Innovation at whirlpool- creating a core competency

1. CASE ANALYSIS
ON
Innovation at Whirlpool: Creating a
New Competency
BY,
HARISH,2T3-08
SOWJANYA,2T3-17
ATHUL,220-04
SRI PRIYA,2T3-18
RAMYA,2T3-20

2. ABOUT WHIRLPOOL AND ITS BRANDS
 Whirlpool Corporation has grown from its origins as a Midwestern U.S.
company to the major appliance industry’s global leader
 60,000+ employees
 Manufacturing in North and South America, Europe, Asia and Africa
 Nine brands, five with over $1 billion in sales
 Leads the $120 billion global home appliance industry with 2013 sales of
about $19 billion
 Products sold in over 130 countries around the world
 Manufacture appliances across all major categories, including fabric
care, cooking, refrigeration and dishwashers

3. THE BEST BRANDED CONSUMER PRODUCTS
…… IN EVERY HOME AROUND THE WORLD
BEDROOM(S)
KITCHEN / DINING LAUNDRY ROOM
BASEMENT
OUTDOOR GARAGE
Clothes revitalization
Room air conditioning
Dehumidifiers
Air coolers
Washer, dryer, sink
Clothes revitalization
Laundry storage solutions
Refrigeration
Dishwasher
Cooking
Ventilation
Portables
Cookware
Storage
Water filtration
HVAC
Freezers Air treatment
Storage
Appliances
Workstations
Flooring
Grills
Cooking
centers

4. Case Facts
 This case is about the organization development (OD) initiatives undertaken at Whirlpool
Corporation (Whirlpool) to create a new core competency in the form of building an
innovation culture within the organization.
 In the late 1990s, Whirlpool was faced with stagnation in revenues, profits, and market
share.
 According to analysts, this was a direct result of the stagnation in its product line due to
the lack of innovative products.
 Whirlpool used the services of Strategos, a consultancy firm, to develop I-consultants and
various I-mentors from within the organization, to form a coaching network to
coach/mentor the employees and help them develop an innovation mindset.
 The case discusses the various steps initiated by the top management at Whirlpool to
bring about a change in the company's corporate culture and embed innovation as a
core competency. Analysts felt that these efforts had borne fruit, judging by the
consistent growth in Whirlpool's revenues since 2002.

5. ISSUES ADDRESSED IN CASE
 Understand the issues and challenges faced by a company in bringing about a change in
organization culture
 Appreciate the role of the senior management in culture change initiatives
 Appreciate the importance of coaching/mentoring in changing the organizational culture
and creating a core competency
 Appreciate the use of IT for Knowledge Management and Innovation management

6. Organisational Development Initiatives by
Whirlpool
 Innovation as a Core Competency
 Laying the Foundation
 Building the Framework
 Reinventing the Corporate Culture
 The Results

7. Need for change in Corporate culture
 By the late 1999, the top management at Whirlpool found itself unable to drive growth
in its businesses. The company's revenues, profits, and market share were stagnant. And
this, despite the fact that Whirlpool had adopted various operational initiatives to cut costs
and achieve economies of scale in its operations. In December 2000, Whirlpool announced
that it would cut 10% of its international workforce and initiate restructuring of its global
operations

8. Innovation as a Core Competency
 Whitwam believed that only innovative products could command premium prices and build
customer loyalty.
 He emphasized the need to develop a culture that would spur Whirlpool's growth through
consumer-focused innovation.
 This would be a part of the company's competitive strategy.
 In fact, Whitwam wanted to make innovation a core competency at Whirlpool.
 Moreover, he did not want creativity to be limited to a few people in the organization; he
wanted all the employees to be creative.
 Nancy T Snyder (Snyder), was made the vice president of leadership and strategic competency
development at Whirlpool

9. LAYING THE FOUNDATION
• 1999 - Whitwam started innovation
• 25 workers were send to Head Quarters
• It was a failure
• Realized the need for a structured approach
• Created a new position – Director, Strategy and Deployment
• 2000 – Consultants from Strategies trained 75 employees
• Whitwam was supportive to the innovators.

10. Building the Framework
 While the core groups were being trained, Snyder focused on getting the rest of the
company's global workforce involved in the initiative through the Internet and
innovation fairs.
 Strategos helped Whirlpool to put the necessary infrastructure in place and to use
Information Technology (IT) to facilitate the objective.
 Whirlpool re-engineered management processes that slowed down innovation and
used IT to improve and accelerate the innovation chain from idea to final product.
 Instead of going in for a few big projects, it encouraged many low-cost "stratlets"
(also known as small strategies)...

11. Reinventing the corporate culture
 Employees were enthusiastic about the various innovation initiatives started by Whirlpool
between 2001 and 2002 and it was evident from the fact that the KM site recorded up to
300,000 hits per month.
 In 2002, Whitwam decided to bring in more structure into the innovation process so as to
increase the participation to include all employees and also to get more practical ideas.
 In monthly I-Board meetings, the top management evaluated and funded new proposals.
Only new ideas that helped enhance Whirlpool's existing brands or products would be
considered (Refer to Figure I for flow of ideas from the employees to the decision makers).
 Snyder also came out with an "I-box" to ensure that only brilliant ideas reached the I-board.
The I-box was a two-step graphing tool. In the first step, the employees had to
demonstrate that their proposals were something that people would buy. These
arguments had to be backed by market research...

