1. In your opinion, does this case illustrate significant problems with the Six Sigma philosophy? Why or why not?

2. Do you agree with the assessment that a company can either focus on quality or innovation? Why do you think 3M had such a difficult time balancing these two goals?

3M, an American corporation, is known for innovative products such as masking tape, Thinsulate, and Post-It Notes. In 2000, 3M hired as its CEO James McNerney, an advocate of Six Sigma. Over the next 4.5 years, McNerney introduced Black Belt training companywide, identified and supported numerous Six Sigma projects throughout 3M’s operating divisions, eliminated many sources of waste, and cut costs.

Initially, investors were ecstatic because the company’s stock price rose and its profit margins increased. Unfortunately, at the same time, people were noticing that a company founded on the idea of radical innovation and disruptive technologies was losing its way; new product ideas were declining. For a company that prided itself on drawing one-third of its revenues from products that had been introduced within the past five years, the number of new products was steadily slipping. What was happening?

Programs like Six Sigma are process improvement–focused and can lead to reductions in cost and increases in quality. Nevertheless, there is a danger that, along the way, the focus on improving the bottom line can stifle the attitudes a company needs to foster creativity. “Invention is by its very nature a disorderly process,” said George Buckley, who in 2004 succeeded McNerney and reversed many of his initiatives. “You can’t put a Six Sigma process into that area and say, ‘well, I’m getting behind on invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday.’ That’s not how creativity works.”

Managing the twin goals of efficiency and innovation was difficult. “The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation,” notes Vijay Govindarajan, a management professor at Dartmouth’s Tuck School of Business. “The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different.”

To reinvigorate new product development at 3M, Buckley increased the company’s R&D budgets and channeled money toward 3M’s core business areas. Six Sigma continues to play an important role in managing the bottom line, but not at the expense of the creativity. Buckley (who has since retired) “brought back a spark around creativity,” explained Timm Hammond, the company’s director of strategic business development. Added Bob Anderson, a business director in 3M’s radio frequency identification division: “We feel like we can dream again.”