The Long Dry Spell at One of America's Most Innovative Companies 3M investors and scientists worry a shift in Research 8: Development (R&D) strategy is stifling breakthroughs as the company faces billions of dollars in lawsuit payouts From its early days. American manufacturing giant 3M gave its researchers a long leash to chase ideas. This often led to dead- ends. The hits. though. were indelible: Scotch tape. Masking tape. Videotape. Post-it Notes. N95 masks. Artificial turf. Heart medication. 3M patented adhesives and abrasives. as well as proprietary coatings and films that reflect light, repel water and insulate against cold and heatmaterials at the heart of highway signs. weatherproof windows and stain-resistant clothing and carpets. Its optical film brightened the screens of millions of laptops. smartphones and flat-screen TVs. More recently. a cautious air has settled on the 3M headquarters and research campus in Maplewood. Minnesota. There are fewer new products and fewer still have been blockbusters. a dry spell that couldn't have arrived at a worse time. This summer 3M agreed to pay as much as $12.5 billion to settle litigation over so-called forever chemicals known as PFAS that were used in firefighting foam. Analysts say 3M could be on the hook for billions of dollars more to settle PFAS-related personal injury claims and lawsuits related to water and soil contamination in the U.S. and abroad. John Banovetz. 3M's chief technology officer. said the company's reduction in product rollouts shows its push for quality over quantity. The company has focused its bets on potentially high-growth areas such as climate-saving technology and its fast-selling electric-vehicle components. "The R&D machine is alive and well.ll he said. Current and former scientists say the strategy makes it more difficult for fresh ideas to survive a gantlet of management naysayers. For decades. 3M released a cascade of new items on the market. confident most would be profitable and a few would become indispensable. The company has retreated from its traditional goal of earning around 30% of revenue from new products. "Senior management has deluded themselves into thinking they can pick winners and losers. when in reality we need to generate more products so we can get into test markets to see what works." said Robert Asmus, a former 3M healthcare scientist and member of the Carlton Society, the company's highest honor for science and engineering. Chief Executive Mike Roman has trimmed 3M in rounds of layoffs and restructuring. including two this year that cut 8.500 employees. Next year. 3M plans to spin off its best-performing unit. healthcare. which accounts for a quarter of the company's $34 billion in annual sales. The spinoff will open a path to faster growth, according to 3M. Analysts said 3M also would get billions of dollars in a one-time dividend that could go toward its legal costs. Roman has said 3M innovationonce the company's taglineremains a priority. 3M devotes more than 5% of net sales to research and development, a drop from the nearly 7% peak of the late 19905 but a larger portion than industrial peers such as Honeywell or DuPont. Last year. 3M spent nearly $2 billion on R&D. The share price of 3M. included in the Dow Jones Industrial Average for nearly 50 years. has been cut in half since Roman took charge in 2018. While much of that is because of the liability lawsuits, investors such as Abdulaziz Alnaim of London-based Mayar Capital. which holds 76,000 shares, say it also reflects an enterprise where innovation is sputtering. 3M's innovation principles took shape more than a century ago under William McKnight. who grew up as a farm boy in South Dakota. He instituted what became known as the McKnight principles. One of them allowed researchers to spend 15% of their time on projects unrelated to their everyday taskseven if their managers disapproved. The principles championed collaboration. encouraging researchers to share findings. The Post-it Note came about after scientist Art Fry. bedeviled by paper bookmarks falling out of his church hymn book, remembered a semi-sticky adhesive discussed at a company seminar. The product was an instant success after it hit stores in 1980. Eye-popping returns continued when 3M researchers developed and patented plastic film technology that was adopted for the liquid crystal displays of laptops, flat-screen TVs and cellphones. 3M's portfolio of multilayer optical films generated billions of dollars in sales, said Jonza, a Carlton Society member who retired last year. But screen technology kept advancing, particularly for smartphones. The fastest-growing segment of the market now belongs to the organic light-emitting diode, or OLED. Though 3M makes products related to OLED devices, including a clear adhesive. the company has said it has taken a financial hit in the move away from liquid crystal displays. Rob Kieschke. a former research director who left the company last year, said 3M's weakening position in the smartphone display market is a symptom of its troubles. Researchers are encouraged to pursue incremental improvements to existing products rather than novel, swing-for-the fences breakthroughs. "If you start forcing people to eliminate risk, then all you end up doing is what has been done before or what everyone else is doing," said Kieschke. Going fonNard. 3M hopes to reignite their growth through innovation. 3M has recently built a 409-acre campus called the Carlton Science Center. The center is the home of 3M's research into electric-vehicle technology. which last year tallied 30% growth to hit $500 million in company sales. One product they are working on is insulation designed for electric car motors. It is coated on both sides with an adhesive that expands when heated to bond the motor's wires. saving time and cost during manufacturing. Changes to government regulations related to electric vehicles is expected to provide increased demand for this sort of product. Further on the horizon are products related to carbon capture, an industry that could be worth as much as $2 trillion a year. said Sam Tutterow, director of 3M global strategy and business development. The company's practice of 15% time has endured. and Tutterow said more than 70 people have spent those hours on projects related to the pursuit. Last year. 3M bought a stake in a small Canadian company called Svante that invented a laminate to trap carbon dioxide. 3M will manufacture the material for Svante, which by 2030 aims to install it in plants that will combat rising temperatures by removing tons of carbon from the atmosphere. 3M's future will largely depend on how well it manages the fallout from one of its biggest innovations. PFAS chemicals, which the company began making in the 1940s, resist heat and repel grease. stains and water. One type was used in firefighting foam, but 3M sells 20,000 other items that contain the chemicals. including some sandpapers and medical splints. Though 3M has settled complaints from municipal water treatment plants, it still faces litigation from California, New York and other states that allege the industrial discharge of PFAS, as well as the disposal of products containing the chemicals, have contaminated their water and soil. Thousands of individual plaintiffs also are suing, saying PFAS caused their health problems. 3M has said PFAS are safe to produce and use, though it plans to stop making them by the end of 2025 and find alternative chemicals for its products. Its annual PFAS sales total about $1.3 billion. Success in markets such as climate tech would brighten the picture, though 3M 3M has said PFAS are safe to produce and use. though it plans to stop making them by the end of 2025 and find alternative chemicals fer its products. Its annual PFAS sales total about $1.3 billion. Success in markets such as climate tech would brighten the picture. though 3M faces plenty of competition