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

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

ABOUT WHIRLPOOL AND ITS BRANDS

THE BEST BRANDED CONSUMER PRODUCTS …… IN EVERY HOME AROUND THE WORLD

BEDROOM(S)

KITCHEN / DINING LAUNDRY ROOM

BASEMENT

GARAGEOUTDOOR

Clothes revitalizationRoom air conditioningDehumidifiersAir coolers

Washer, dryer, sinkClothes revitalizationLaundry storage solutions

RefrigerationDishwasherCooking

VentilationPortablesCookware

StorageWater filtration

HVACFreezers Air treatment

StorageAppliancesWorkstationsFlooring

GrillsCooking centers

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.

Case Facts

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

Organisational Development Initiatives by Whirlpool

Innovation as a Core Competency

Laying the Foundation

Building the Framework

Reinventing the Corporate Culture

The Results

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

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

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.

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)...

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...

Flow of ideas from the employees to the decision makers

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...

OTHER FACTORS

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

Should creativity be restricted to a

few people??

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

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

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

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

100+ YEARS OF INNOVATION

1911-1948 1948-1980 1980s 1990’s 2000s Today

ManufacturingTechnology,Single ProductSingleCustomer

Multi-Product and Whirlpool Brand

Multi-Brand, U.S. Trade Expansion

Globalization

TopConsumerBrands, MaytagAcquisition

LeadingBrandAndConsumerProduct Company

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

INNOVATION STRATEGIC APPROACH“Leading Global Appliance

Manufacturer”“Leading Global Innovative

Products Company”“Leading Global ConsumerBrand/Products Company”

GROW THE CORE EXTEND THE CORE+ +

Major appliancesProducts or services which are dependent on and related to

our core business

High-margin, stand-alone businesses that leverage our core competencies and core

business infrastructure

EXPAND BEYOND THE CORE

Direct sales

23April 13, 2023WHIRLPOOL CORPORATION CONFIDENTIAL

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

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 :

A NEW EXPERIENCE FOR YOUR CUSTOMERS

... and a new experience for your people

FROM A “CENTER OF RESOURCES”

TO “CENTER OF COMPETENCIES”

“What is the new boss ?”“The new is that the only thing that counts is BRAIN”

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

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”

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.

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