical products. Today, owing to the innovations, the company has developed a widely sought pharmaceutical product involved in tumor control. The company has continued to pursue a rich culture based on a former president, McKnight’s principle that “management that is destructively critical when mistakes are made kills initiative. It’s essential that we have many people with initiative if we are to continue to grow.” Based on this principle, the company has cultivated a unique relationship and behavior pattern in which the workforce has been given freedom to seek and explore new concepts and ideas. In such an environment, the workforce has been given the opportunity to try the concepts fully funded by the company with emerging risks being managed by the firm. This has in turn increased creativity resulting in development of more than fifty thousand different products (The Times 100, 2012).
Innovations at 3M are encouraged and developed in a proactive approach. The management has put in place structures that allow for development of new products through a deliberate and well cultivated obligation towards technological advancement in line with emerging customer demands. All innovations at 3M are customer focused; a paradigm shift from the approach taken by many other firms that develop new products on the basis of their capability rather than according to customers’ demands. The success of 3M as an innovative organization is also based on the urgency with which it implements new ideas. Due to the stiff competition from similar companies, the firm has set in place programs that allow quick commercialization of newly identified products by allocating the necessary resources. Another leading factor that makes 3M standout as an innovative organization is the plan to patent all its innovations. The intellectual property rights accorded to the firm ensures that its products penetrate the market over time with no chance of competition. This generates more funds for the firm in addition to creating satisfaction within the workforce. To encourage continued innovation, 3M has a unique program to accelerate the entry of its innovations into the market. A team of expatriates known as the Enterprise Growth Teamis responsible for identifying new consumer-focused applications to be developed by the company. This is achieved through a rigorous market research to identify existing gaps in markets as well as follow emerging consumer trends. The firm has continued to lead in innovations partly due to its ability to maintain the momentum arising from development of a new product. With an elaborate entrepreneurial culture, the firm ensures that the employee’s ingenuity continues to be nurtured through a well structured development process (The Times 100, 2012).
Q2. iPad 3 by Apple
The iPad, a tablet computer developed and marketed by Apple.Inc,has revolutionized the audio-visual media platforms. The device which is slightly larger than smartphones but smaller than conventional laptops has been described as an innovation of the 21st century. Controlled through a uniquemultitouch display, the device offers a platform for accessing books, movies, games, music, periodicals and web content. The new touch screen model is a revolutionary transformation from the conventional tablet computers that operated on a pressure-triggered stylus coupled with an onscreen keyboard. iPad appears in two different models, the cellular and Wi-Fi based. These models allow different consumers to enjoy using the product in diverse environmental settings. The Wi-Fi model allows for access of both local area networks and the internet while the cellular based model relies on wireless network platform on top of the Wi-Fi connection. Following the success of this device, continuous innovations have continued in response to emerging consumer demands. The latest version of this product; iPad 3 was launched in march7, 2012. The third generation iPad is a modification of previous models that had registered their share of market success since they were launched.iPad 3 has improved features such as advanced camera with ultra modern optics that can capture high definition photo images. The use of Wi-Fi and 4G connection platform means that the new iPad can efficiently connect to the fastest networks worldwide. It is the only device in the world of media applications that records the highest resolution display possible on a mobile device. It can deliver the tiniest of details in videos and photo images courtesy of its 3.1 million pixels. This is four times the number of pixels in the preceding version in turn creating a new display standard that makes images and text appear realistic and overly sharp. Incorporated into the new version is a powerful A5X chip that enables faster response to user manipulation while maintaining a balance between the incredible performance and improved power efficiency.It allows for quick download and uploadsspeeds that have effectively transformed the email platform since large file attachments can now be sent with relative ease (Murph, 2012).
The success of the iPad can be attributed to its multitasking ability. As such, the product has addressed many of the consumer-focused demands in the audio-visual media arena and continues to do so. It has readily gained acceptance in business, education, consumer usageand healthcare. Studies indicate that leading business enterprises have incorporated the use of iPad in their operations. It is also projected that the use of this new mobile platform could become the favorite mode of communication in workplace settings. Already, the device is widely used by lawyers attending to their clients, healthcare professionals to access patient records and other general communications between employers and their employees. The flight industry has not been left behind with many airlines rapidly replacing paper based flight manuals with iPads. In the education sector, the device is gaining favor as the preferred model for homeschooling. Children with autism have also been found to benefit immensely from the use of the device to enhance their communication and interactions. The iPad also offers a platform for dictation in English, French, Japanese and German. By using the microphone icon on the iPad’s keyboard, the device converts the voice into text. This helps in taking notes, writing messages and searching the web. Many hospitals are today using iPads in supply chain management. The leisure industry is the leading consumer of iPads. Their ability to download, upload and record music, photos and videos has created a buzz particularly in the tech-savvy young generation (Murph, 2012).
