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GROWING THROUGH INNOVATION: EXAMPLES FROM WHIRPOOL AND CRAYOLA January 8, 2010

Posted by Bima Hermastho in Change Management.
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Most companies agree innovation is a key avenue to growth, but far too often the implementation is lacking. Some companies stop at lip service, somehow believing that if you say you value innovation it is equal to being innovative. Just think of how many companies do not include innovation as part of their mission statements!

imageThen there are companies that try to isolate innovation in a "Skunk Works," keeping its work separate from "normal" business. Skunk Works is a term that means a group of people who, in order to achieve unusual results, work on a project in a way that is outside the usual rules.

Still others try to embrace innovation by completely reorganizing themselves based on what has worked somewhere else. What these companies miss is that a corporate innovation capability is not a structure, it is a mindset. Whirlpool’s structure would not work at Google, and vice versa. Yet both companies recognize that there are levers that can be pulled to organize for and institutionalize innovation. And that the pulling of those levers infuses an innovation mindset within their companies that, supplemented with the appropriate tools for success, can help a company build an innovation capability whether that company has been around for ten years or ten decades.

Why innovation?

It has become a truism that innovation is important. But have you ever asked yourself why? Why are companies expected to innovate? Why is growth presumed to come through innovation? Why isn’t there more attention from the experts and the media on companies that are "fast followers?" There is a simple explanation for why innovation is considered so important: there just are not very many examples of companies who have maintained success without focusing on growing through innovation.

An occasional example may arise of a company that found some growth without taking a new way of thinking about part of its business. But examples of successful innovative companies are everywhere, and the level of their success is persuasive. Everyone has a favourite example or two – Google, Apple, ING Direct, Southwest Airlines, Starbucks, Toyota, Procter and Gamble, or any number of others. Those companies do not have a lot of structural similarities, but what they do have is a shared understanding that innovation capability can be built, and that an innovation capability ensures that they will not get stuck working on their "old" innovations.

Renewed ability to innovate

It is possible to find taxonomies to map approaches to innovation within an industry or a business model type, but the practical answer for each company lies at the intersection of industry and business models – leading to designs that are fairly unique to each company.

As such, it behoves each company to find out what innovation is to achieve in their current situation, how it is falling short and how it is delivering, and what needs to be changed.

The way in which one implements additional innovation capacity is also going to be different across different business models, current situations, and cultures.

For instance, Whirlpool is a product-focused company organized by appliance brand. Innovation at Whirlpool was to fight the "ocean of white" syndrome – the mass of difficult-to-differentiate boxes that face consumers entering an appliance store. Whirlpool chose to escape commoditization by building the organization’s capability to continuously differentiate its products through innovation.

Today Whirlpool goes from one successful launch to another after modifying existing processes and adding to existing capabilities. For example, they have:

  • the ability to fund innovative opportunities that do not appear in synch with the annual budgeting process;
  • metrics that encourage new products;
  • a process to manage a pipeline of new products, from idea to commercialization; and
  • a set of innovation skills widely disseminated but tailored to different positions across the organization.

For Whirlpool, the ability to differentiate products resided in equipping as many people as possible involved in the creation and manufacturing of appliances with the tools to identify new needs and to satisfy them.

Whirlpool has had great success with this approach – so should this be the way to do it for everyone else? Do we not all have more or less of a differentiation issue? Would we not all benefit by having a workforce that can spot new consumer needs and act on them?

Let’s look at Crayola’s approach to innovation. Only a few years ago, many wondered about the future of Crayola in a world of electronic toys and computer-savvy children. It would have been tempting for Crayola to reinvent itself from top to bottom and to try to follow Leapfrog and other computer-centric toy companies – a major effort fraught with risk.

"Innovation is important. However, most ready-made tips on innovation do little more than to help managers check their innovation to-do checkbox."

A careful study of internal obstacles and enablers to innovation led to a simpler, easier, and, so far, very successful alternative. Crayola did opt to shift from mostly stationery-like products to more toy-like products. But it also – and more significantly – chose to leverage its deep intellectual property competencies in chemistry to do so. The Crayola Color Wonder Spray Magic and the Crayola Color Explosion Spinner are some of the very successful products that are creating new reasons for kids to continue exercising their creativity today.

