Proszę pamiętać, że przypadek ma ponad 10 lat. Dane finansowe nie są potrzebne, choć zachęcam do ich uaktualnienia. Pozostałe informacje są ciekawe. 3 M CASE The case is not new but you do not need the financial data for your analysis. Please note from where and how 3M obtained ideas for its products. 3M: Making Waves with Microreplication* Imagine driving home on a dark road after a long day of work. You have been staring at the screen on your laptop computer for almost eight hours and yet your eyes don’t seem too strained, thanks to advancements in computer screen brightness. In the distance, you clearly spot the reflective tape on the clothing of a late evening jogger. Further ahead, a stop sign blares out a warning at you. Without realizing it, you have experienced the wonders of microreplication technology! Microreplication is a manufacturing technology that combines the art and science of applying precise, microscopic threedimensional patterns on various surfaces. 3M (Minnesota Mining and Manufacturing Company), a Minnesota-based manufacturing corporation, leads the world in microreplication technology. 3M has successfully used this technology in such diverse applications as light-enhancing film for laptop computer screens, reflective highway signs and reflective tapes, superior mechanical fasteners, and highly precise abrasives. In 1996, 5 percent of 3M products sold were manufactured using microreplication. 3M anticipates that by the year 2000 it will generate 25 percent of its sales with products manufactured using microreplication. Company Background Since its founding in 1902, Minnesota Mining and Manufacturing Company has become one of the world’s most innovative and productive companies. 3M’s primary growth strategy is to sell more existing products into new markets and to introduce new products into new or existing markets. It is said that a quarter of the world’s population uses one or more 3M products every day. Headquartered in St. Paul, MN, the company operates 82 plants and 99 sales offices in 38 states, with an additional 109 plants and 223 sales offices outside the United States. In 1996, 3M employed over 74,000 people and reported worldwide net sales of $14.2 billion. Some of 3M’s most ubiquitous products include Post-it® Repositionable Notes, Scotch™ Magic™ Transparent Tape and Scotchgard™ fabric protectors. This assortment of seemingly unrelated products is developed from a solid base of core technologies and sub-categories of technology (Exhibit 1). A typical 3M product, as described by Dr. George Allen, a former Vice President of Research and Development, is "…complex to design and make…but simple to use." 3M is divided into two core sectors - the Industrial & Consumer Sector and the Life Sciences Sector - which are supported by two additional sectors: Research and Development; and Engineering, Quality and Manufacturing Services. The Industrial & Consumer Sector manufactures products in pressure-sensitive adhesives, specialty tapes, coated and nonwoven abrasives, specialty chemicals, electronic and electrical products, and telecommunications products. The Life Sciences Sector manufactures products for the medical and pharmaceutical markets as well as personal safety products. Dick Drew Unmasks an Innovation One of 3M's earliest innovations was the invention of masking tape in the 1920's. While visiting an auto-body shop, 3M technician Dick Drew heard loud cursing as a painter removed the glued newspaper strips he had used to mask a two-tone paint job. Paint had peeled away with the newspaper, ruining a day’s work. Having identified a problem, Drew began working on a solution. He investigated many adhesive formulations in combination with various backings, but nothing worked and he was ordered off the project. Drew believed so deeply in his idea, however, that he continued working on it. Eventually Drew discovered that using a crinkly backing paper would allow adhesive to pull away from the surface a little bit at a time, thus lowering the risk of stripping off the paint. Drew’s eventual success on this project, despite having been ordered to back away, helped establish 3M’s tolerance for employees who aggressively pursue ideas beyond conventional boundaries. William McKnight, who rose from a bookkeeper's position to become chairman of 3M and who guided its growth for five decades, underscored this tolerance in a speech in 1948. It was McKnight who ordered Drew off his masking tape project, only to recognize that he had erred in doing so. McKnight observed, "…Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow." 3M scientists have a history of pursuing their ideas beyond ‘normal’ bounds, as exemplified by Dick Drew’s pursuit of masking tape. After the success of masking tape, Drew asked an executive, Edgar Ober, for permission to buy a $37,000 paper maker which would improve the masking tape. Ober told Drew to hold off for a while, since finances were tight. Six months later, Drew took Ober into his laboratory and there was the paper maker, working away and producing a vastly improved masking tape backing. Ober was astonished and asked Drew where the hardware came from. Drew explained that he had simply submitted a blizzard of $100 purchase orders over six months. The machine had been paid for in amounts that he was authorized to spend on his own. Research & Development 3M has established a corporate goal of generating 30% of sales from products introduced within the previous four years. In striving to attain this goal, the company spends 7 cents of every sales dollar on R & D - more than twice the average of U.S. manufacturing companies. This amounted to $947 million in 1996 and a five-year total of $4.3 billion. In the tradition of its humble R & D beginnings in a laboratory in 1916, the company continues to recognize the importance of continuous improvement, and in 1995 operated 52 laboratories in the United States and 12 additional labs in nine countries around the world. In 1995, 3M received over 500 patents and applied for another one thousand. 