Analysis of the Case Study:
Innovation at Whirlpool: Creating a new competency
- 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
Organizational
Development
Initiatives
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
- Whitwam wanted to make innovation a core competency at Whirlpool
- He wanted all the employees to be creative
- In late 1999, Whitwam started the innovation initiative by inviting ideas from all the employees. He felt that a direct call to employees was needed to ensure that no brilliant ideas got lost in the corporate hierarchy
- In order to bring out creative ideas, 25 employees from the company's European arm were released from their routine job and sent to Whirlpool's European headquarters at Comerio, Italy, for one year
- Their sole assignment was to brainstorm and come out with ideas regarding new products or services that would truly differentiate Whirlpool's offerings from those of its rivals
- 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
- 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
- Instead of going in for a few big projects, it encouraged many low-cost "stratlets"
- 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
- 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
- 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
- According to the company, revenues from innovative products were almost US$800 million in 2005 as compared to just US$10 million in 2001. The share price had also doubled
- Between 2003 and 2005, Whirlpool's revenues had grown at an average of 9% per annum
- As of April 2006, Whirlpool's innovation pipeline had 568 projects under development of which 195 were being scaled up for commercial launch
- Expected to rake in another US$ 3.3 billion in annual sales once they were launched
- Consumers see something that is so different or innovative that they want to buy it as opposed to: they have to buy it
Reinventing the Corporate
Culture
- That the employees were enthusiastic about the various innovation initiatives started by Whirlpool between 2001 and 2002 was evident from the fact that the KM site recorded up to 300,000 hits per month
- 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
- Also came out with an "I-box" to ensure that only brilliant ideas reached the I-board
- The employees had to demonstrate that their proposals were something that people would buy
- In most conventional Organizations, innovation/creativity is restricted to a few people
- In some, like Whirlpool, innovation/creativity comes from everyone in the organization
Should Creativity
be restricted to a few people?