Earlier this summer, I had the pleasure and honor of joining a
group of 3M executives for lunch, and was fortunate to sit across from
Ken Bartelt. Half-way through my hoagie, I asked him if 3M kept track
of how many of their products were new at any point in time. Ken’s
answer was immediate, detailed and illuminating.
Yes, 3M keeps careful track of new product development, using a measure called the New Product Vitality Index (NPVI), which quantifies the percentage of 3M’s sales from products that were introduced during the past five years. Stop here a minute, and guess what that number is…
Ken told me that in 2011, the New Product Vitality Index was 32%. Thirty-two percent. Think about that. 3M has over 55,000 products, and nearly a third of them are new in the past five years. There’s a company that innovates!
How do they do it? Ken explained that many of the new products are
re-makes of existing products, but with a new competitive edge. For
instance, one of 3M’s original products (introduced nearly 100 years
ago) was sandpaper. But almost every sandpaper that 3M now sells is new
in the past five years, because 3M innovation in manufacturing has
resulted in sandpapers with sharper little particles that do the work,
so the sandpaper is distinctly more effective than other brands, and can
be sold for a premium.
What Ken didn’t tell me is that 3M has tracked the NVPI since 1988, and that it has risen by more than 50% in the past 6 years. More than 50 percent. During this time, the percentage spent on research and development has remained steady at 5 to 6 percent. Larry Dignan of smartplanet wrote a fine article (with a great graph) about this last summer, describing insights from 3M CFO David Meline about how 3M structures R&D.
Over lunch, Ken had mentioned that 3M is aiming to raise the NPVI to 40% by 2015. It doesn’t really matter if we reach that number exactly, he mused. Just having the goal there — aggressive, measurable and very visible — makes the challenge palpable and 3M talent will rise to it.
Hats off to the team that looked at 3M’s NVPI in 2005 — an enviable 21% — and aimed to nearly double that over the subsequent 10 years. And thanks, Ken Bartelt, for one of the most interesting lunch conversations ever.
Yes, 3M keeps careful track of new product development, using a measure called the New Product Vitality Index (NPVI), which quantifies the percentage of 3M’s sales from products that were introduced during the past five years. Stop here a minute, and guess what that number is…
Ken told me that in 2011, the New Product Vitality Index was 32%. Thirty-two percent. Think about that. 3M has over 55,000 products, and nearly a third of them are new in the past five years. There’s a company that innovates!
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| photo by Brock Davis |
What Ken didn’t tell me is that 3M has tracked the NVPI since 1988, and that it has risen by more than 50% in the past 6 years. More than 50 percent. During this time, the percentage spent on research and development has remained steady at 5 to 6 percent. Larry Dignan of smartplanet wrote a fine article (with a great graph) about this last summer, describing insights from 3M CFO David Meline about how 3M structures R&D.
Over lunch, Ken had mentioned that 3M is aiming to raise the NPVI to 40% by 2015. It doesn’t really matter if we reach that number exactly, he mused. Just having the goal there — aggressive, measurable and very visible — makes the challenge palpable and 3M talent will rise to it.
Hats off to the team that looked at 3M’s NVPI in 2005 — an enviable 21% — and aimed to nearly double that over the subsequent 10 years. And thanks, Ken Bartelt, for one of the most interesting lunch conversations ever.
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