3M employs over 700 patent holders amongst its ranks of technical personnel. In general, research at 3M is conducted at three different levels. About 85 percent of research and development activity is conducted by the 48 product divisions. These divisions conduct research on products and technologies that are currently in place or are expected to be commercialized within 1 to 5 years. These divisions are organized into two business sectors - the Industrial & Consumer Sector and the Life Sciences Sector - whose labs focus on technologies with horizons between 5 and 10 years. These sectors account for about 5 percent of research activity. 3M's eleven technology centers are housed at the sector level and promote new technologies across division lines. The remaining 10 percent of research activity is conducted at corporate research laboratories, which also engage in government-funded research activities. The corporate-level laboratories usually explore technologies that have horizons of more than 10 years. In addition to its in-house facilities, 3M maintains ongoing relationships with university researchers (such as MIT’s media laboratory) and with governmental research organizations including Lawrence Livermore, Los Alamos, Oak Ridge, and other national laboratories. In June 1995, 3M invited 50 university and federal labs to share their discoveries with 350 senior 3M scientists by participating in a technology fair at the company’s administrative and research headquarters in St. Paul, MN. This fair introduced 3M to a number of outside technologies and helped establish researcher-to-researcher links; participating laboratories presented enough possibilities to fill a database with 3,600 different technologies for future reference. Communication 3M has several platforms of communication, including the Technical Forum, formal symposia, and technology fairs, that serve to enhance communication between not only technical staff but marketing and management as well. The most unique program is the Technical Forum. All technical employees at 3M belong to the Technical Forum, which is represented by a Senate that consists of a Senator from each laboratory or technical group and a group of officers elected by the general membership. The Senate meets monthly to discuss issues of importance and also sponsors chapters to enhance communication between technical disciplines. Currently, there are about two dozen such chapters operating in the 3M Technical Forum. The Technical Forum also sponsors an annual mini-technology trade show, in which each 3M laboratory showcases its most exciting technologies or new products. All Technical Forum members and their marketing counterparts attend this annual event. At a recent annual event two scientists who were showing their technologies side-by-side became aware of a potential product that could be developed by melding their ideas together. In addition, in order to foster entrepreneurship, the company provides Genesis grants for 3M scientists looking for start-up funds. If scientists need funding for unique "orphan" ideas, they can petition 3M for seed money to jump-start their inventions. This program is intended to fund research and development activities for one year. After that time, scientists must demonstrate commercial applicability of the project to secure additional funding. Award & Rewards 3M encourages research excellence with several incentives including the Technical Circle of Excellence program, the Carlton Society, the Golden Step Award, and a "Dual-Ladder" promotion system. The Technical Circle of Excellence Program recognizes excellence in the laboratory during a one-year time frame. The focus is on newer technical employees, support personnel and team leaders or champions. Awardees are nominated and selected by peers based on contributions above and beyond assigned tasks. 3M has established a society to recognize the long-term contributions of its scientific and technical employees as well. Formed in 1963, this society is named for R. P. Carlton, 3M's first head of Research & Development and its fifth president. Exemplifying the attitude of 3M towards innovation, Carlton favored risk taking and is credited with pointing out that "You don’t stumble … unless you are in motion." Membership in the Carlton Society is the highest form of recognition 3M can provide its technical employees. Team contributions are also rewarded at 3M. The Golden Step Award recognizes the contributions of cross-functional teams in bringing new products to the marketplace. To qualify, a product must reach certain targets for sales and profits within three years. A unique feature of the 3M structure is the "Dual Ladder" system. This system has established parallel promotional