Value Proposition canvas- Customer needs and pains
How 3M Applies Lean Principles to Make Competitive Intelligence Impact Measurable
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How 3M Applies Lean
Principles to Make
Competitive Intelligence
Impact Measurable
A Complimentary Webinar from Aurora WDC
12:00 Noon Eastern /// Wednesday 26 June 2013
~ featuring ~
Terry Kerby Derek JohnsonDoug Quam
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Sources of Growth – Example only
2012
Sales
Est
2017
Sales
Plan
New
Products
Revenue Growth
2012
Sales
Est
2017
Sales
Plan
Market
Growth
2013
Sales
Est
2018
Plan
Price
Growth
M & A
Market
Penetration
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Remember that we have very strong
competitors everywhere. I like to
win, and I want this company to win. Just
as we need to know our customers
better, we need to understand our
competition better. …
So you will hear me talk a great deal
about improving 3M’s competitiveness
and winning in the marketplace.
Inge Thulin
President and CEO
2/24/12
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3M strategies
1. Expand relevance to our customers and our presence in the market place.
4. Intensify capabilities to achieve regional self sufficiency
5. Build high performing and diverse global talent
6. Drive consistent superior levels of operational excellence
Invest in innovation: Invigorate existing
market opportunities and focus on
emerging markets
2. Gain profitable market share and accelerate market penetration everywhere
3. Invest in innovation: Invigorate existing market opportunities and focus on emerging
markets
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PLAN
ADJUST
CHECK DO
“GRASP THE
SITUATION”
Last Year: Revenue Target = $860MM This Year: Revenue Target = $1042MM Goals Activities J F M A M J J A S O N D
Last Year: Actual Revenue = $901MM This Year: Operating Income Target = $206MM 1. New Product cycle Time acceleration (J.Miller) $5MM 1.0 1.0 1.0
Last Year: Operating Income Target = $150MM 2. Bonding additional growth programs(M.Koller) $2MM 2.0 3.7 3.7
Last Year: Actual Operating Income = $141MM 3. Bonding Venture products launch (M.Koller) $5MM 0.3 0.2 0.2
Targets: 4. Converter add'l growth (R.Marchiani)$2.8MM 2.8 2.8 2.8
1% additional core growth = $19.6MM 5. Converter Venture products (R.Marchiani)$5MM 5.0 5.0 5.0
Leverage Venture = $15MM 6. MPSP add'l growth programs (C.McKenna) $3.8MM 3.8 9.6 9.6
New Prod cycle time=$5MM 7. MPSP Venture products launch (C.McKenna) $5MM 6.0 1.0 1.0
8. Government add'l growth (N.Biderman) $3MM 3.0 3.0 3.0
9. Marine add'l growth programs (M.Smith) $0.3MM 0.3 0.3 0.3
10. Northstar add'l penetration (D.Burger) $2MM 2.0 2.0 2.0
11. Channel add'l growth programs (N.Stevens) $5MM 1.0 1.0 1.0
12. Contractors add'l penetration (D.Iverson) $0.7MM 0.7 0.7 0.7
13. 1% sales erosion reduction (D.Iverson) $5.3MM 5.3 5.3 5.3
14. e-Store - Achieve plan of $4.4MM (D.Iverson) 2.8 2.8
15. Increase Price to keep pace with RM inflation 24 13.8
Subtotal as of 2/07 = $27.2MM sales = $4.7MM OI
Subtotal as of 3/07 = $32.4MM sales = $5.5MM OI +$13.8MM price
Activity Rating Key results and issues
16. PSA Portfolio rationalization (B.Kesting) $3MM OI 1.5 3.1 3.1
Accelerate Channel Penetration Reached 50K new customers (300K more available) 17. 10% additional LSS cost reduction (T.Gregory) $4MM OI 2.5 3.5 3.5
Need new business model to reach Tier C customers Targets: 18. Thwart RM headwinds (P.Deconinck) $5MM OI 2.5 4.0 4.0
Close multiple acquisitions Achieved topline revenue 19. Supply Chain Simplification-Deliver Plan(D.Schaefer)
Acquisitions dilutive to P&L,need faster integration to realize
synergy Subtotal as of 2/07 = $4MM OI
Improve New Product Penetration Introduced numrous new products 10% add'l LSS Cost Subtotal as of 3/07 = $6.6MM OI
Total revenue below expectations with longer than expected
cycle time Thwart headwinds $5MM Total as of 2/07 = $8.7MM OI
Cost Reduction (focus COPQ) Delivered $36MM LSS Cost Savings Total as of 3/07 = $25.9 x 85% probability = $22MM OI
