Core Competence Follies at 3M

This is an old video depicting the process for a $20M investment in the laserdisk division. It has two uses in class. First it illustrates some limits of “core competence” (as the term is usually used) as a guiding principle for analyzing whether business units will add value — the clip describes 3M’s competence, with a straight face, as “two dimensional products.” Second, the video might be described as depicting an exercise decision for a real option that was acquired earlier. One can explore the role of core competence and other organizational factors in making such exercise decisions.

3M, of course, is extremely sophisticated in it’s management of core competencies — maintaining deep expertise in a well-defined set of technologies. The only one with the wool pulled over their eyes was the filmmaker who really did believe that 3M’s core competence was 2 dimensional products…

Contributed by Russ Coff

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