paths for technical workers and supervisory personnel, and ensures that outstanding contributors are compensated properly, whether they move into management positions or not. Under the "Dual Ladder" system it is possible for a research scientist to advance to the rank of Corporate Scientist, equivalent to vice president, without leaving the lab. In practice, many scientists and engineers switch back and forth on the dual ladder during their careers. Innovation in Microreplication As with many of its innovations, 3M did not conceive microreplication in a vacuum. Rather, 3M began working on this manufacturing technology in the early 1960s to develop a low-cost overhead projector to boost sales of its transparency films. All overhead projectors use a Fresnel lens to focus light from a bulb into a single beam and project it through a transparency. Unlike other overhead projectors that used heavy glass lenses, 3M’s overhead projectors incorporated lightweight plastic lenses manufactured using microreplication technology. Fresnel Lenses Invented by the French physicist Augustine Jean Fresnel, the Fresnel lens works by bending the light waves radiated from the light source on all sides and focusing the light in a single plane. The original use for the lens was in lighthouses. Prior to the Fresnel lens, large lighthouse lamps were difficult to construct because the traditional convex lenses used were not only extremely large, but also inefficient at capturing light. Made up of a combination of prisms instead of a single large lens, the Fresnel lens system not only was much lighter than existing lighthouse lenses, but also more efficient capturing light. With the new lens system, lighthouse lamps could project light much greater distances. Fresnel Lenses in Overhead Projectors Prior to 3M’s invention of the plastic Fresnel lens, overhead projector stages were glass Fresnel lenses manufactured individually with a compression molding process. Such lenses were not only expensive to manufacture, but were extremely heavy. As a result, overhead projectors were large, expensive, and difficult to carry. Additionally, since each lens was molded individually, the manufacturing process was slow. Microreplicated Plastic Fresnel Lenses In order to make the overhead projector more attractive to more customers, 3M had to develop a lighter, cheaper machine. With microreplication manufacturing technology, 3M developed and manufactured a plastic Fresnel lens that significantly reduced the weight and cost of its overhead projectors. First developed in 1964 by 3M technician Roger H. Appeldorn, the new lens refracted light not through several glass prisms, but through literally thousands of small, microreplicated grooves on the surface of a sheet of plastic, in effect creating a sheet of prisms. While the two lenses had similar light capturing characteristics, the plastic lens weighed considerably less than its glass counterpart. The microreplication manufacturing process for the plastic lens also had significant advantages over the existing technology. With the new process, 3M could manufacture sheets of lenses in a continuous, one-step process instead of the multi-step glass lens molding process described above. In addition, Appeldorn’s team found that the lenses produced had the same high quality throughout a manufacturing run, with very few lenses rejected. Combining the cost and manufacturing advantages with the significantly lower weight of the plastic lens, 3M could produce projectors that were much lighter and cheaper than its competitors' products. Manufacturing Process Once Appeldorn’s team developed the plastic Fresnel sheet lens in the laboratory, it had to develop the actual manufacturing process. While the replication of thousands of grooves in a sheet of plastic may seem trivial, 3M scientists had to develop and integrate six enabling technologies to make microreplication work. 1. Structure Design: The surface geometry had to be designed to produce the precise angles and spacing required for refraction. 2. Structure Generation: The design had to be transferred to a master mold. Micromachining methods had to be developed to make the mold. 3. Metrology: The tools had to be built to measure the structures machined into the master mold. 4. Replica tooling: The master mold had to be copied to make enough replicas for mass production. 5. Materials Research: The team had to find materials that had consistent properties throughout the manufacturing process. 6. Systems Integration: Each of the five technologies had to be integrated to insure an efficient development and manufacturing process. Once 3M scientists mastered these technologies for microreplication, 3M could manufacture the plastic lenses for its overhead projectors. Once introduced, 3M overhead projectors dominated the market. Microreplication Benefits Appeldorn’s team also found that the microreplication process itself was unique. As a single-step process, microreplication manufacturing required little space within a factory, produced a high quality product, and most importantly, could be applied to different materials easily. 1. Single-Step Process As discussed above in the case of plastic Fresnel lenses, microreplication is a single-step process. As compared to the multi-step glass lens manufacturing process, this single-step process meant that 3M could use only one manufacturing tool, thereby saving money not only on the cost of additional tools but also on the extra maintenance on those tools. This single step process also gave 3M other advantages. 