In early 2020, when Minnesota-based 3M Co. decentralized its research and development function, it drafted veteran employee Cordell Hardy to take on a new leadership role.
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.
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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 unita 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.
How does 3M measure R&D’s impact?
We’re a very global organization. … So, how do we measure our impact? It’s actually easiest to do with some of our sub-units versus the whole, because within my team are very diverse functions. On its whole, we would think about the way that our businesses are performing, and the way the corporate or total R&D organization is contributing to the aggregate business success in an area.
So, that can be easiest to get through collaborative discussions with the senior R&D leaders as well as the senior business leaders in my regular meetings with them. How are things going? How is the business performing in areas X, Y, and Z? Getting that feedback from them on the contributions our team is making in terms of hiring, recruiting, retention, culture, morale as well, as some of the quantitative measures like contribution to key projects or influence on execution timelines.
We have great KPI dashboards to help us to see the sales opportunities that arise because of interacting with customers in our facilities…
… Within our customer innovation center management group, we have great KPI dashboards to help us to see the sales opportunities that arise because of interacting with customers in our facilities, and the number of virtual or remote visits that we’re hosting with folks through different team members within a country. And then, after you’ve had the sales opportunity through our CRM system, we can either track that through the realization of revenue, based on some of the interactions and touchpoints we had with the customer. That’s an example at a sub-group level of, how we can really get granular and quantitative about the impact that we have?
Is it difficult to quantify the effect R&D groups have on profits?
I would say yes. At best, I’d say anything we point to is going to be an indirect measure. If we have an interaction with a customer at our center and we then start to track, “OK, we talked with person X about so many rolls of multilayer optical film into their smartphone design.” There are hundreds of other people involved in that who have nothing to do with our group. …All we can do is point in the direction and say, “Hey we are integrated into the value creation process.” But we’re not independent. We’re additive.
It’s absolutely necessary to have the grit and dedication — to go all the way through the finish line, manage all the risks and overcome the failures.
Generally speaking, is R&D work more often inspiration or perspiration?
Wow. I think both have to be true. But if you were to push me and say, you have to lean toward one or the other, I would offer that it’s primarily perspiration, not inspiration. I could probably list off 10 good ideas for you in the next five minutes and create not a penny.
To actually create value out of a good idea, and to go through the rejection and the failures and the iterations associated with turning a good idea into something that’s really going to impact society, improving the life condition and generating value for a company as large as 3M, is perspiration. It’s absolutely necessary to have the grit and dedication — to go all the way through the finish line, manage all the risks and overcome the failures. It’s been my experience that that’s lot of work.