Need to realize more yield to the bottom line
Manage Raw Material Pricing Headwinds considerably more than historical
Need higher percentage of second sources
Achieve 8% productivity improvement Not able to achieve double digit organic volume growth
Need more effective stratgy deployment
Portfolio Management Reduced the number of D SKU's
Need to accelerate jumbo rationalization
J F M A M J J A S O N D
Rationale for This Year's Activities - Business Opportunity Assessment
Profit = Revenue-Cost We have opportunities to accelerate improvement in both areas Soft U.S. economy putting pressure on the Op Plan
2/7 plan has $11MM of additional OI in play
2/22 Gap $16.8MM-need to implement additional actions
To meet our Op Plan we must;
1) Accelerate our top line growth
2) Reduce manufacturing cost
3) Make up for an estimated $15MM shortfall in the U.S.Operating Plan
Author: T.Gregory 3/25/08
Version/Date: V5
A. Find and delivery additional sources
of revenue GROWTH
Reduce Business Erosion = $5MM
1% Portfolio rationalization
A3 - Increase OI from $141MM to $206MMFocus: U.S. Performance Dept: IATD Division
Performance, Gaps and Targets This year's action plan Performance
Reflection on last year's activities
We need to accelerate Lean deployment
to realize additional factory cost savings
Performance Gap in 2008 U.S. Operating Plan: $15MM shortfall In Operating Income
Cost: RM Headwinds, global captial investments need to be offset by broad based cost reduction efforts
3/20-Oil $86 to $95-Headwinds $24 to $30-5% May price
increase-$6.3MM+ erosion = Gap $29MM - $22MM = $7MM
Follow-up / Unresolved Issues
B. Find and delivery additional COST
reduction above Op plan
We need to redeploy personnel to these
extraordinary objectives
Revenue: Capturing new customers, retaining existing customers, and accelerating new products below expectations
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
B C D E F G H I J K L M N O P Q R S T U V W X Y
X-Matrix IATD Division 2008 U.S. Strategy Deployment
Support Int'l Expansion
Portfolio Optimization
Operational Excellence - Cost, Service, Quality
New Product Development
Business Execution Process (BEP) Deployment
Increase OI from $141MM to $206MM
Grow Channel Sales from $863MM to $894MM
Grow Recent Acquisitions from $50.6MM to $159.3MM; IMC Sales
Grow Core Sales from $863 to $894
SimplificationofSupplyChain,Products,&Processes
OperationalExcellence-EHS&R,Cost,Service,Quality
ExpandIATDPSACapability
TotalEngagementoftheWorkforcetoDeliverTrueNorth
ImproveOperatingIncomefrom15.4%to19.6%/Sales
GrowSalesfrom$901MMto$1042MM
BondingBUSalesfrom$185MMto$197MM($12MM)
ConverterSalesfrom$285MMto$304MM($19MM)
MPSPSalesfrom$381MMto$393MM($15MM)
VentureSalesfrom$32.7MMto$134.3MM($101.6MM)
NorthstarSalesfrom$17.9MMto$25.0MM($7.1MM)
IMCSalesfrom$860MMto$886MM
ExistingChannelSalesfrom$860MMto$886MM
AlternativeWaystoMarket(e-store,B&C)$2.5to$8.3MM
MarketCenters(MRO,Marine,Govt)+$12MMT-Scorecard
ManageCOGSfrom$515MMto$598MM(57.2%)
ManageSG&Afrom$218MMto$218MM
IncreaseOIfrom$141MMto$206MM
LeadershipDevelopment(Deploy2levelsbelowVP)
Increase US GMO Penetration ratio from 15.4 to 20 (Penetration) A3 A3 A3 A3 A3 A3A3A3 A3 A3 A3 A3
Move from the number 2 to number 1 PSA Innovative Company(Innovation)
Reduce Fcost 1% point/year Operational Excellence (Create The Space) Speed
Complexity
Employee Engagement
U.S. Performance
Targets to
Improve
Long-Term
("Breakthrough")
Strategic Objectives
Annual
Strategic
Objectives
Top-Level
Improvement
Priorities
X Matrix,
A3 “Strategy” Plans
TOOLS
COMPLETED ANNUALLY
updated Monthly
A3
CI projects ID
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Ab
Abrasives
Bi
Biotech
Ac
Acoustics
Ce
Ceramics
Ad
Adhesives
Dd
Drug
Delivery
Am
Advanced
Materials
Di
Display
An
Analytical
Do
Dental &
Orthodontic
Materials
As
Application
Software
Ec
Energy
Components
Em
Electronic
Materials
Fc
Flexible
Converting &
Packaging
Fe
Flexible
Electronics
Fs
Filtration, Separa
tion, Purification
Fi
Films
Im
Imaging
Fl
Fluoro-materials
In
Inspection &
Measure-ment
Is
Integrated
Systems Design
Lm
Light Mgmt
Md
Medical Data
Mgmt