2. Manufacturing Compactness The length of a microreplication manufacturing is short, meaning that the average line required a footprint no larger than "three to four ordinary offices." Therefore, for a given factory, more manufacturing lines can be built, thereby spreading many fixed overhead costs over more lines. 3. High Quality Product With the single-step process, the chance of a defective product decreased significantly over a multi-step process. If the manufacturing process created defective products, the problem could be spotted and corrected easily. In the case of the plastic Fresnel lens, Appeldorn’s team maintained the quality of the lenses "from the first inch [of product] to the last foot." The lack of defects added to the cost savings already realized. 4. Ease of Raw Material Change Perhaps the greatest benefit of the new microreplication technology is the flexibility of its application. While Appeldorn’s team applied microreplication originally to clear plastic for its Fresnel lenses, it found that surfaces could be replicated easily on other materials that had similar surface properties. If a new product required the same surface geometry as an existing product, only the raw material entering the process would change. If it required a different surface geometry, only the mold would change; the process itself would not. Therefore, 3M could use its microreplication technology to produce other products on the same manufacturing lines. With the discovery that these benefits could be applied to other materials, 3M scientists began looking for other applications for microreplication manufacturing. Additional Research in Optics Once 3M scientists discovered how to focus an image with microreplicated lenses, they continued research to determine what other optical properties could be altered. While some scientists were directly tasked with this next level of research, others participated by drawing upon their "15% free time" -- an unwritten policy by which 3M encourages the exploration of new ideas. Under this practice, 3M scientists are free to use up to 15% of their work time to pursue any idea of their own choosing. The only requirement imposed by 3M is that the idea must have potential commercial value. 3M's Post-It® Repositionable Notes were the result of scientists using their 15% free time to explore new ideas. Through additional research, 3M scientists learned about the optical effects of altering the size of the microreplicated structures on a surface. Relatively large structures focus divergent light rays, as was done with Fresnel lenses. As scientists tested smaller structures, they discovered that diffraction occurs with small geometries; that is, the light is broken down into its component colors. As surface structures were made even smaller, they observed an even more surprising result: enhanced adhesion between microreplicated surfaces occurred. The first non-projector application of microreplication built on the same properties leveraged in improving Fresnel lenses. 3M began working on films that could be added to building windows and skylights to focus daylight and project it into a building. The purpose was to increase the level of ambient light in a given building. This technology was employed at the Minnesota Zoo, where light levels in the horticulture exhibit were increased by 2-5 times using microreplicated films. A more advanced use of microreplication to focus light is "light tubes", which are cylinders lined with a microreplicated lighting film. Light tubes can be used to transfer light from a light source and project it onto the desired area some distance from the source. The most common application of light tubes is in highway overhead signs. The light sources for these signs cannot be located over the roadway projecting directly onto the signs, since traffic would need to be stopped to change the bulbs. Instead, the light source is located on the side of the road in the base of the support structure, where it is easily accessible. From there, light tubes funnel the light through the support structure and project it onto the overhead signs. The Optics group's experiments also resulted in the discovery of microreplicated surfaces that would allow light to be seen only from a particular angle. This innovation led to the introduction in the late 1960's of traffic signal lights that could only be seen from designated lanes, a major breakthrough in roadway safety. Scientists in 3M's Traffic Controls Material Division began experimenting with microreplicated surfaces in the early 1970's after seeing the potential applications of microreplication in their own products. The Traffic Controls Material Division's products in the late 1960's and early 1970's were based on 3M's glass-bead technology, which was regarded as the most advanced reflective technology in use at the time. However, glass-bead technology involved an expensive multi-step manufacturing process for creating reflective surfaces. Introduced in the late 1970's, 3M’s microreplicated Scotchlite Diamond Grade Reflective Sheeting replaced its High Intensity Reflective Sheeting, the best previous product produced with glass-bead technology. The reflective surface of this new sheeting