HOW WHIRLPOOL HAS BECOME AN INNOVATOR IN THEIR INDUSTRY


As the first of many brief thought provocations on driving organic growth through innovation, I would like to excerpt from a Business Weeks article on "How Whirlpool Defines Innovation" in their March 6, 2006 edition. The article was an interview with Nancy Snyder.

The challenge: In August, 1999, Nancy T. Snyder got a flattering -- and frightening -- assignment from David R. Whitwam, the chairman and chief executive of Whirlpool (WHR ). Whitwam wanted to make the market leader in big-ticket appliances No. 1 in innovation as well, by soliciting ideas from everywhere and everyone in the 61,000-employee enterprise. And he wanted Snyder, director of strategy deployment, to make it happen. Snyder recalls having two reactions after her one-on-one with the boss: "excited and overwhelmed."

Measuring success in innovation: One of the things we struggled with a lot is how do you measure success. We counted the number of people we trained. We did that for a year, but that doesn't tell you anything. Then, we had a defining moment. We were in an executive committee, and it sounds like it should have been obvious, but it wasn't. One of our committee members said, "What if we asked every individual at Whirlpool: "Have you been trained in innovation? Can you use it in your job? Has it changed your job?" ............We set a goal every year, and the goal this year is $1 billion in revenue from innovation. The first couple of years, we didn't know how to set the goal. Should it be $1 million? Should it be $50 million? It took us a couple of years to get a baseline, to begin to understand what a real goal would be and what a stretch goal would be. ?"

Importance of what we called the Project Selection Criteria:It had to create a competitive advantage. It had to be unique and differentiating. And it had to create shareholder value. We worked with those definitions for three years, and then we realized they weren't quite right. It's hard for any one thing to create a competitive advantage by itself and be sustainable. You have to stay ahead of the competition. If you have a cadence of innovations that keeps a product fresh and always improving -- a migration path -- that makes it sustainable. So now we say if we're going to put any money in an innovation project, it has to sit on a migration path, it has to be something that the customer really wants, and it's got to return an above-average profit. ........Now every project that comes forward has to meet the innovation criteria or we won't fund it.

Incentives: A third of your pay, if you're a senior leader, is tied directly to what comes out of the innovation pipeline. And that's been in place for three years. That was a tipping point for us on innovation.

How to train the organization: ........ we trained these people called I-mentors who are kind of like Six Sigma black belts. They have real jobs, but they've also had special training in how to facilitate innovation projects and help people with their idea. We have nearly 600 of them around the world, so it's very likely that in your location or the department next to you there's an I-mentor who you can talk to.