Me
Metal Matrix
Composites
Mf
Mechanical
Fasteners
Mi
Microbial
Detection &
Control
Mo
Molding
Mr
Micro-
replication
Pe
Predictive
Engineering &
Modeling
Nt
Nano-
technology
Nw
Nonwoven
Materials
Rp
Radiation
Processing
Se
Sensors
Po
Porous Materials
& Membranes
Pm
Polymer Melt
Processing
Wo
Wound Mgmt
Vp
Vapor
Processing
Su
Surface
Modification
Sm
Specialty
Materials
Op
Opto-
electronics
Pd
Particle &
Dispersion
Processing
Pr
Process Design
& Control
Pp
Precision
Processing
Tt
Track and
Trace
We
Accelerated
Weathering
Technologies are not industry specific
Technology Platforms
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To provide 3M divisions & Countries with know-how, tools & process
to efficiently;
IDENTIFY their competitors
UNDERSTAND their competitors
MITIGATE their competitors strategy
All within the confines of 3M values
MISSION
COMPETITIVE INTELLIGENCE PROCESS
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Our Values
► Act with uncompromising honesty and integrity in everything we do
► Satisfy our customers with innovative technology and superior
quality, value and service
► Provide our investors an attractive return through
sustainable, global growth
► Respect our social and physical environment around the world
► Value and develop our employees' diverse talents, initiative and
leadership
► Earn the admiration of all those associated with 3M worldwide
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Common Language, Tools, Methodologies
Replicatable Successes
The program
The challenge MULTI
Technology
National
Industry
Jan
Jul
AprOct
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Deep dive analysis
C SME’S appointed
So What?
Now what? Analysis
Daily / Weekly Alerts
CI Sharepoint site
Earnings reports analysis
Product evaluations
Key Intelligence Questions
Confirmed or Revised
Strategy
Market Competitive Factors
Competitiveness
of all market participants
Market Key Intelligent topics
IDENTIFY
UNDERSTAND
War Games
Trade show CI
3rd party research
MITIGATE
COMPETITIVE INTELLIGENCE PROCESS
COMPETE
Identify
UnderstandMitigate
Competitor
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Deep dive analysis
C SME’S appointed
So What?
Now what? Analysis
Daily / Weekly Alerts
CI Sharepoint site
Earnings reports analysis
Product evaluations
Key Intelligence Questions
Confirmed or Revised
Strategy
Market Competitive Factors
Competitiveness
of all market participants
Market Key Intelligent topics
IDENTIFY
UNDERSTAND
War Games
Trade show CI
3rd party research
MITIGATE
COMPETITIVE INTELLIGENCE PROCESS
COMPETE
Identify
UnderstandMitigate
Competitor
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22
Competitor
COMPETITIVE INTELLIGENCE PROCESS
IDENTIFY
Key Success
Factors People
Cost
CustomerService
Technology
Distribution
Brands&
Marketing
Computed weight 10 9 7 5 8 4 Score %
3M 1 6 9 6 6 3 217 56%
Competitor A 9 6 3 9 3 9 270 70%
Competitor B 9 9 6 6 3 9 303 78%
Competitor C 1 3 9 1 1 1 117 30%
Market segment name
Ready to
compete
Readiness
to
compete
metric
Market KSF’S linked
directly to corporate
Competitive Factors
Competitiveness of all
participants
(including 3M)
Scoring guide
Competitive Factor 9 6 3 1
People
Ability to support (call on) ; Customer's
C suite, Procurement, Clinical,
Standardization comm, GPO
interactions, POE suppliers
< 9 < 6 < 3
Cost
For Customer - Lowest treatment cost
to achieve the desired clinical outcome
< 9 < 6 < 3
Customer
Service
Technical support 24/7, continuous
educational offering, high OTIF
< 9 < 6 < 3
Technology
State of the art, supported by clinical
evidence
< 9 < 6 < 3
Distribution
Supply to the continuum of care
(including retail) "easy to find, easy to
buy"
< 9 < 6 < 3
Brands &
Marketing
Highly trusted in the marketplace (C
suite >> Patients). Leverage of the
brand around solutions. One
company face to the customer
< 9 < 6 < 3
Key Success Factor
An asset or capability
that a market participant
must have to sustain
their presence in the
market segment
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Deep dive analysis
C SME’S appointed
So What?