was three times brighter to the human eye. With microreplication, scientists could pack each square inch of Scotchlite Diamond Grade Reflective Sheeting with approximately 7,000 unique prismatic cubes. With its precise geometry, each cube markedly improves the reflection of light, even when the reflective surface is located at a severe angle to the light source, even at angles approaching 90 degrees. Highway engineers call this capability angularity. So, for example, if a car approaches a school bus at an odd angle, the driver of the auto will still be able to see the reflective outline of the bus. In addition to uncovering new applications of microreplication in reflective surfaces, the Traffic Controls Material Division began to supply customers with packages including reflective surfaces and other products, such as light pipes. The Optical Technology Center By 1981, Appeldorn's division needed new manufacturing equipment. However, its current sales did not justify the required capital expenditure. So in an attempt to locate other small units to share the investment, Appeldorn looked around 3M to see what other units used microreplication technology. What he found were over a half-dozen units using microreplication to produce a variety of intermediate and end products. Appeldorn took this discovery to 3M's senior managers, who saw the potential in this technology. 3M created an Optical Technology Center in 1982 and named Roger Appeldorn to lead it. The initial charter of this research center was to develop further microreplication and investigate optical properties of microreplicated surfaces. Over time the interests of 3M researchers and businesses led to an expansion of this original goal. As Appeldorn later commented, "I guess we should have called it the Surface Technology Center … because we subsequently branched out into non-optical fields … such as abrasives … mechanical fastening and numerous other areas that still are under wraps. Today … only about half of our work involves optics." In addition to adding research and development capabilities, 3M also sought to enhance its optics manufacturing expertise. In 1982, 3M acquired Optical Sciences Group, Inc., a small optical manufacturing firm located in Petaluma, California. Optical Sciences Group had strong processing capabilities and had built an expertise in manufacturing optical materials. When combined with 3M's own capabilities, these skills enabled 3M to more rapidly capitalize on developments from the Optical Technology Center. Expansion Beyond Optics After 3M established the Optical Technology Center, 3M found new product categories in which it could apply microreplication technology – including drag reduction film for World Cup sailboats, abrasives, adhesives, and brightness intensity products (Exhibit 2). Stars & Stripes Prior to his 1987 America's Cup yacht race in Australia, Dennis Conner contacted 3M seeking any assistance that might help improve the performance of his yacht, the Stars & Stripes, in the upcoming race. Conner told 3M that it was 3M's reputation for innovation that prompted the call. Conner was put in touch with Frank Marantic of 3M's Commercial Graphics Laboratory. Marantic was already experimenting with a drag-reduction film for aircraft. Using his knowledge of microreplicated dragreducing films and 3M's expertise in adhesives, Marantic created and attached to the hull of Stars & Stripes a "ribblet film" that reduced surface tension and drag, allowing the yacht to cut through the ocean with less resistance. Conner later won the America's Cup with Stars & Stripes. 3M's role in Conner's victory created a lot of interest in and excitement about the future of microreplication. Public relations tied to the victory generated calls from other outsiders seeking assistance or advantages from 3M products. It also made 3M management and scientists realize that microreplication could be expanded even further than previously thought, including into products such as pipe liners that reduce friction drag as liquids flow through pipes. Abrasives Microreplication had made its way into 3M's abrasives group by the beginning of the 1990's. Prior abrasives technology involved using positive and negative charges to randomly attach particles to sandpaper, resulting in a "rock garden" appearance under a microscope. With microreplication, tiny, three-dimensional abrasive structures can be applied to a backing in a precise pattern. For the user, the benefits of the new Trizact™ abrasive, introduced to the public in 1995, are numerous: a superior finish, a reduction in the number of steps required to finish products, and a product four times more durable than conventional sandpaper. Microreplicated abrasives have been used in the production of many products, including surgical implants and instruments, golf, clubs, turbine engine blades and doorknobs. These abrasives are also used in the electronics industry, where they are replacing an abrasion process using abrasive slurries that is variable and difficult to control. The greater predictability and control offered by microreplicated abrasives leads to higher yields and less waste for semiconductor manufacturers. Adhesives 3M scientists used microreplication to create new adhesive products as well. For example, 3M combined its core technologies in non-woven materials and microreplication to create hook-and-loop