Q3. Importance ofthe Commercialization Process for Innovative Organizations Such As 3M
Successful commercialization ofinnovations contributes to growth of an organization.Commercialization entails developing an idea into a tangible product or service and availing it to a customer. For such organizations as 3M, the many innovations developed by the workforce need to be commercialized if at all the firm is to benefit from them. This requires prioritizing all the ideas brought to the fore and identify those whose commercial viability is greatest. The commercialization process is an integral part of actualization of ideas into viable projects that guarantee growth and profitability of an organization.This indicates why many firms dedicate time and other resources in making numerous prototypes, trials and modifications in an effort to achieve the best possible quality before a product is introduced into the market. Companies attach great importance to the commercialization process as it is the interface between production and profitability. As such, they employ elaborate structures to strike a balance among many factors such as cost, profitability, consumer tastes and environmental impact before manufacturing the product. By observing and considering the consumer demands, the commercialization process is realigned accordingly. Established firms such as Google, Apple.Inc and 3M have programs that ensure consistency and continuous improvement of the commercialization process in an effort to satisfy the current consumer demands. To ensure value for their clients, such firms use sophisticated and well crafted tools and techniques to guarantee quality consistency and minimize variations (Terziovski, 2007).
The commercialization process is crucial for innovative firms as it creates room for curving a niche in the market. A well structured process gives the company a chance to establish its brands in the market. The brand identity is regarded a vital tool for connecting with the customers in addition to creating customer loyalty. A firm known for developing quality innovations such as 3M and Apple benefits immensely through the commercialization process since unlike new entrants into the market, the company can readily position its products. A well developed commercialization process also contributes in creating an effective channel to the market. Through market research, a production firm can identify the most appropriate distribution channel to reach and satisfy the final consumer. Commercialization of an innovation is important in that it eliminates the temptation to only take the innovation that is easy to work on and easily get it into production. Most organizations that follow this route may appear to be making progress to investors but in turn this approach is subject to failure. There is a need to commercialize an innovation at the appropriate time. Firms such as 3M have clear guidelines followed in the commercialization process to ensure that an innovation product is introduced to themarket at the appropriate time. Failure to do this result in compromised process integrity and low quality products as companies try to rush to capture a market from a sudden demand rise. A good commercialization process guides the product development process as all quality or reliability problems of a product or a service are handled professionally through trials on prototypes. It gives the experts time to make trials and design products whose functionality is guaranteed in all user environments where the product or service is targeted (Terziovski, 2007).
The commercialization process is accorded attention by innovative organizations as through it the firm is able to design the products in a way that guarantees optimal performance, quality, affordable cost of production, adequate time to avail them to the market and the ability of the firm to realize optimal manufacturability levels. Managing an innovation and successfully commercializing it contributes to the ability of the entrepreneurial organization to compete favorably in a mature business environment. In a firm such as 3M that produces many innovations, an elaborate commercialization process allows management of the various phases of innovation which guarantees continued release of various products into the market at different times. This contributes to developing a sustained competitive advantage (Terziovski, 2007).
Part B: Key Performance Indicators
Key Performance indicators (KPIs) are measurements that act as a guide in helping an organization achieve its set goals. Majorly KPIs provide both internal and external stakeholders with metrics from which they can easily access and customize formats to facilitate enhanced efficiency in operations. KPIs also act as indicators that can generate information concerning the strategic performance of an organization.Organizations need to use appropriate indicators to measure performance. KPIs provide a system of standardized activities that give adequate data on performance. With continued measuring of performance, an organization is in a position to adjust or make improvements which is of integral value in management. Measuring organizational performance through KPIs is one sure way of creating a gauge upon which the organization can make changes in management or general operations. KPIs act as a source of information regarding process, product and/or service from which the organizations can now make an informed decision. This information affects a great number of the organization’s parameters including employees, processes, time management, and relationship with external partners such as suppliers and distributors. Without well structured KPIs, an organization may not be in a position to determine its performance in both qualitative and quantitative terms. An organization’s performance is determined only if prior goals are set. In order to determine if these goals are met, an elaborate system of indicators has to be applied. The performance indicators mainly referred to as KPIs have gained popularity in many organizations. In an overly competitive business environment, an organization must always be in a position to determine its level of performance on many fronts. KPIs help inform the organization whether the situation it is in financial or otherwise needs to be reviewed or maintained. For instance an organization such as Toyota may have a goal to reduce the defects rates in its production lines from 6% to 2%. As such, to enable Toyota identify whether the production department is achieving that goal, a Key Performance Indicator known as defect rate is assigned. Such a KPI would be used to measure the quantity of defects identified prior to and after implementing a decided-upon change. It is only the use of the KPI that can precisely help the firm determine if the improvement in the process has yielded or not(Parmente, 2012).
