William L. McKnight  (1887 – 1978)

The Man Who Used Risk, Reward & Entrepreneurship To Build A Manufacturing Giant

William McKnight was born in White, South Dakota in 1887 in a sod home on his parents’ homestead. 

At the age of 19 years old in 1907 he left 4 months into a 6 month college business program to join the company where he would work for the rest of his professional life: Minnesota, Mining and Manufacturing, better known as 3M. Founded as a mining company in 1902, the company would pivot to manufacturing sandpaper in 1905. 

McKnight joined the struggling company as an Assistant Bookkeeper, earning $11.55 per week.  He rapidly grasped the company’s financial peril and boldly made suggestions for cutting costs and making better products. Impressed, his boss made him Cost Accountant and two years later he was promoted to run the company’s Chicago office. 

In 1914, seven years after joining the company he was made General Manager and in 1916, at the age of 29 he would become the company’s Vice President. Soon after due to the illness of the company’s president, Edgar Ober, McKnight would be running the company, and in 1929 he would officially take on the title of President, a position he would hold for the next 20 years.

McKnight would take the company from a struggling startup that made sandpaper that alienated customers unhappy the sand wouldn’t stay on the paper because the glue didn’t hold, to a company whose name would become synonymous with cutting edge innovation and one particularly attuned to customer needs and quality manufacturing.

The key to that transformation was McKnight’s focus on people and his confidence in their creativity.  McKnight wanted 3M to become a bastion of new products. His most famous rule was that 30% of revenue should come from products developed within the last four years. Another rule included allowing employees to spend 15 percent of their time on personal projects without telling management. Understanding that mistakes could be made, McKnight established a program where the company would grant $50,000 for new ideas that have already been rejected if they could be successfully monetized. Some of the famous product that resulted from McKnight’s rules system included Post-it Notes, Thinsulate and advanced fiber optics. 

In 1948 McKnight formalized his theory of management: 

As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women, to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.

Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs.

Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.

In 1949 McKnight was made Chairman of the Board and he would finally retire in 1972. He joined company that was on the ropes in 1907 and left it as one of the world’s greatest manufacturing firms 65 years later.  In addition to shepherding 3M through most of the 20th century, McKnight would also spend a great deal of time and money on charitable projects, largely through the McKnight Foundation, the multi billion dollar foundation he established in 1953.

Today, the company he saved and turned into a juggernaut manufactures over 60,000 products around the world and which holds over 100,000 patents. A great deal of that success is directly due to William McKnight’s appreciation for the power of ingenuity, his tolerance for risk, and perhaps most of all, his belief that if you give employees the freedom and incentive to be creative, entrepreneurial even, they can and will achieve greatness.  There’s a lesson there for many of us, both in business and in life.

More reading / Sources Consulted:

They Made America: From the Steam Engine to the Search Engine: Two Centuries of Innovators