fasteners for disposable diapers. These fasteners hold even when exposed to powder, lotions and oils. Sold in conjunction with 3M's fluted elastic materials which are used in diaper waistbands, these fasteners have enabled 3M to expand its presence as a supplier in the disposable diaper market. Adhesives created with microreplication are also employed in automobile manufacturing. Components attached using microreplicated surfaces have stronger bonds and higher sheer strength than alternative bonding methods. Brightness Intensity Products Based on its research and development work in optics and optical films, in 1991 3M introduced a privacy film designed for ATMs to prevent others from reading the screen while a customer executed a transaction. This screen also provided better daytime visibility. Shortly thereafter, 3M modified this product and began offering filters that could be attached to computer monitors to reduce glare and increase privacy. As glare reduction reduces eyestrain, 3M’s filter made it easier for people to view monitors for long period of times, whether at work or at home. 3M also used micro-louver technology to make the screen appear black when it is viewed from side angles. This feature is especially important to those working with sensitive data in a busy office environment. These screens were sold to end users via the distribution channels established by 3M's Commercial Office Supply Division. In 1993, 3M introduced a Brightness Enhancement Film for laptop displays. This film enabled manufacturers to increase the brightness of the display screen while simultaneously reducing the drain on battery power. This enhancement film is made by etching thousands of microscopic prisms into a clear film. These prisms focus the light toward the viewer so effectively that one layer results in a 50% increase in brightness. The film enabled 3M to control the lion's share of the market and has lead to relationships with market leaders including Sharp and Hitachi. A second-generation film, introduced in 1995, provides greater design versatility and better viewing angles and increases screen brightness. These films are transferable to all types of electronic displays, opening up huge potential markets for 3M (see Table 1). Table 1 Market Cathode Ray Tubes (TV's, computer monitors, etc.) Laptop Displays Cellular Phones, Pagers, etc. Estimated Size (1996) 200 million units Growth Rate 6% annually 20 million 50+ million 20% annually Rapid growth expected Source: 3M Presentation to Financial Analysts, August 1996 Competitors While no one organization competes with 3M on all product platforms, it has encountered strong competition in specific business lines. In particular, Avery Dennison Corporation, with its array of adhesives; Fuji Film U.S.A and Kodak Company, with their respective film offerings; and Norton Materials, which produces high quality abrasive products, compete with 3M. Avery Dennison Corporation S. Stanton Avery, who invented the world's first self-adhesive label and pioneered an industry on the strength of that invention, founded the company in 1935. Management’s vision for Avery Dennison is to be the global leader in self-adhesive base technology. It aggressively pursues this vision through technological innovation and leadership in adhesives and materials combinations. Today, Avery Dennison is a global leader in pressure sensitive technology, and develops, manufactures and markets innovative self-adhesive solutions for consumer and industrial markets. In 1996, the pressure-sensitive adhesives and materials units contributed $1.7 billion in net sales. Avery Dennison has established the Avery Research Center in Pasadena, CA, to conduct fundamental research in new pressure sensitive adhesives. Avery Dennison operates 200 manufacturing and sales facilities to sell its products in over 89 countries worldwide. Norton Materials Norton Company / Abrasives Division is a manufacturer of grinding and mounted wheels, grinding segments, and non-woven dressing finishing purposes. Norton Company is a subsidiary of SaintGobain, a French conglomerate. In 1996, the company had approximately $500 million in annual sales. Norton’s size is typical of firms in the abrasives industry, which is highly fragmented with many small niche players carving out particular territories. Fuji Photo Film Co., LTD. Fuji Photo Film Co., LTD., headquartered in Tokyo, Japan, is a leading manufacturer and marketer of imaging and information products. Fuji began operations in 1934 with the production of a professional 35mm motion picture film. On the strength of its research laboratories, Fuji soon moved into amateur still films, videotape, and 8-inch floppy disks. The company entered the North American market in 1955 and culminated a decade of rapid growth with the establishment of its Fuji Photo Film U.S.A., Inc. subsidiary in 1965. Today, the company is the world’s second largest and Japan’s largest producer of photosensitized materials. In the fiscal year ending March 1997, the company posted net sales of $10.1 billion. Kodak Company On January 1, 1881, George Eastman and Henry A. Strong formed a partnership called the Eastman Dry Plate Company. On the strength of the technological development of film in rolls, the partnership evolved into a successful concern: the Eastman Kodak Company, formed in 1901. From these modest beginnings, the Kodak Company now