Chemistry was neither an issue nor a source of competitive advantage for Whirlpool. Crayola did not have business units that could be made independently responsible for innovation. A cookie cutter design for these two companies would not have served their respective innovation needs.

More generally, an industry’s bases for competition, the structure of its channels, the source of its competitive differentiation, etc., will dictate differences in innovation systems across industries and across companies in an industry.

You, too, can renew your ability to innovate

Just like Whirlpool and Crayola, any company seeking to increase its capacity for innovation can do so. Look back and identify which organizational levers will be most effective in removing obstacles and capitalizing on existing strengths.

The following list spells out some of the dos and don’ts for each lever.

  1. Skills:
    • Don’t have everyone learn the same thing.
    • Do determine what role innovation can play in each job type and see how much innovation-related skill is really needed and how available it is.
    • Train additional employees as they become involved in innovation-related activities instead of getting ahead of the need. In the best of all worlds, have them learn while they are involved with the activity – learn by doing, and learn by working on the actual, relevant issue at hand.
  2. Processes:
    • Don’t create additional process.
    • Do tweak existing processes to remove barriers to innovation without losing the processes’ other advantages. For instance, hold part of the annual budget for opportunities that will come up between budgeting cycles, rather than creating an entirely separate innovation budgeting cycle.
  3. Culture and values:
    • Don’t try to "change culture" in the abstract.
    • Do get early results and communicate how working differently leads to success.
    • Create the space to get something done in a different way. Show the way by example. The message should never precede the action.
  4. Enabling tools and technologies:
    • Don’t create an electronic suggestion box.
    • Do pair up idea management technology with capable coaches who can organize, support, and lead people and teams to triage and elaborate their innovative ideas.
    • Do leave responsibility for elaborating an idea on the idea originator – both to stay connected to the original passion, and to ensure better quality ideas.
  5. Organizational structures:
    • Don’t rely on separate innovation roles alone.
    • Do spell out responsibility and accountability for all the members of a leadership team and for the heads of the business units in particular. Have a small number of innovation specialists available to support employees who work on an innovative opportunity.
  6. Measures:
    • Don’t measure output alone.
    • Do assess the health of your innovation pipeline by tracking number of opportunities at different stages of elaboration at any given time – from ideas to concepts to pilots to commercial launches. Many opportunities take more than a year for their full potential to be realized. Executive performance measures have to consider opportunities under development for the following year and not only today’s mature revenue streams.
Success begets success

Innovation is important. However, most ready-made tips on innovation do little more than to help managers check their innovation to-do checkbox. Many companies have become disenchanted with innovation after trying these generic recipes and getting no rewards for their effort.

It can be frustrating to learn that the answer to the question, "How can we build an innovation capability?" is, "It depends." Here is an important lesson to pull from the experience of successful companies that have renewed their ability to innovate: even though the specific levers and the specific structures that have been successful for others may or may not work for you; the components of those levers are the same. It is then just a matter of organizing the pieces in the manner that best suits your needs. Just make sure you do something – the energy from your first few successes will serve to drive innovation capability deeply and broadly throughout your organization, until you become one of the established companies that successfully renewed its ability to innovate.

This is a shortened version of "Systematically innovate! What sounds like an oxymoron is actually a recipe for dependable results", which originally appeared in Business Strategy Series, Volume 10 Number 2, 2009.

The authors are Dave Crosswhite, Director of Strategos, Chicago, Illinois, USA and Jorge Rufat-Latre, Director of Strategos, Chicago, Illinois, USA.

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Comments»

1. Daniel Mouton - November 8, 2011

Thw Whirlpool example is very relevant. The expansion in South Africa is proof of just that – but with a management team that are not experienced to drive change! It is of no use to have an overall change management strategy successfully running all over the world and then exepect it to be the same with a management team not equipped to do the same on the African continent.


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