1. K6201 Scholarly Paper Presentation By Group #16: GU QIQI (RACHEL) MAO YANLAN (ELAINE) ANG HUN BEET (ELVIN) Strategic Innovation: Embedding Innovation as a Core Competency in Your Organization

2. Defining Innovation Innovation is a complex series of activities beginning at “first conception”, when the original idea is conceived; proceeding through a succession of interwoven steps of research, development, engineering, design, market analysis, management decisions making, etc.; and ending at “first realization”, when an industrially successful “product”, which may actually be a thing, a technique, or a process, is accepted in the market place. Battelle, 1973, p. 1 2

3. Defining Innovation Benefits of Innovation Cost reduction for goods in widespread use. Development of entirely new goods and services. Powell & Snellman, 2004, p. 202 3

4. Example #1: SegwayPT 4

5. Example #2: The Shipping Container 5

6. Innovation Embedment The concept of embedment is analogous to the institutionalization of a core competency. Prahalad and Hamel (1990) wrote about core competency creation especially stress that sustaining core competencies for the long run is critical to creating value. 6

7. Innovation Embedment Training vs Embedment 7

8. Innovation Embedment What does that mean to Whirlpool? Embedment refers to a wide range of actions that assimilate, incorporate, internalize, and imbue the entire fabric or lifeblood of an organization with the mind-set and skills of innovation. 8

9. Introduction End of Era … At the end of 20th century New levels of expectations to create share holders value Whirlpool’s CEO & Executive Committee vision Through long-term strategy focusing on customer loyalty 9

10. Introduction Removing Barriers with Innovation Barriers to address: Barrier 1: Long product life cycles. Barrier 2: Indirect customers. Barrier 3: The mental of customers. 10

11. Introduction What is Innovation? Any product or service that creates unique compelling solutions valued by their customers, real and sustainable competitive advantages, and extraordinary value for their shareholders. Innovation should create a clear linkage to their customer loyalty mission, drive breakthrough levels of thinking, and include a wide scope of work from core products to new-to-the-world offerings. Must drive a reallocation of their resources to be more focused on their strategic objectives. 11

12. Introduction The Beginning of Innovation at Whirlpool Seeking Models and Partners With no models among other organizations, they sought a consultant. Concepts categorized from suggested consultants are, Great Man Theory Skunkworks Creativity and Games Technology Strategy (re)Formulation Product Bells and Whistles Training and More Training 12

13. Introduction To Take their Own Journey Lack of literature to support the need for innovation embedment. Strategos was the consultant They did not want a long-term relationship with Whirlpool and would not create consultant dependency. They admitted that they did not have all the answers. They wanted to work with Whirlpool to discover new ways to embed innovation. Strategos' Approach Refreshing approach put the emphasis on learning for ourselves (Whirlpool). Creating a systemic approach to embedment that would become self-sustaining. 13

14. Introduction The Whirlpool’s Organizational Structure Chairman and CEO Global VP of Innovation Strategos (external consultants to VP and I-Teams) Global Director, KM Latin America Regional VP/GM of Innovation Latin America Regional VP/GM of Innovation Latin America Regional VP/GM of Innovation KM Manager KM Manager KM Manager I-Board Senior Leaders from Latin America I-Board Senior Leaders from Latin America I-Board Senior Leaders from Latin America 14

15. The Embedment Wheel Source: © 2002 Whirlpool Corporation. All rights reserved. 15

16. Vision and Goals Whirlpool's Enterprise-Wide and Innovation Visions 16

17. Vision and Goals The Five CFPM Whirlpool Statements Enterprise-Wide Vision Every Home . . . Everywhere Our vision proposes a higher order of purpose: Every home is our domain . . . every consumer and consumer activity our opportunity. This vision will fuel the passion that we will develop for our consumers. This means not just building white boxes . . . but rather providing a wide range of innovative solutions that uniquely meet our customers' needs. Innovation Value Ideas from Everyone and Everywhere Innovation will become a core competency of the enterprise. Innovation will come from everyone, from everywhere, and in everything that we do. Our heroes will be the people who seize opportunities, not just the people who solve internal problems. We will rid ourselves of processes and practices that hamper risk-taking and innovation. We will view falling short of risk-taking goals as learning, not failure. All of this will allow us to continuously win consumer loyalty. We will value the diversity of our people and their ideas, as only significant diversity at our company will lead to great innovation. Innovation will allow us to win customer loyalty and create value. 17

18. Vision and Goals The Five CFPM Whirlpool Statements Strategy Branded Solutions That Build Consumer Loyalty Branded solutions represent an immense transformation for our company. These strategies will change our jobs and how we work with each other and it will force a personal connection with the consumer. They will create mindset changes, actions and outcomes that will build exceptional consumer loyalty to our brands . . . thus continually expanding our opportunities. This will lead to the growth and performance that we must deliver. Resource Creation Investments in Great Ideas We will understand that the focus and beneficiaries of our resource decisions must be the consumer and shareholder. This will require us to look at all of our activities with a new perspective. We will create purposeful investments around great ideas. We will stop feeding the status quo and underperforming activities and fund those activities that contribute to our success with our consumers and value for our shareholders. We will put our money and talent behind innovative consumer solutions and invest in doing this faster than anyone else. 18

19. Vision and Goals The Five CFPM Whirlpool Statements Organization Structure and Decision Making Open. Flat. Fast. We will organize around our brands as our key connection to the consumer. We will be open, flat and consumer-centered. We will drive decision-making close to the markets and at the appropriate level. We will spell out clear accountabilities for every job that, in turn, will propel us to have a sense of urgency for what is important. We will create great jobs that challenge our spirit. We will create well-defined “decision space” where people know their decision-making accountabilities, and then we will get out of the way and let our people do their jobs. We will move faster internally than the external world. 19

