Sunday, May 07, 2006

Creativity Overflowing

[8 May 2006 - Business Week] After its initial efforts stumbled, Whirlpool is reaping big dividends from its push to jump-start innovation. David R. Whitwam had run out of tricks. The chairman and chief executive of Whirlpool Corp. (WHR ) had built the company into the world's No. 1 maker of big-ticket appliances, achieving unmatched economies of scale. He had also cut costs by hundreds of millions of dollars, again and again. Yet here it was 2000 and, judging by everything from stock price to profit margin to market share, Whirlpool was no better off than it was a decade earlier. The company's problem was not hard to diagnose: Its machines had been reduced to commodities. Prices for its most important products were actually falling each year. Nor was the solution a mystery: Whirlpool had to come up with exciting new products that could command premium prices. But the appliance maker had never paid much attention to innovation. During most of its 95-year history, it excelled at operating plants and distribution channels efficiently and at turning out washers and dryers that were solid and long-lasting. From time to time, research and engineering (R&E) technicians would tweak Whirlpool's Kenmore, KitchenAid, and namesake appliances to lower costs or boost performance -- by better insulating a freezer, say, or adding another washing cycle. But that's about as exciting as product development ever got. It was clear that Whirlpool needed to reinvent its corporate culture. To do so, it had to 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? "We knew from a strategic point of view what we needed to do, but from a practical point of view we didn't know how to do it at all," confesses Jeff M. Fettig, 49, a 25-year veteran who succeeded Whitwam as chairman and CEO in mid-2004. So Whitwam put out a broad call for help. Believing that brilliant ideas were buried in the corporate hierarchy, he invited each of the company's 61,000 employees to unleash their creativity: Everybody everywhere, he exhorted, Go out and innovate! More

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