Innovation at Whirlpool - Creating a New Competency

            
 
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Case Details:

Case Code : HROB081
Case Length : 21 Pages
Period : 1999-2006
Pub. Date : 2006
Teaching Note : Available
Organization : Whirlpool Corporation
Industry : Electricals and Electronics
Countries : USA, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts Contd...

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 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...

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

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 (Refer to Exhibit III for a comparison of share prices of Whirlpool in Q1 of 2001 and 2006).

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 (Refer to Exhibit IV (A) and Exhibit IV (B) for Whirlpool's innovation pipeline). 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...

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Future Outlook

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. However, he also felt that it was unlikely that they could have all the 60,000 employees working on innovations...

Exhibits

Exhibit I: The Whirlpool Logo

Exhibit II: Whirlpool's Consumer-Driven Innovation Model

Exhibit III: Comparision of Share Prices* (in Us$) of Whirlpool in Q1 of 2001 And 2006

Exhibit IV (A): Whirlpool's Innovation Pipeline: 2005

Exhibit IV (B): Whirlpool's Innovation Pipeline: 2006

 

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