boasts manufacturing operations in Europe, South America, Canada and the United States. Kodak products are marketed by subsidiary companies to customers in more than 150 countries. George Eastman founded Eastman Kodak on an entrepreneurial spirit that remains alive today. An outpouring of new camera films for consumers has resulted from new film emulsions designed in Kodak’s worldwide research laboratories. Kodak T-Grain emulsion technology is the foundation of many of Kodak's improvements in film quality. Kodak expects this innovation will enhance and extend traditional photography and believes it is the highest quality imaging technology available, despite the introduction of electronic and digital technologies. Conclusion There are currently over a dozen 3M laboratories experimenting with microreplication, and 3M executives expect to generate approximately one-quarter of 3M's total revenues from products based entirely or partially on microreplication by 2000. Even everyday items such as mouse pads can be improved though microreplication. 3M's Precision Mousing Surface, introduced in 1996, provides smoother starts and stops and allows more accurate control over the cursor. The less-slippery surface lets users keep their hands and fingers more relaxed as they manipulate the mouse to move the cursor toward its destination, reducing the risk of carpal tunnel syndrome. When asked about the origin of the idea for such a product, a 3M engineer responded that it was not consumer demand but instead "unarticulated customer needs." During the course of his career, Roger Appeldorn was named a 3M Corporate Scientist. Also, for his work in advancing microreplication technology, he was named to the Carlton Society prior to his retirement. Another of Appeldorn's associates, Tim Hoopman, was named to the Carlton Society in 1997. Interestingly, while many products and product families have ties to microreplication, both Appeldorn and Bill Coyne, Senior Vice President, Research and Development, believe that "the big Kahuna is still out there" - the application of microreplication technology that will change the world. At 3M, the search continues. Exhibit 1 List of Core Technologies & Competencies Adhesives Cardiovascular devices Ceramics Chemical power systems Coated abrasives Copper interconnects Dental materials Diamond-like films Drug delivery Electroluminescence Electromechanical systems Films Filtration Flat-panel-display components Fluorochemicals Fluoropolymers Imaging Infection control Mechanical fasteners Melt processing Molding Metal matrix composites Microstructured surfaces Non-woven fibers Optical fibers & connectors Optics Pharmaceuticals Porous materials & membranes Precision coating Specialty chemicals & polymers Surface modification Vibration dampening materials Wound management Exhibit 2: Microreplication product expansion chart (adopted from Fortune, 5 February 1996) Exhibit 3 Historical Selected 3M and Competitor Financials Key financial figures for 3M (Dollars in millions, except per share data) 1996 1995 1990 1985 1980 1975 1970 Net sales Operating income Net income Net income per share Total assets Long-term debt Stockholders' equity Return on average stockholders' equity R and D expenditure Number of employees at year end Stock price at yearend $14,236 2,491 1,526 3.65 13,364 851 6,284 $13,460 2,221 9,76 2.32 14,183 1,203 6,884 $13,021 2,191 1,308 5.91 11,079 760 6,110 $8,117 1,188 664 2.89 6,968 431 4,008 $6,080 1,188 668 2.85 5,061 346 3,308 $3,127 501 263 2.29 3,024 424 1,847 $1,687 350 188 3.35 1,500 54 1,076 24.4% 947 19.2% 883 22.70% 675 17.2% 507 21.2% 283 14.8% 143 17.5% N/A N/A 74,289 83.00 85,313 66.38 89,601 85.75 88,093 44.88 86,898 29.50 78,427 55.50 49.50 Selected financial figures for competitors for 1996 Kodak Fuji Film1 Avery Dennison Net Sales Net Income Total Assets Stockholders' Equity R&D expenditure Number of Employees Stock price, year end 1996 15,968 1,288 14,438 4,734 1,028 94,800 80.25 9,345 628 15,908 10,788 630 29,903 40.833 3,223 176 2,037 832 55 15,800 35.88 Saint-Gobain2 (Norton) 17,467 826 N/A 2,339 N/A N/A 158.073 Notes: 1 Dollar figures calculated using exchange rate of 1 dollar = 116.10 yen, as of 12/31/96 2 Dollar figures for Saint-Gobain calculated using exchange rate of 1 dollar = 5.2318 French francs, as of 12/31/96 3 Stock prices for Fuji and Saint-Gobain are from 12/7/97. Source for exchange rates: 164 Currency converter OANDA, www.oanda.com Exhibit 4 3M's Major Innovations, 1902 - 1996 1902 Minnesota Mining and Manufacturing Company founded in Two Harbors, Minn. 1904 First sandpaper is made. 1921 3M's first laboratory develops 3M(TM) Wetordry(TM) Waterproof Abrasives. 1925 Dick Drew, a young researcher, acting on his own initiative, develops Scotch(TM) Masking Tape. 1930 Drew invents Scotch(TM) Transparent Tape. 1931 First adhesives and coating products are introduced. 1932 First colored roofing granules are produced. 1935 First automotive underseal coating products. 1937 Central Research Labs are established to conduct long-range research in materials and technologies. 1939 First traffic sign of 3M(TM) Scotchlite(TM) Reflective Sheeting went up in Minneapolis. This was the first of many reflective and retro-reflective products. 1945 First electrical tape with vinyl plastic backing is introduced. 1947 Scotch(TM) Magnetic Tape, the first commercially acceptable magnetic audio recording tape is introduced. 