Hardy was approaching the two-decade mark with the $32 billion company; when it decentralized its model to give the presidents of its four business groups more autonomy over R&D, he became Senior Vice President of Corporate R&D Operations.
3M, which was founded in 1902, sells more than 60,000 products and operates in 70 countries. Those products range from N95 masks to orthodontic gear to the omnipresent Post-it Note. It employs about 95,000 people.
In partnership with the company’s industrial business group, R&D most recently reimagined a commercial paint sprayer with composite materials after 10 years of development. It’s faster, cleaner and lighter than conventional, all-metal models.
We spoke with Hardy about 3M’s new approach to R&D; addressing customers’ sustainability needs; and how the company tries to measure R&D impact.
How is your R&D group structured, and how many workers does it employ?
I manage a group called corporate R&D operations. This organization was created about two years ago as 3M transitioned to a new operating model. For a long time, we’ve had individual business units, divisions that sell different portfolios. …We’ve gone away from that structure to empowered business groups. Now, the business group presidents are in a lot more control of their organizations. In particular, the R&D units around the world reports solid line up through the division. The R&D teams for each of those business units…they all report globally up to the R&D head for each business.
That’s a massive structural change, wherein now global R&D leaders really are global R&D leaders, with team members individually in all of the major lab centers around the world. They truly do lead global organizations. … The risk is [that] we create silos where we erode the collaboration between the technical team members across business units, which has really been a hallmark of 3M’s success.
So, R&D operations was really created to serve as sort of the mortar between bricks, and to provide the range of shared technical services necessary to operate at an enterprise level within the countries where we have a scale of technical personnel and structure.
How many employees are on your team?
Our team numbers around 380 folks globally.
How many R&D workers overall, companywide?
The R&D headcount, and this is approximate, is around 10,000 folks.
You have to be thinking about how your customer or user is going to use the product, what workflow they engage in, and what their sustainability concerns may be.
What industry trends are having an influence on how your team operates?
The industry trends that are relevant to my team are the same that are relevant to the entire company. The emphasis on competitive product performance and value proposition is the same as it has always been. Customers buy first on that. However, a very strong trend — and I’m sure this is true for every manufacturer — is around lifecycle management and sustainability.
Since 2019, all 3M products have had a sustainability commitment. … Increasingly, our customers are looking for this. It’s one thing to say, “We produce this with few emissions or recycled materials.” And that’s great. But another trend is our products fitting into manufacturing processes or designs or usage patterns that increase the sustainability footprint for our customers themselves. That’s a different conversation. That means you have to be thinking about how your customer or user is going to use the product, what workflow they engage in, and what their sustainability concerns may be. That’s been a point of emphasis.
Have expectations for R&D changed at over the years, or has it been consistent?
That’s a fair question. I think there’s always the conversation around the metrics that are used to assess the productivity or the impact of R&D. 3M has invested in order of five or six percent of sales in R&D consistently, and [annual revenue is about] $30 billion. So, you’re talking about something on the order of $1.5 billion, $1.8 billion per year invested, which is significant relative to shareholder interest. There’s always a conversation about, “OK, what benefit do you get out of this investment? How do you measure it? How do you think about it? Are you positioning for the future?” That’s consistent.
The things that may be a little different are we the way we…think about what skillsets are important for our company as we go forward. Certainly, in the last 20 years, digitization has been a huge trend … so, we’ve had to think about what research and development looks like as you incorporate increasing digital content and digital technologies and capabilities and partnerships outside the enterprise and how you measure that, right? Digital business models look different and they scale differently. The ROI and the P&L itself looks different. For the businesses that we run that are heavily focused on software, they have a much different structure to their profit-and-loss than a business related to abrasives, for example.
We’ve had to think about what research and development looks like as you incorporate increasing digital content and digital technologies and capabilities.