Now what? Analysis
Daily / Weekly Alerts
CI Sharepoint site
Earnings reports analysis
Product evaluations
Key Intelligence Questions
Confirmed or Revised
Strategy
Market Competitive Factors
Competitiveness
of all market participants
Market Key Intelligent topics
IDENTIFY
UNDERSTAND
War Games
Trade show CI
3rd party research
MITIGATE
COMPETITIVE INTELLIGENCE PROCESS
COMPETE
Identify
UnderstandMitigate
Competitor
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Focus on the Vital Few
Complete deep dive analysis
Define Key Intelligence Topics
UNDERSTAND
Create an “Alert network”
Establish CI Sharepoint process
Quarterly earnings call
Appoint C SME’s
So What?
Now What?
Define Key Intelligence Questions
COMPETITIVE INTELLIGENCE PROCESS
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Deep dive analysis
C SME’S appointed
So What?
Now what? Analysis
Daily / Weekly Alerts
CI Sharepoint site
Earnings reports analysis
Product evaluations
Key Intelligence Questions
Confirmed or Revised
Strategy
Market Competitive Factors
Competitiveness
of all market participants
Market Key Intelligent topics
IDENTIFY
UNDERSTAND
War Games
Trade show CI
3rd party research
MITIGATE
COMPETITIVE INTELLIGENCE PROCESS
COMPETE
Identify
UnderstandMitigate
Competitor
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Leads to revision or Confirmation of Strategy
MITIGATE A competitive Intelligence process used to
Anticipate a competitors Future Actions
War Gaming
1.Start with the question(s) you want to answer about your competitor.
2.Prepare briefing documents for the team .
3.Deploy teams ( 4-6 people per team) to answer the question
4.Entire group (all teams) review each teams response
5.Entire group refine to establish the group view
6.Set / adjust strategy based on your new understanding
7.Take action
What is it?
How do I conduct a War Game?
What’s the benefit ? - A deeper understanding of a competitors capability.
- All team members get on the same page.
- Confidence that we have the right plan to win.
Key
Intelligence
Questions
Trade show CI
3rd party research
COMPETITIVE INTELLIGENCE PROCESS
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Business Competitiveness
Identify high growth markets
Investment PrioritizationMeasure Our Success
Aligns Business
Groups/Countries/Markets
Business Competitiveness Index - Designed to meet multiple planning needs
Business Competitiveness Index (BCI)
• Increase transparency to investors
• Discuss progress with investors
• Target share discussions in reviews
• Simplify planning
• Provide enterprise-wide visibility
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BCI designed with critical questions in mind
• Are we taking share (unit/volume) in our markets across the globe?
• How to provide greater clarity to current/potential investors?
• Bridging strategy & operations, way to track our progress?
• Which markets do 3M products ultimately serve? By product code? By
country?
• Do Divisions/Countries align on priority markets & share gain potential?
• How to identify & align on potential market gaps & future opportunities?
• Validate high growth opportunities above external consensus, where can
3M outperform?
• Leverage 3M’s International breadth to leap frog competitors?
• Do our investments align to these markets?
• How can we deploy capital spending and M&A on targeted markets
and regions?