12. Flow of ideas from the employees to the
decision makers

13. The Results
 According to the company, revenues from innovative products were almost US$800 million in 2005
as compared to just US$10 million in 2001. The share price had also doubled .
 Between 2003 and 2005, Whirlpool's revenues had grown at an average of 9% per annum. Fettig
had attributed one third of this growth rate to innovative new products.
 As of April 2006, Whirlpool's innovation pipeline had 568 projects under development of which 195
were being scaled up for commercial launch.
 The company expected these new appliances to rake in another US$ 3.3 billion in annual sales
once they were launched .
 Commenting on these improved results, Fettig explained, "We're seeing evidence of what we call
a "want in." In other words, consumers see something that is so different or innovative that they
want to buy it as opposed to: they have to buy it...

14. OTHER FACTORS

15.  If we sieve the entire case to obtain the sole reason that has driven the change, we get
"Competition“
 Competition resulted in stagnation of the company's growth and had reiterated the
need to innovate, in order to survive the onslaught
 Change will always be resisted in large organizations: first from the top Management
and then the rest.
 The credit must go to the Top Management for taking the initiative and holding things
together
 Apart from innovation, Effective Leadership, Team Work and collaboration, Belief in the
system and the Willingness to improve were the factors responsible to bring about this
change

16. Should creativity
be restricted to a
few people??

17.  In most conventional Organizations, innovation/creativity is restricted to a
few people
 Specialized Training
 R&D
 In some, like Whirlpool, innovation/creativity comes from everyone in the
organization

18. Advantages
 All employees would be involved in the innovation process and would look for ideas
and insights in their routine work
 The number of ideas would be huge
 Acts as motivation
 More practical ideas would come in through employees closer to the end customer
 Synergy due to cross-fertilization of ideas between different groups > Eg., Design and
Marketing
 Creates a culture where the importance of innovation would be ingrained in
everyone

19. DISADVANTAGES
 While going for quantity, quality of the ideas may be hampered
 It takes time to filter the sheer number of ideas flowing in
 Employees may be distracted from their regular work
 A lot of time and money will be required in training all the employees in this
direction

20. AS A RESULT OF ABOVE FACTORS
WHIRLPOOL COULD…………

21. 100+ YEARS OF INNOVATION
1911-1948 1948-1980 1980s 1990’s 2000s Today
Manufacturing
Technology,
Single Product
Single
Customer
Multi-Product
and Whirlpool
Brand
Multi-Brand,
U.S. Trade
Expansion
Globalization
Top
Consumer
Brands,
Maytag
Acquisition
Leading
Brand
And
Consumer
Product
Company

22. FROM A “SEA OF WHITE”
TO “EMBEDDED INNOVATION”

23. INNOVATION STRATEGIC APPROACH
“Leading Global Appliance
Manufacturer”
“Leading Global Innovative
Products Company”
“Leading Global Consumer
Brand/Products Company”
GROW THE CORE + EXTEND THE CORE +
Major appliances
Products or services which are
dependent on and related to
our core business
EXPAND BEYOND THE CORE
Direct sales
High-margin, stand-alone
businesses that leverage our
core competencies and core
business infrastructure
WHIRLPOOL`S INNOVATION DEFINITION
1. Unique and compelling solution valued by our customers and aligned to our brands, and…
2. Creates sustainable, competitive advantage, and…
3. Creates differentiated shareholder value
WHIRLPOOL CORPORATION  CONFIDENTIAL 1 November 2014  23

24. TWO KEY QUESTIONS:
- WHAT IS INNOVATION ?
- WHAT IS THE SECRET ALCHEMY TO MAKE IT HAPPEN ?
…… many different answers
all of them true BUT more then them INNOVATION is :

25. A NEW EXPERIENCE FOR
YOUR CUSTOMERS
... and a new experience for your people

26. FROM A “CENTER OF RESOURCES”

27. TO “CENTER OF COMPETENCIES”
“What is the new boss ?”
“The new is that the only thing that counts is BRAIN”

28. COMPETENCIES ARE A MATTER OF COLLABORATIVE
ECOSYSTEM  Experience is complex and goes beyond
products
 Competencies to drive the “new experience”
are multiple and complex and can not be
single domain of a company
 Create collaborative ecosystems with common
objectives is crucial to built up a “competency
driven organization”
 The role of “change agent” is crucial to bridge
the different part of the ecosystem
 Change agent objective is to have the
ecosystem working not your company getting
better off vs. others in the system

29. WHAT IS THE ROLE OF THE LEADERSHIP
 Create and sustain “change agents”
 MULTISECTORIAL
 EXTREMELY GOOD IN UNDERSTANDING THE RELEVANCE
BEHIND THE CONNECTIONS
 EXTREMELY GOOD IN COMMUNICATE
 Create a WIN-WIN collaboration
 EVERYBODY HAS A POSITIVE RETURN
 EVERYBODY HAS AN INCENTIVE TO GUARANTEE SUPPORT
 EVERYBODY WINS
From “LEADER OF A FUNCTION” to “LEADER OF AN ECOSYSTEM”

30. Conclusion
 According to Fettig, Whirlpool's approach had been quite healthy. He felt that
Whirlpool was in a position to leverage on innovations devised in one part of the
world and apply them to another part of the world.
 According to his estimates, as of April 2006, about 1,500 employees out of the 60,000
Whirlpool employees worldwide worked on innovations on any given day. Around
5,000 people worked on innovations in any given year. Fettig said that Whirlpool
could increase this figure to 10,000 or 15,000 employees.
 Leadership strategies when aligned with the business goals of the organization, at
whirlpool, worked as a turnaround strategy and changed the face of the company
completely.
 Every organization can thus, rely on the Leadership strategies partially, if not
completely, and create the magic of success.

31. Concepts and Learning
 Importance of change to sustain in a market
 Importance of developing a core competency
 The role of a change agent
 Process of innovation
 Strategic leadership and Change management
 Self managed teams
 Mentoring
 Learning organization
 Leadership of culture and ethics