1948 Nonwoven fabric developed. The technology has since been "spun-off" to produce Scotch-Brite(TM) Cleaning and Finishing products, Thinsulate(TM) Insulating Materials, surgical masks, absorbent materials for oil and other hazardous liquids, as well as many medical and surgical tapes. Scotch(TM) Filament Tape introduced. 1950 Scotch(TM) Surgical Drape introduced. 1951 3M Technical Forum is established to "encourage free and active interchange of information and the cross-fertilization of ideas. First fluorochemicals produced. 3M presensitized photo-offset printing plates introduced. 1952 Electrical insulation products, 3M(TM) Scotchlok(TM) Electrical Spring Connectors. 1954 Scotch(TM) Magnetic Video Tape used in the first recording of television pictures. 1956 Scotchgard(TM) Fabric and Upholstery Protector introduced. 1958 Scotch-Brite(TM) Floor Cleaning Pads introduced. 1959 Scotch-Brite(TM) Cleaning Pads for consumers introduced. 1960 3M(TM) Steri-Strip(TM) Wound Closures introduced. The first medical wound closure tape. 1961 3M(TM) Steri-Drape(TM) Surgical Drapes. The first sterile, disposable surgical drapes. 1962 3M(TM) Tartan(TM) Track. The first synthetic running track. Scotch(TM) Magic(TM) Transparent Tape is introduced. 1963 Carlton Society formed to honor extraordinary scientific and technical contributions to 3M. 1964 3M introduces Dry Silver technology. Produces high- contrast or continuous imagery by heat process in seconds, replacing liquid chemicals, powders or toners to make prints from microfilm. 1967 The first disposable face masks for respiratory protection developed. 1969 3M(TM) Light Water(TM) Fire Fighting Foam introduced. 1970 3M(TM) Scotchban(TM) Paper Treatment developed. Makes grease-proof food packaging possible. 1972 3M Data Cartridge technology revolutionizes computer data storage. 1973 3M(TM) Trimax(TM) Medical X-ray Film introduced. 1975 3M Pollution Prevention Pays (3P) introduced, leading to reductions of more than 1.3 billion pounds of pollution. 3M(TM) Buf-Puf(TM) Skin Care Products introduced. 1978 3M Fire Barrier Sealant developed. Heat-activated material that helps prevent the spread of fires. 1979 Thinsulate(TM) Thermal Insulation introduced. Light- weight warmth with much less bulk than previously possible. 1980 Post-it(TM) Notes introduced. The sticky yellow notes that revolutionized communication by message. Scotch(TM) VHB(TM) (Very High Bond) Tapes introduced. Tapes strong enough to replace rivets and screws in fastening operations. 3M(TM) Scotchcast(TM) Casting Tape material introduced. Scotchcast casting tape is 50 percent lighter, yet stronger, than plaster casts. 1984 3M Medical Laser Imager introduced. The first imager to make fast, highquality medical images from digital data. 1985 First successful optical disks for information storage, video and audio reproduction. First refastenable diaper tapes introduced. 3M(TM) MS2(TM) Modular Splicing System introduced. Makes joining telephone cables fast and easy without interrupting service. 1988 3M(TM) Fibrlok(TM) Fiber Optic Splices introduced. This easy-to-use, high- performance product reduced splicing time from at least 20 minutes to one minute. 1989 Maxair(TM) Autohaler(TM) Asthmatic Inhaler introduced. Accurate dose inhalers triggered by breathing. 1990 Hot melt fiber optic connectors. The first fast, easy connections for fiber optic cables. 1991 3M(TM) Scotchprint(TM) Electronic Graphic System, the first alternative to short run, full-color, screen-printed graphics introduced. 3M(TM) Scotchshield(TM) 3 Window Film. Shatter-resistant, heat- and cold-resistant window protection. 1992 3M(TM) APC(TM) Adhesive-Coated Orthodontic Brackets are introduced, the first brackets to feature pre-applied adhesive. Blue-green laser developed. Future applications in communications, data storage and imaging markets. 1993 Scotch-Brite(TM) Never Rust(TM) Wool Soap Pads introduced. Made from recycled 3M polyester film waste. 3M SelfCheck Automated Library System. The first commercial automatic book check out system for libraries. 1994 O-Cel-O(TM) StayFresh Sponges. The sponge kills germs and their odors on the sponge, and is the first on the market to use anti-microbial technology. 3M(TM) DryView(TM) Laser Imaging Systems. Combines for the first time, the high quality of wet-processed silver halide film with the convenience and cost savings of dry processing. 3M(TM) Active(TM) Strips Flexible Foam Bandages. An advanced water-resistant adhesive provides extra sticking power on perspiring skin. 1995 3M structured abrasives. The first abrasive product with a precise, structured surface composed of abrasive composites bonded to a flexible backing. Airomir(TM) Inhaler(TM) is introduced. First medicinal aerosol that does not rely on a chlorofluorocarbon propellant. 3M(TM) Precise Mousing Surface. The first mouse pad with patented microreplication technology that offers users precise pointing of their mouse. 1996 3M(TM) Dual Brightness Enhancement film. Increases the brightness of laptop computer screens by 60 percent and delivers sharper readouts on pagers, cellular phones, calculators and other devices with electronic displays. 3M(TM) HFEs (hydrofluoroether). A family of products designed to replace chlorofluorocarbons (CFCs) and other ozone-depleting substances used in cleaning solvents, coolants, carrier fluids and other materials.