The End of Leadership as We Know It

11When Best Isn't Best

3M used to be synonymous with innovation. The company transformed itself from a commodity maker of sandpaper to one with popular products from Scotchgard fabric protection to Post‐It notes and CFC‐free asthma inhalers. Then in 2001 a new leader, former GE executive Jim McNerney, joined the company with goals of improving it further.

In three years, he converted the entire company to Six Sigma, a system of best practices for improving quality by reducing errors in operations. McNerney's plan worked at first, as quality improved and costs fell. But by mid‐2005, when McNerney left to become CEO of Boeing, 3M's rate of innovation had fallen sharply. McNerney's application of best practices had undermined one of the company's most important competitive advantages.

The root of the problem was Six Sigma's insistence on plans and discipline, which discourages work on novel products. Geoff Nicholson, father of the Post‐It note, had just retired as vice president for international technical operations as McNerney arrived. He pinpointed the problem: “The Six Sigma people would say they need a five‐year business plan for [a new idea]. Come on, we don't know yet because we don't know how it works, we don't know how many customers, we haven't taken it out to the customer yet.”¹ McNerney's successor, George Buckley, largely discontinued the use of Six Sigma in research and development.² 3M's leader had fallen into a trap, but you don't have to. Often, best practices ...