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14.03.06

Innovation at Whirlpool

Nancy T. Snyder has been interviewed by Business Week where she speaks about how she managed the task to position big-ticket appliances manufacturer Whirlpool No. 1 in innovation. Also highly valuable, her remarks on what didn’t went well during the 6 years.

Some important lessons distilled from the interview and augmented with my own experience:
- Innovative organisations are different: I remember an article about the most innovative organisation in the US. Gore won it. From the article: ’Gore is a strikingly contradictory company: a place where nerds can be mavericks; a place that’s impatient with the standard way of working, but more than patient with nurturing ideas and giving them time to flourish; a place that’s humble in its origins, yet ravenous for breakthrough ideas and, ultimately, growth. Gore’s uniqueness comes from being as innovative in its operating principles as it is in its diverse product lines. This is a company that has kicked over the rules that most other organizations live by.’
And an employee recalls: ’I came from a very traditional male-dominated business — the men’s shoe business,” she recalls. “When I arrived at Gore, I didn’t know who did what. I wondered how anything got done here. It was driving me crazy.” Like all new hires, Davidson was given a “starting sponsor” at Gore — a mentor, not a boss. But she didn’t know how to work without someone telling her what to do.’

- Difficulty to measure (success for intance): The important aspect here is to find the right balance between flexibility and consistency. Be receptive of developed measures that don’t work (either because they don’t measure the right thing or because employees don’t report them) and permantely improve the devised measures. However, be consistent with core measures to allow for benchmarking. This process requires time, so don’t expect to hit the right measures with the first development.

- Define what innovation means for your company: from the interview: ’So just like the learning journey on metrics, we had a learning journey on how you describe innovation. An idea had to meet three criteria to be innovative: 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.’

- Communicate innovation throughout the organisation: The CEO need to go out and talk to people, especially trained employees can act as advocates or facilitators and IT-systems need to support the exchange of ideas and information.

- Design a smart reward system: Tie a substantial portion of senior executives’ pay to the outcomes of the innovation pipeline, while putting the focus for non-senior executives on recognition by their peers. From the interview: ’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.’

- Manage change: Do not focus only on the hard issues such as power structures, systems and finance. Addressing organisational culture, the organisation’s paradigm, stories and symbols is at least as important.

- Adapt the organisational structure, its systems and its culture: For example, devise an effective and efficient budgeting process that matches with the same flexibility that innovation requires. Make innovation a concern for all employees (and not linked to a department). Fostering innovation is not a one-shot deal, it needs permanent attention. And many more aspects.

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