FORTUNE home comp_profiles investor careers smallbiz tech
SEARCH



Magazine Customer Service
FSB Special Sections
Fortune Datastore
Advertising Information

Current Issue
Web-exclusive Articles
FAQ
Contact FSB
Press Center
Magazine Advertisers


William McKnight
William McKnight set principles for 3M
(Photo: 3M)
Send to a friend
Print
  íP Home: America's Classic Companies
íP Quiz: Creation Myths
íP Quiz: How Well Do You Know These World-Famous Products?
  3M: The Magic of Mistakes
íPThe Square Pegs
íPFORTUNE 500
íPAmerica's Most Admired Companies

THE GREAT AMERICAN COMPANY
3M: The Magic of Mistakes
A mining company built on a mistake stuck it out until a young man came along with ideas about how to tape those blunders together as innovations--leading to decades of growth.
FORTUNE SMALL BUSINESS
Wednesday, March 19, 2003
By Paul Lukas


"3M" comes from "Minnesota Mining & Manufacturing," but those three M's might better stand for Mistake = Magic = Money. Throughout its 101-year history, many of 3M's breakthrough products have followed a similar arc: A 3M customer identifies a problem, and a 3M engineer expresses confidence in being able to solve it. He bangs his head against the wall for years, facing repeated setbacks, until management finally tells him to stop wasting time and money. Undeterred, the engineer stumbles onto a solution and turns a dead end into a ringing success.

Lots of companies like to talk about giving employees the freedom to make mistakes. But 3M found a way to incorporate random chance into company policy, driving its transformation from a struggling startup to a FORTUNE 500 mainstay. When Jim Collins and Jerry Porras, co-authors of the besteller Built to Last (1994), asked Bill Hewlett of Hewlett-Packard for a corporate role model, he replied, "3M! You never know what they're going to come up with next. The beauty of it is that they probably don't know what they're going to come up with next either."

Innovator William McKnight
Year started 1902
Family run 59 years
2002 revenues $16.3 billion
Factoid Folks used Scotch tape to patch cracked turkey eggs and to coat zeppelins.

Although William McKnight, the man responsible for 3M's entrepreneurial culture, was not, in fact, a company founder, he does deserve the credit for what made 3M successful during his 59 years at the company and beyond. Says Noa Staryk, chair of the McKnight Foundation, which McKnight founded in 1953: "There are two values that resonate from my great-grandfather: innovation and risk taking."

McKnight ended up at 3M by mistake. The company had turned him down for a laborer's job in 1906, and when it wanted to hire him as a bookkeeper a year later, he had already decided to accept a position elsewhere. But upon hearing that his mother was ill, he refused the job offer and prepared to go home--only to learn that his mother had recovered. The only option left was 3M. It turned out to be the best mistake that ever happened to the company.

The birth of 3M sounds like the beginning of a bad joke: A lawyer, a doctor, two railroad execs, and a meat market owner form a company in 1902 in Two Harbors, Minn., expecting to get rich. Minnesota Mining & Manufacturing (quickly nicknamed 3M, although that didn't become the company's official name until last year) set up business to mine a superhard material called corundum, which could be made into high-quality grinding wheels. But "like so many others who organized mining ventures in the early 1900s," wrote Virginia Huck in Brand of the Tartan--The 3M Story (1955), "the founders of 3M apparently incorporated first and investigated later." And their corundum turned into a conundrum: Instead of a prized mineral, it was a soft rock and an inferior abrasive. According to Huck, "By the end of 1904, 3M stock had dropped to the all-time low on the barroom exchange--two shares for a shot, and cheap whiskey at that." 3M's raison d'etre had suddenly evaporated.

The founders shifted gears, entering the abrasives business directly by making their own sandpaper, even though their corundum was virtually worthless as an abrasive. 3M had moved to Duluth, Minn., to make the sandpaper, but the local humidity often kept the product from drying properly. Into this comedy of errors came a shy, red-haired 20-year-old, William McKnight, as an assistant bookkeeper. "I was the scaredest boy that ever lived when I applied for that job," he said. Wrote Huck: "His assets were a most brief business school training [five months], inherent determination, and high ambition. No one who saw the quiet, serious boy apply for the job could have possibly predicted that in a very short time he would become the major influence in the success of 3M."

McKnight was soft-spoken but also direct and efficient. As sales manager in 1911, he established the policy of going into the backroom with a client's workmen--where he could demonstrate 3M products and learn their concerns--instead of just dropping off a catalog in the front office with a purchasing agent. In doing so, he realized that 3M's sandpaper was inconsistent at best, inferior at worst. To increase quality control, he believed the company needed someone to facilitate communications between sales and production. Upper management agreed, and thinking McKnight perfect for the job, named him general manager in 1914.

His tenure started--naturally--with a mistake. Just as the company showed a profit, with sales at about $22,000 a month, angry clients suddenly began returning 3M sandpaper. It turned out that several casks of olive oil had spilled onto a shipment of 3M abrasives in transit, and the oil-tainted "sand" failed to retain its adhesion to the backing paper. And no one had noticed the problem. After that debacle McKnight established a research lab to test materials at every stage of production. It was a crude, closet-sized affair--"I had to back out when Mr. McKnight wanted to come in," recalled William Vievering, the first lab employee--but an important first step.

McKnight's move to center the business on research ended up having the dual effect of not only testing ideas but also generating them. He set the tone with his philosophy of "Listen to anybody with an idea." When he received a letter in 1920 from an ink manufacturer requesting bulk mineral samples (not one of 3M's businesses), McKnight wanted to know what the correspondent would do with the minerals. A Philadelphia inventor named Francis Okie had sent the note, and he wanted to develop his invention of waterproof sandpaper. McKnight realized that Okie's idea would rapidly be accepted because it produced less friction than dry sandpaper and didn't generate hazardous dust when used wet. He bought the rights to the idea and hired Okie, and by 1921, 3M had released Wetordry sandpaper, its first breakthrough product. As Richard Carlton, 3M's director of manufacturing and author of its first testing manual, wrote, "Every idea should have a chance to prove its worth, and this is true for two reasons: (1) If it is good, we want it; (2) if it is not good, we will have purchased peace of mind when we have proved it impractical."

The Great American Company
More compelling tales of creation from the entrepreneurs who've changed American life.
Company
Brunswick: Kingpin Kellogg: Champion of Breakfast
Gillette: Blade Runner Mattel: Toy Story
H.J. Heinz: Shake It Up Motorola: Radio Days
Holiday Inns: Be My Guest 3M: The Magic of Mistakes
J&J: Medicine Men UPS: The Whole Package

Read the current issue of FSB Magazine Article Page: 1 | 2  Next >

Try 3 Risk Free Issues of FORTUNE Click Here!
SEARCH FORTUNE BY...
Enter Keyword(s)



HOME | COMPANY PROFILES | INVESTING | CAREERS | SMALL BUSINESS | TECHNOLOGY
© Copyright 2003 Time Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Privacy Policy Terms of Use Disclaimer Contact Fortune