Roughly $4 billion of Whirlpool's 2008 $19 billion in revenue results came from their innovation areas.
Sometimes we need to go back to basics when things aren't working as well as we think they should. For many companies, achieving consistent and predictable returns from spending on R&D and innovation is a nagging problem. This is not the case at Whirlpool, the global leader in large household appliances. Whirlpool defines innovation well. They also teach it well.
We interviewed Randy Voss who gave us some insights into his company's "Innovation 101" program. He is a headmaster well suited to the task, being Whirlpool Corp.'s Senior Manager, Global Strategy and Business Development. Randy came to Whirlpool after 22 years at Panasonic where he earned the distinction of being their Salesman of the Year in 1989. At Whirlpool, Randy is a Certified Innovation Mentor which he described as an "Op X black belt."
Roughly $4 billion of Whirlpool's 2008 $19 billion in revenue results came from their innovation areas. This compares to $2.7 billion the previous year and $1 billion the year prior for this Benton Harbor, Mich.-based company.
According to Randy, the big changes started happening in the late 1990s when then CEO David R. Whitman and consultant Gary Hamel started giving shape to programs. Randy credited VP Nancy Tenant Snyder, who has published books on innovation, with driving some of these changes.
Q: What is Whirlpool's definition of innovation?
A: We struggled with this like a lot of companies and now have a good set of qualifiers. If you came to the company two to three years ago and asked "What's innovation?" you would have been given different answers all over the place. We now have a definition that is clear, crisp and to the point. Our three definitive criteria for innovation are:
- It allows us to have a unique and compelling solution that a customer validates,
- It offers us a real and sustaining competitive advantage in the marketplace,
- We get extraordinary value from it -- better payback -- something above what we earn today.
Innovation is an interesting buzzword. It is on every corporate jargon list out there right now. It is on every mission statement. It has become a catchphrase for everything. It cannot be that. What comes to mind is the IBM commercial with people lying on the floor staring at the ceiling "innovating." It needs to be something more real than that and there needs to be measurable returns.
Q: What about your definition of marketing? How does that definition change as you go to different parts of your organization?
A: The definition of marketing might vary when you go from our offices over to the engineering area but it is pretty consistent within areas. We are aligned in fairly traditional ways with marketing and technology areas reporting upwards independently until they meet at the top. We are aligned by product area into refrigeration, cleaning (dishwashing and laundry) and cooking. Our engineering and marketing are very collaborative and cross-functional. I work across some of these silos to drive various innovations. We are a very matrixed organization. Funding gets distributed a lot of different ways.
Q: Where does the organization get its ideas from? Is there a mechanism?
A: We don't really operate an incentive system. A lot of it is top down. In 1999 to 2000, our then chairman did a lot of work with Gary Hamel on how to change our corporate mindset.
We have our innovation mentorship program, of which I am a Certified Innovation Mentor. There are around a couple hundred of us globally. We also have tools like an online forum that is a portal that employees and businesses alike can use. Challenges are posted there and employees are encouraged to create and participate in dialogues.
Every employee is required to go through some innovation training as part of our human resources development process. This is innovation 101. It is a basic curriculum where employees learn what innovation is at Whirlpool. Beyond that, there is opt-in training available where it applies to their job. For those who wish to head toward becoming a Certified Innovation Mentor, they can request innovator mentor training. This is sort of like an internship around innovation. These projects then form a portfolio that goes to an innovation board where the candidate is interviewed. This interview process is the last step toward certification.
Q: How do you measure the results?
A: This program took shape beginning in the late 1990s. Greater rigor and better metrics evolved in 2003 and 2004. It is not something I am prepared to talk about in too much detail due to its proprietary nature. The system is a hard one. It took time to develop and needs to always be worked on. The key thing is that you can't flush away money. There has to be a return on whatever you are putting it into.
Q: Is your system complicated?
A: No, we do not have overly complicated ways to gauge innovation. There is nothing impossible, mystical or magical.
Q: Who does Whirlpool look to as being great leaders in successful innovation?
A: I look at everything and everyone. Whirlpool looks to the usual suspects. Whirlpool talks about Apple, Coca-cola, Amazon, google, etc.
But then you start looking at something deeper. I love what Mars did with M&Ms. If you go to M&Ms dot com, you pay 50 times what you pay per bag in the store for the product highly customized. It is huge for them.
Q: What about you Randy? How did you become so involved in the area?
A: I am one of those creatures that 'got' innovation before it became a buzzword. I've always looked between today and the future while asking "why" and "why not." I've always thought like that.
Q: You exude tremendous enthusiasm while talking about innovation. How important is passion and enthusiasm when it comes to innovation?
A: The innovation area is a very tough one. There are so many obstacles, challenges and setbacks. You have to find the right time and place, through enthusiasm, to get to where you need to get. My favorite Thomas Edison quote is "I never failed, I just came out with 10,000 ways that didn't work."
Anil Rathi, president of Idea Crossing, has worked with Whirlpool through Idea Crossing's Innovation Challenge program. After our interview with Randy, we asked Anil what he admired about Whirlpool's innovation process. Foremost on his list was the way in which Whirlpool values its people and involves people from different parts of the company in their programs. The company constantly finds ways to connect different areas. There is also an open process for coming up with ideas, outlined in a 60 page document.
Note: We would like to thank Randy and Anil for letting us drop in for a crash course on Whirlpool's "Innovation 101."
Peter Paul Roosen and Tatsuya Nakagawa are co-founders of Atomica Creative Group, a specialized strategic product marketing firm. They have co-authored Overcoming Inventoritis: The Silent Killer of Innovation www.atomicacreative.com