Head: (5 of 5)
Heart: (4.5 of 5)
Leadership Applicability: (4.5 of 5)

In the late 1990s, Whirlpool Corporation was facing a defining moment: Over its nearly 90 years of existence, it had gone from being a one-product, one-customer manufacturer of washing machines to the global leader of marketing and manufacturing major household appliances with products sold in 170 different markets and more than $10 billion in revenues. In 1997, Whirlpool executives rolled out a "post-globalization" strategy, focusing on brand and value creation. But by 1999, it was clear that something critical was missing from that strategy. Growth rates were flat, average selling prices were going down, and margins had become a cost game. Reluctantly, and after some "deep soul searching," they decided that what was missing was innovation. They discovered that in order to succeed and execute the new strategy, they had to be both operationally excellent AND innovative.

Snyder and Duarte have a clear warning for those who talk the innovation talk without walking the innovation process walk: "In the best case, well-meaning innovation hoopla without the corresponding framework that makes innovation work overshadows emotional drivers and becomes gimmicky. In the worst case, emotional drivers are snuffed out by limited innovation programs that bring in consultants or geniuses to do the innovation for you."

Embedded innovation, on the other hand, is infused into a company's DNA and culture, the authors say. It takes years of steady and tenacious effort to change the nature of any large organization, and it requires two seemingly contradictory approaches: clear top-down direction and ownership and systems for bottom-up, grassroots innovation. Embedded innovation requires changing deeply ingrained business systems to allow everyone to innovate; and, at the same time, it requires the top leaders' involvement, commitment, and dedication for the long haul.

Beginning in early 2000, Whirlpool recruited, created and trained a team of innovation experts, or "I-mentors," from a pool of volunteers across all divisions of the company. And over years of trial and error, they put together a clear innovation process, supported by management systems, that covers four phases of innovation: (I) Collecting insights, (II) Idea Generating and Screening, (III) Converting Ideas to Innovations, and (IV) Providing Unique Solutions.

All four of these phases are supported by embedded management systems that the authors refer to collectively as "The Innovation Machine." They urge readers to think of the innovation machine, or pipeline, as an end-to-end process rather than focusing on the end results of any one phase.  Of course you will want revenue-enhancing innovations to appear right away, but it may take some time-focus on building your machine for a continuous flow of innovation for years to come.  Successful pipelines have common underlying principles: finding ideas, testing them, funding and building protoypes, experimenting and getting market feedback.

The basic processes are straightforward enough, but there are critical elements that have to be carefully aligned and structured to ensure that the machine works well and produces real results, the authors caution. Don't do what Whirlpool did at first, which was to spend most of its focus and resources on creating the innovations and moving them through the pipeline, only to lose track of them once they hit the marketplace in favor of the next generation of ideas.  You must pay attention to the post-launch process or risk starving the entire process due to small measureable results relative to the rest of the results.  Don't let your innovation potential be lost "in the last three feet."

It is important to note that all of Whirlpool's successful revenue-increasing innovations were not costly or even terribly exciting game-changers. Snyder points out that although there were a few notable completely new products-i.e. the Gladiator GarageWorks, "a complete solution for the garage and living space" that is now a rapidly growing new brand contributing to Whirlpool's profits, and the EcoHouse, which introduced safe, trusted drinking water to homes in Brazil using a new business model based on subscription services-most of Whirlpool's innovation to date has been in changing the perception and value proposition of existing products. At the time the book was written, they were beginning to migrate their innovation capability from product design and marketing to elsewhere in the organization, including services, business models, and execution.

When she was tasked in the summer of 1999 with the massive effort to include all then-60,000 employees in the new innovation innovative, Snyder said she felt "as if a ton of bricks had fallen on me."  Whirlpool was a ninety-year-old manufacturing company, a stodgy mainstay in an industry not known for change or game-changing innovation.  And previous attempts at transforming Whirlpool into an innovative, customer-focused company-once in the early 1990s and again in the mid-1990s-had not been successful.  But the need was clear, and Snyder and her team followed through. 

At the time Snyder wrote the introduction to the book in late 2007, Whirlpool had become a $20 billion company with 73,000 employees, with innovative products and services were on track to make up to 20 percent of its 2007 revenue, up from zero percent in 1999.  They made 50 million appliances that year, "amounting 1.5 appliances per second." And at least one in four of these met their stringent definition of innovation. As a result, innovative products were driving additional value and revenues in most major product areas, and Whirlpool was on track to reach $3.5 billion in innovation revenue for 2008. Whirlpool's innovation success is proof that no matter how classic the stalemate within an industry, and no matter how entrenched business practices and systems are in an organization, transforming almost any institution is possible with careful attention to the processes, systems and emotional drivers that drive and sustain innovation while ensuring continued operational excellence.

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