The company that was first to bring to market masking tape, Post-It Notes and hundreds of other products over the past 120 years needs to rediscover its innovation mojo, its new CEO said last week.
Speaking to analysts and investors July 26 after 3M Co. reported its second-quarter earnings, Bill Brown noted that various factors—the recent spinoff of the company’s healthcare business as Solventum Corp. as well as spending on work to wind down PFAS “forever chemicals” businesses and fix a supply chain rattled by COVID-19—have in recent years pulled research and development dollars away from activities that for decades shaped 3M’s identity. To fuel his top priority of producing good organic growth, Brown said, R&D needs a reset.
“The number of and revenue from new product introductions has steadily declined over the past decade,” he said on a conference call. “The simple fact is that our products are aging. While we’ve been shifting our portfolio towards higher-growth markets like auto electrification, industrial automation, data centers and semis, climate tech and others, these efforts aren’t material enough today to offset erosion in our core.”
Brown, a former Harris Corp. and L3Harris CEO who took 3M’s helm from Mike Roman May 1, made it clear that he’s not preparing to pour millions more dollars into R&D. His push, he said, aims to refocus investments—3M’s core business are on track to receive about $1 billion for innovation this year—on projects with the greatest potential returns. Brown also didn’t promise a quick turnaround on the R&D front. 3M’s product introductions steadily slipped from more than 1,000 about a decade ago to a pace of about 150 this year and reversing that will take time—and some surgery on 3M’s organizational chart.
“There’s an opportunity to drive effective capacity of our engineering team,” he said. “We have an opportunity to drive velocity through the new product development pipeline.”