20. Vision and Goals Goal Trilogy Innovation Embedment Goal Trilogy Results Goals Embedment Goals Individual Capability Goals 20

21. Vision and Goals Result Goals The amount of new revenue generated from innovation The number of projects in the innovation pipeline The number of intellectual property rights generated The number of people in the process The number of new customers as a result of innovation The number of new methods of distribution and doing business 21

22. Vision and Goals Embedment Goals The amount in seed funds set aside and used to fund innovation projects The number of or diversity of people certified in levels of innovation expertise The number of change management projects defined to drive innovation The number of key barriers removed to allow innovation to thrive The number of jobs changed due to innovation 22

23. Vision and Goals Individual Goals Number or percentage of people in your work group who can describe how innovation has changed their job Number of job descriptions rewritten to include innovation Ways in which people use innovation in their day-to-day job Identification and removal of barriers to innovation in your work group Written statements about how each person has used innovation tools Number of performance appraisals that have listed innovation goals for individuals 23

24. Leader Accountability & Development Innovation at the Top Leadership Level 24

25. Leader Accountability & Development Leaders' Behavior and Cultural Change Co-Creation Time and Space for Involvement Out-of-the-Box Thinking Balancing Day-to-Day Pressures An Innovation-Rich Environment 25

26. Leader Accountability & Development Developing Leaders' Innovation Skills Leadership Education and Training Embedment Immersion Workshops Regular Leadership Events Leadership Exchange Programmes (with other Companies) Leadership Training On-the-Job Experience I-Boards I-Teams and Projects Development Feedback 360-Degree Feedback and Development Planning One-on-One Coaching 26

27. Culture and Values Edward Schein (1992), defined organizational culture “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” 27

28. Culture and Values Cultural and Values Descriptions of Whirlpool 28

29. Culture and Values Cultural and Values Descriptions of Whirlpool 29

30. Culture and Values Cultural Change and the Embedment Wheel Vision Leader Systems Resources Knowledge Management and Learning Systems Change Management and Strategic Communications Rewards and Recognition Measurement and Reporting Systems and System Alignment 30

31. Resource Creation Creation vs Allocation 31

32. Resource Creation Resource Creation Funding Communiqué People Talent 32

33. Knowledge Mgmt & Learning Systems Knowledge Management Efforts I-Pipe 33

34. Knowledge Mgmt & Learning Systems Knowledge Management Efforts Innovation E-Space 34

35. Knowledge Mgmt & Learning Systems Developing Knowledge Management Knowledge Management Team Knowledge Management Primer Common Knowledge Management Definitions Knowledge Management Vision Whirlpool will create a knowledge-rich culture with the ability to transform knowledge and expertise into a superior market value. KM Mission Build a global knowledge-driven environment which will enable all Whirlpool HR people to spontaneously create, easily capture, and share their knowledge, expertise and skills. This will be accomplished so that we exploit scalable and sustainable innovative opportunities, support faster and effective customer solutions, and ensure a unique competitive advantage that is hard to duplicate. 35

37. How do we acquire that knowledge?

38. How is that knowledge stored?

39. How it is distributed, shared and re-used to create leverage or new knowledge?

41. Tacit information is what people cannot easily tell you. Tacit knowledge includes: know-how, judgment, routines, experiences and lessons learned. For customer knowledge this comes from direct experience with the customer such as service technicians, people in the call center and trade partner sales people. This type of information is harder to collect and share widely than explicit knowledge.36

42. Knowledge Mgmt & Learning Systems Common Knowledge Management Definitions Experts People in the organization who have a unique set of skills or knowledge-set in the practice area. These were the people we mentioned earlier that have specific customer information such as people in market research, strategic planning, product development and product design. Community of Interest Groups of people who, on an ongoing basis, create and share know-how and knowledge and then put that knowledge into practice. Communities of interest may not even think of themselves as a community or as a formal group, and often the group is not chartered or formally organized. For us, the community of practice for customer knowledge was almost anyone in Whirlpool who had a strong interest in the customer and using data and knowledge for innovation or other purposes. 37

43. Strat. Communications & Change Mgmt Path of Change Management 38

44. Strat. Communications & Change Mgmt Path of Change Management 39

45. Strat. Communications & Change Mgmt Path of Change Management Change at Individual Level Formal Dimension Psychological Dimension Social Dimension 40

46. Strat. Communications & Change Mgmt Path to Strategic Communications Corporate Communications Innovation Days and Road Shows 41

47. Rewards & Recognition The Power of Intrinsic Rewards Individual Reward Programs Getting Asked to the Party Becoming a Strategic Thinker Increased Marketability and Job Potential Expanding their Networks Being Free to Think Outside the Box Running Their Own Business External Recognition Leaders at the Middle Manager Level 42

48. Rewards & Recognition Team Reward Programs Part of an Innovation Team and Strategy Visibility with Senior Leadership New Friends and Diverse Views New Ways of Working as a Team Organizational Reward Programs Balanced Scorecard Measures Financial Systems Communications 43

49. Measurement & Reporting Systems Measuring Embedment Business Measures Embedment Measures Measuring Embedment by Going Around the Wheel Measuring by Executive Committee Measures Measuring by Innovation Board Measures Individual Measures System and Process Alignment Human Resource Product Development Finance Systems Other Systems 44

50. Conclusion No idea at the moment… 45

51. Questions & Answers

52. Thank You!