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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"You begin to see the magnitude of infrastructure that has to change to support it (plans to reinvent the corporate culture to embed innovation as a core competency). And remember, we weren't adding on to a core competency. We were creating one that didn't exist." 1

- Nancy T. Snyder, vice-president of leadership and strategic competency development at Whirlpool Corp. in 2004.

"Plenty of other companies are taking notice of Whirlpool's success. Over the past few months, the company has hosted delegations from Hewlett-Packard, Nokia and Procter & Gamble - all eager to benchmark their own innovation programs against Whirlpool's." 2

- BusinessWeek3 in 2006.

Innovation Fuels Growth

On April 25, 2006, Whirlpool Corporation (Whirlpool) reported net sales of US$3.5 billion for the first quarter of 2006, up 10% compared to the corresponding period of the previous year.

Its net earnings during that period stood at US$118 million, up 37% over the first quarter of 2005. These sales and earnings figures for the first quarter of 2006 were the highest Whirlpool had recorded in its earnings history. It was also the 19th consecutive quarter of year-over-year increase in sales revenues for the company. Analysts attributed this increase to the strong worldwide demand from customers and channel partners for the company's innovative products. Commenting on the company's Q1 2006 results, Jeff M. Fettig (Fettig), Whirlpool's chairman and CEO, said, "Our first-quarter results reflect solid performance by all regional businesses, strong earnings momentum generated from innovation, productivity, and leverage from our global operating platform."4

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

Whirlpool had come a long way from where it had been in the late 1990s when it was faced with stagnation in revenues, profits, market share, as well as share price.

According to analysts, this was a direct result of the stagnation in its product line caused by very little attention being paid to innovation.

In 2000, David R. Whitwam (Whitwam), chairman and CEO of Whirlpool, initiated major efforts to bring about a change in the company's corporate culture and embed innovation as a core competency.

Analysts felt that these efforts, which were later carried forward by his successor Fettig, had borne fruit, judging by the consistent growth in Whirlpool's revenues since 2002 (Refer Table I for Whirlpool's revenues from 1998 to 2005 and Table II for its key financials).

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1] Kathleen Melymuka, "Innovation Democracy," www.strategos.com, February 16, 2004.

2] "Creativity Overflowing," www.businessweek.com, May 8, 2006.

3] BusinessWeek is a leading business magazine published by McGraw-Hill.

4] "Whirlpool Corporation Reports Record 2006 First-Quarter Results," www.money.cnn.com, April 25, 2006.

 

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