R&D is investment, not cost, for 3M: Ashish Khandpur
New Delhi: A minor change in plans led to Ashish Khandpur being hired by 3M while he was a doctorate student at University of Minnesota. His adviser fell ill and asked Khandpur to step in and make the presentation to 3M that he was supposed to, and before he knew it, the young man from Meerut,a graduate from Indian Institute of Technology Delhi, had been offered a job by one of the world’s most innovative companies.
Twenty one years later, Khandpur is the global chief technology officer of the US conglomerate which is famous for such revolutionary products as Post-it notes, ScotchTape, and Scotch-Brite pads. In between, his journey which started at the company’s corporate research labs also led to India where he was deputed to drive the company’s mission of building products in India, for India.
On a recent trip to India, Khandpur shared the company’s future plans and innovation efforts. “We openly talk about it because we are not afraid of our competition replicating it,” Khandpur said in an interview.
You set up two research and development (R&D) centres in India five years ago. How successful have these been?
3M has made great progress in India in R&D. We didn’t have much product development capacity or capability prior to 2011. Our research work at these centres is directed towards the needs of India and developing products for India. The needs for India are very specific and unique and anybody who has grown up in India, like me, can appreciate that.
We have over 520 patterns out of these centres for products for India which are sustainably self-sufficient.
To give a few examples, in the automotive sector, we are working on acoustic solutions to reduce sound and give better passenger experience in the cabin of a car. The raised pavement markers on the roads were developed specifically for India because road traffic conditions in India, the volume as well as the hits, are much more compared to other parts of the world. We have to develop products that last longer, and can take weather conditions and dirt and grime on the road. Apart from these, we have products in healthcare for infection prevention, automotive aftermarket area as well as pipe coatings and liners for corrosion protection. We have several of these products in commercialization already.
Also, our 46 technology platforms need to be connected to the needs of the market and customers and the way we do it is through our culture of collaboration. We collaborate across the globe, work as one single team with 8,000 scientists. The Indian team has access to all scientists across the world.
How much of your innovation is about effort and how much is it to do with intuition? What does it take to deliver the right product at the right time?
We focus on the customer and the need. Without a clear focus, you can have lot of papers published and sciences developed, but to apply, you need to understand your customer’s needs.
We always have a portfolio of technology ready. We have a strong portfolio of 46 product platforms because once you understand the market needs, if you go back and start developing technology at that stage, the game is already over; the customer is not going to wait.
So, if you don’t have something already on your burner that you can quickly adapt to meet the needs of the customer, it will not happen.
You first develop technology, and then create the market. Does is entail a fair amount of risk?
It does. One of the strategies of investing in our innovation is to continuously invest in R&D. We invest close to 6% of our sales revenue in R&D now; we were at 5.5 % in 2012. That was $1.8 billion last year and $8.5 billion in the last five years. When you put in that amount of money, you would surely want to see the outcome. 3M has a great history to show it works. We have much higher margins, we continue to grow and the return on investment of the invested capital is good. All these things from a shareholder’s perspective make sense, and there is no doubt that this model is working. R&D is investment and not cost, for us.
Do you plan to invest further in India in 2017?
India is a focus country for us, it is one of the fastest growing subsidiaries we have in the world. Our focus in developing talent in India and investments will be accordingly on the aggressive side.
What are the new markets for you in India?
Among new markets are automotive electrification, intelligent infrastructure, technology to improve safety and productivity, industrial safety and population healthcare management. We have access to a lot of patient-related data. We can use that big data to create analytics to improve the quality of healthcare and to take decisions that can improve productivity and efficiency of hospitals. We can also develop products just for India in areas such as general manufacturing, railways and transport to ensure higher efficiency in railway cabins and so on. We try to get insight into customer needs. Technology evolves the market but the market, too, evolves technology.
What share of 3M’s annual revenue comes from these products?
India revenues are approximately Rs2,500 crore and 3M is a $30 billion company. If we look at the growth in our strategic plan over the next five years, India will be in the top five contributors to that growth.
We invest about 5% of our sales in India in R&D. If the growth needs more investment, we are happy to take that call.
You have launched hundreds of products, over the years. What is the one thing that unifies all of these?
Our technology platforms, based on needs of the market, unify all of these. In 2006, we had around 40 platforms and now we have 46. Based on the needs of the markets, we continue to scale up and build capabilities in new areas. We call it a platform when we have multiple product lines for multiple markets using the same technology. We are leveraging the same tech to build different products.
We connect the different markets to the common platform of technology. On our technology platforms, you can start making products in very different directions using the same technology. For example, in adhesive sector, we have a product that is Post-it—designed not to stick permanently and be removed without doing any damage to the surface it was applied to. On the other hand, we have structured adhesives that hold aeroplanes together. And then there are dental adhesives that can be used in one’s mouth to fill cavities. We also have adhesive tapes. So, the same adhesive platform continues to generate different revenue streams by connecting it to different markets, and this goes back to the central model that we have of keeping the technology at the centre of the company.
How do you encourage employees to be innovative?
Our CEO (Inge Thulin) is a strong proponent of innovation. Investing in technology is a key strategy and one of the fundamental layers in running the company. Innovation is central to both our strategy and vision.
People at 3M are empowered to take risks, are not afraid to fail, since it is not seen as a failure. We tell people how certain errors led to great innovations in the past. We create a culture of entrepreneurship and that’s an ingredient of leadership.
We have 15% time scheme wherein people can use company resources to follow what they are passionate about. They can engage other people around on that project too. Several of these 15% time projects have led to multi-billion dollar opportunities for us, including the Post-it notes.
All these things taken together create the magical thing called innovation. Everything goes back to hiring good and creative people.