Several articles and books in the business press have heralded 3M for its product innovation and entrepreneurship. At the same time, good financial planning and tight cost controls are important to 3M. 3M accomplishes its objectives by using financial targets to set goals and measure performance. In particular, the company seeks to derive 25 percent of total sales each year from new products.
Many groups are involved in budgeting for new products. People from marketing estimate market demand. Research and development, manufacturing, and finance people budget costs and revenues. If new equipment is involved, manufacturing, engineering, and finance work out the cost of that equipment and how fast it will run. Why are people from so many different functions involved in the budgeting process?