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3M's output of new product launches tumbled in the years before CEO Bill Brown took the helm.
Brown set a strategy of boosting new product launches, and the results have been impressive.
In 2025, 3M launched twice as many new products compared to 2023, and another increase is planned for 2026.
In August 2024, 3M (NYSE: MMM) CEO Bill Brown diagnosed one of the industrial giant's core problems just a few months after taking the helm. A years-long slide in innovation, as measured by new product launches, was crippling the company's growth engine. "The simple fact is that our products are aging," Brown said during a conference call.
Image source: 3M.
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In the past, 3M was a prolific innovator, launching at least 1,000 new products each year. While the company's stable of time-tested products is important to its success, you don't find the next blockbuster product unless you try a lot of new things. By 2024, 3M had largely given up, launching fewer than 170 new products that year.
While 3M still has work to do, the company successfully restarted its innovation engine in 2025 and plans to rev it up further in 2026.
During the fourth-quarter earnings call on Tuesday morning, Brown disclosed that 3M launched 284 new products in 2025. That's up 68% from 2024 and more than double the number of new product launches in 2023. What's more, the company is targeting 350 new product launches in 2026, a 23% increase from 2025. "These new products are vital for our long-term growth and are already contributing to our top line," Brown said.
3M was targeting a high-teens percentage of revenue from products that launched in the past five years, but the company blew past that target in 2025. For the full year, these newer products accounted for 23% of total revenue, and that percentage shot up to 44% as the company exited the fourth quarter.
Overall organic sales grew by just 2.2% in the fourth quarter, but new product launches were a key driver that offset softness in certain consumer, roofing, and auto markets. For 2026, the company expects adjusted organic sales growth of approximately 3%. A $3.5 billion investment in research and development over a three-year period ending in 2027 will support the company's new product launches and help drive improved organic sales growth.
While 3M is fixing one of its core problems by ratcheting up the pace of innovation, other risks remain. The macroeconomic environment continues to pressure demand in some of the company's businesses, and the prospect of additional tariffs related to tensions between the U.S. and Europe could hurt the bottom line.
While investors should be aware of those risks, 3M's valuation looks reasonable. With the company targeting adjusted earnings per share between $8.50 and $8.70 in 2026, the stock trades at 18 times the midpoint of that range. I wouldn't call the stock cheap, but for long-term investors confident in the turnaround story, 3M stock looks like a solid bet.
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 3M. The Motley Fool has a disclosure policy.
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