The overall performance of a business can be established by formulating the appropriate KPIs. As such, with such indicators it is possible to obtain a quick glance of the overall performance of an organization.In the ever changing business trends, the management of an organization needs to be in a position to give real time data on the business performance. The most crucial key performance indicators should continually be reviewed to keep track on the progress of the organization. These also avail essential data that can be used in making quick decisions concerning the appropriate direction of operations. KPI measurement is believed to promote learning within an organization.The compiling of data and its analysis triggers vital conversations concerning the performance of the organization and as such may be considered educative. This is because the personnel learn to interpret the measurements. KPIs are also essential in ensuring continuity of an organization.They promote or facilitate achievement of both short term and long term goals set by the management. This is because through them, the organization is triggered to keep measurements consistent. Though organizations are constantly changing goals for one reason or another, the measurement of key performance indicators in most cases remains consistent. This therefore makes KPIs remain strategic pillars in a firm’s realization of its laid down plan and vision(Parmente, 2012).
Toyota, a leading car manufacturer has set key performance indicators that guide the performance of its various departments. These include the sales, service, parts, body shop and business management departments. The sales department is concerned with making profits from the sale of vehicles. The gross profit made is the sales minus the cost of the sales.Different economic situations have an impact on the gross profit margin and in some cases it may be in the negative. The firm uses a KPI known as Annualized sales per sales person. This is based on unit sales per annum. The KPI is used to measure the average quantity of units sold by designated sales person per year. The statistic is used by the company to determine the performance of a sales team and that of individual sales persons. This provides data to the company through which it can gauge the strengths and weaknesses of individuals and teams. The company has set one hundred and fifty as the general benchmark in car sales annually for a new salesperson and two hundred for the established salespersons. Based on the set KPI, while sales drop down in years of financial crisis, the company adjusts its sales strategies in order to retain the gross profit and continued sale of new vehicles. Another KPI of importance in Toyota’s sales department is the stock turn. This measures the annualized unit sales per units in stock. It provides information on the car stock turnover annually. The importance of this KPI is ensuring efficient monitoring of stock flow. Through it, the dealer can also monitor profitability trends and the resultant speed in circulation of funds. When the KPI indicates a continued decline in sales, efforts are made by the firm to reverse the trend. Some of the measures Toyota has adopted over the years to boost sales include retraining the salespersons and marketing advertisement (Velimirovića,Velimirovićb&Stankovića, 2010).
In the service department, Toyota uses a KPI called productive ratio that measures the ration of productive staff in relation to non-productive staff. The company has set the acceptable ration at 3:1 and when results indicate a decline in this ratio, the management takes corrective measures. This KPI is gauged mostly by analyzing other related KPIs such as technical efficiency and labor utilization. The technical efficiency element determines the relationship between the number of hours sold per number of hours in which the technicians have actually worked. Based on the Industrial European technical efficiency average of approximately 115%, the company continually reviews its services department functionality to achieve that benchmark. Some of the measures adopted when a workshop can not achieve this target include a review of the technicians’ skills level and analysis of the condition of the equipment used in the particular workshop. This is followed by management implementing a raft of measures such as organizing for the training of the technical staff or replacing the equipment in use for increased efficiency. The labor utilization KPI measures the productivity of the workers and is based on the number of hours worked in comparison to the hours attended. The company has set a range of 85% to 95% and lower efficiency percentage is associated with poor organization and low quality work. As such, the management has previously adopted measures such as skill training and introduction of bonuses based on employee efficiency. This has boosted efficiency in the services department to a large extent(Velimirovića,Velimirovićb&Stankovića, 2010).
The British Airways’ annual performance is based on key performance indicators determined at the beginning of each year. The indicators focus on both financial and non financial areas of the business. On the financial front the firm aims at achieving a consistent and strong financial performance in an effort to remain relevant and benefit the shareholders. Customer satisfaction as indicated by onboard surveysis also used to measure the success of the company. Operations have also been streamlined to ensure all current and emerging customer demands are met accordingly. This is also based on the running of a cost-effective business that effectively addresses all operational constraints. The firm has also identified employee performance as an integral KPI. As such, the firm has pursued employee commitment towards the vision of the company. Using an employee involvement index, the company conducts bi-annual surveys where employees are encouraged to speak out about everything on the company’s operations. The aim as per the year 2007/08 was to achieve at least 73% of employee involvement (British Airways 2007/08, 2007).
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