28 April 2006

Whirlpool’s push to jump-start innovation [Business Week]

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Whirlpool's Pia refrigerator
In 2000, writes Business Week, Whirlpool’s machines had been reduced to commodities. The company needed “to reinvent its corporate culture” and “figure out the answers to basic questions that managers everywhere struggle with: How do you define innovation? How do you measure success? How do you teach people to be creative?”

After some failed unstructured attempts, “they realized in 2002 that they had to bring more order to the innovation process. For starters, they decided that new ideas would have to enhance the company’s existing brands or products. Top management would evaluate and fund all new proposals at monthly innovation-board meetings. These groups, in turn, reported to Whirlpool’s nine-member executive committee. Green-lighted projects would be assigned to pros — representatives from the design, market research, R&E, and manufacturing departments — to see them through.”

“To make it easier to design products that reflected consumers’ needs and desires, […] innovators [had] to demonstrate that their proposals were something that real people would buy [and that] the new product would command above-average markups”. This of course involved consumer research.

“Since 2003, innovation revenue has quadrupled annually, easily surpassing goals. […] Moreover, Whirlpool is no longer caught in a price war.”

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