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Business Competitiveness Index – Post 2013 Rhythm
BCI Process
Planning
Workbooks
Strategic Plan
Operating
Plan &
Measurement
Revised
Mapping
Output
• Quarterly estimate of expected market performance
(across 230 markets & ~50 countries and regions)
Output
• Align products to markets (by country/region)
• Projected Share Gain (real & nominal)
• Total market Penetration (real & nominal)
Output
• Priority markets and countries/regions
• Expected share gain by market
Output
•Track share gain against :
•Key Markets
•Product Codes
•Countries/Regions
• Share of Total Market (real & nominal)
Output
• Implement revised
mapping for next FY
Timing: Nov-Dec
Timing: October – Updated Qtrly
Timing: August-September
Timing: June-August
Timing: Ongoing
Business
Competitiveness
drives strategy
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Terry Kerby
Biographies
Doug Quam is Market Insights Manager in 3M's Center of Marketing Expertise.
He is responsible for supporting 3M's global marketing community with market
intelligence resources and tools. His most recent contribution is the development
and launch of the Competing to Win center, an online site providing 3Mers with
resources and tools to support their competitive intelligence initiatives. Doug has
worked in a variety of divisional and corporate roles including market
research, competitive intelligence, Design for Six Sigma (marketing black
belt), product marketing, and business model innovation. Doug managed the
market research and competitive intelligence operations for one of 3M's largest
divisions. He holds an MBA from the University of St. Thomas in St. Paul, MN.
Terry J. Kerby has over 30 years of experience in International business
management. Terry’s past roles within 3M include, Managing Director of 3M
Israel, Global Business Director, Initiative Leader and General Manager of 3M
Microbiology. From 2007-2012 Terry was the responsible for Strategy and Lean
Six Sigma at 3M’s $5Bn Health Care business; it was in that role that he
established a high impact competitive intelligence program. In 2012 Terry
assumed the role as the Director of Competitive Intelligence for 3M Company
World Wide. Terry holds an M.B.A. from Ivey School of Business, Canada and is
trained at the Master Black Belt level in Six Sigma.
Doug Quam
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Questions and Comments
Terry Kerby
► +1 (651) 733-2077
► tjkerby@mmm.com
The Intelligence Collaborative is the online learning and networking
community powered by Aurora WDC, our clients, partners and other friends
and dedicated to exploring how to apply intelligence methods to solve real-
world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn
more about Aurora at http://AuroraWDC.com – see you next time!
Doug Quam
► +1 (651) 736-5879
► djquam@mmm.com
Notes de l'éditeur
We need to grow – Our share holders expect us to deliver a return on their investment in terms of enhanced share price. The market values growth above all in determining the price of 3M stock. The market rewards growth and will reward double digit growth highly particularly in these turbulent times.Here is an example of the sources of growth for 3M .As I will show you later in this presentation 3M is if not the most, one of the most diverse companies on the planet and as such can expect to benefit from some modest market growth. We can expect some price, we provide ourselves on innovation , infact we are issues on average 3 patents everyday, this allowing us to be fairly confient that we can enter and expand new markets. Our M&A machine is in high gear but what we must do is penetrate – take share of the market we participate in. Our CI program is focused on allowing us to do just that.
To understand how our program fits, I need to give you some background on the challenge within 3M
There are many situations, from tactical to strategic, where a war game can help. You will see a few of these situations mapped on this continuum. A common application of war games is to test competitive reactions to a 3M offering. You may be developing an important new product or promotional campaign and you have many questions about how competitors will react. A war game can help you test out a few possible reactions as part of the NPI process and then develop strategies to address those responses quickly if and when they occur. Perhaps there are rumors that a company in an adjacent market is making a series of acquisitions within your market. Or a private equity firm is rumored to be considering the acquisition of one of your main competitors. What should you do? A war game prepares you to act fast when competitors change or emerge. A very practical strategic application of war games is to add insight to our strategic plans. We need to look 3-5 years into the future, and a war game is an excellent tool for that purpose. The 4th example can help us deal with black swans if and when they happen in our business. A ‘black swan’ event is one that has a low probability of occurring, but if it does occur, its impact is great. The term is derived from the previously held assumption that ‘all swans were white‘ until the discovery of black swans in Australia. Examples of black swan events in recent history impacting 3M were the earthquake in Japan and the H1Ni outbreak. Finally, some industries change more rapidly than others, but change is inevitable in all businesses. A war game is a valuable tool to model competitive and 3M responses to major changes to industry and market forces.