Book Review Strategic Innovation Embedding Innovation As A Core Competency In Your Organization

K6201 SCHOLARLY PAPER PRESENTATIONBY GROUP #16:

GU QIQI (RACHEL)MAO YANLAN (ELAINE)ANG HUN BEET (ELVIN)

Strategic Innovation: Embedding Innovation as a Core

Competency in Your Organization

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

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Defining Innovation

Benefits of Innovation Cost reduction for goods in widespread use. Development of entirely new goods and services.

Powell & Snellman, 2004, p. 202

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Example #1: Segway PT

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Example #2: The Shipping Container

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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.

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Training vs EmbedmentTraining Embedment

Short-term solution Long-term solution

Ineffective at dispersing skills over wide groups of people.

Focused on creating systemic change in the infrastructure

Trainer and trainee relation Self-creating and self-learning

Narrow and targeted approach Broad and inclusive approach

Analogous to changing the outer skin Embedment changes its DNA

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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.

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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

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Introduction

Removing Barriers with Innovation Barriers to address:

Barrier 1: Long product life cycles. Barrier 2: Indirect customers. Barrier 3: The mental of customers.

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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.

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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

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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.

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Introduction

The Whirlpool’s Organizational StructureChairman and CEO

Global VP of Innovation

Global Director, KM Strategos (external consultants to VP and

I-Teams)

Latin America Regional VP/GM of

Innovation

KM Manager

I-Board Senior Leaders from Latin

America


Innovation

KM Manager


America


Innovation

KM Manager


America

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The Embedment Wheel

Source: © 2002 Whirlpool Corporation. All rights reserved.

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Vision and Goals

Whirlpool's Enterprise-Wide and Innovation Visions

Whirlpool'sEnterprise-Wide Vision

Whirlpool'sInnovation Embedment Vision

Every Home, Everywhere… with Pride, Passion and Performance

Innovation from Everyone and Everywhere

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Vision and Goals

The Five CFPM Whirlpool Statements

Enterprise-Wide VisionEvery 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 buildingwhite boxes . . . but rather providing a wide range of innovative solutions that

uniquely meet our customers' needs.

InnovationValue Ideas from Everyone and Everywhere

Innovation will become a core competency of the enterprise. Innovation willcome from everyone, from everywhere, and in everything that we do. Our

heroes will be the people who seize opportunities, not just the people who solveinternal problems. We will rid ourselves of processes and practices that hamper

risk-taking and innovation. We will view falling short of risk-taking goals aslearning, 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 significantdiversity at our company will lead to great innovation. Innovation will allow us

to win customer loyalty and create value.

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Vision and Goals


StrategyBranded Solutions That Build Consumer Loyalty

Branded solutions represent an immense transformation for our company. Thesestrategies will change our jobs and how we work with each other and it will

force a personal connection with the consumer. They will create mindsetchanges, actions and outcomes that will build exceptional consumer loyalty to

our brands . . . thus continually expanding our opportunities. This will leadto the growth and performance that we must deliver.

Resource CreationInvestments in Great Ideas

We will understand that the focus and beneficiaries of our resource decisionsmust be the consumer and shareholder. This will require us to look at all of ouractivities with a new perspective. We will create purposeful investments aroundgreat ideas. We will stop feeding the status quo and underperforming activitiesand fund those activities that contribute to our success with our consumers andvalue for our shareholders. We will put our money and talent behind innovative

consumer solutions and invest in doing this faster than anyone else.

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Vision and Goals


Organization Structure and Decision MakingOpen. Flat. Fast.

We will organize around our brands as our key connection to the consumer. Wewill 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 accountabilitiesfor 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 createwell-defined “decision space” where people know their decision-making

accountabilities, and then we will get out of the way and let our people do theirjobs. We will move faster internally than the external world.

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Vision and Goals

Goal Trilogy

Innovation EmbedmentGoal Trilogy

ResultsGoals

EmbedmentGoals

Individual CapabilityGoals

• Tied to the enterprise-wide vision

• Long-term business outcome for innovation

• The Embedment Wheel• Progress on embedment

wheel actions

• I understand the importance of innovation to the company's success

• I understand the importance of innovation to succeeding and contributing in each job

• Knowhow to get help or get started in innovation?

• Understand and use the tools?

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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

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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

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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

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Leader Accountability & Development

Innovation at the Top Leadership LevelEnterprise Accountabilities Functional or Regional Accountabilities

Deeply understand that there is a critical role for leaders in innovation embedment.

Understand their role in innovation embedment within their unit or function.

Describe the desired outcome for overall innovation embedment at the enterprise and the individual levels.

Describe the desired outcome for overall innovation embedment for their business or unit.

Establish the processes and systems for embedment by populating the embedment wheel and ensuring the proper infrastructure and capabilities building mechanisms are in place.

Employ the processes and systems designed to the embedment wheel and build capabilities in their business or unit.

Ensure that embedment is designed to the individual level, as well as to the enterprise or strategic business unit level.

Personally engage each individual on their staff and ensure that every individual in the entire business or unit is personally engaged by their manager.

Engage in personal learning and embrace the innovation tools and processes.

Reprioritize and set direction to ensure that appropriate timing and attention is given to innovation.

Reprioritize and set direction to ensure appropriate timing and attention is given to innovation.

Monitor and report on progress to business or unit to leadership.

Monitor progress. Model the change in behavior required to embed innovation.

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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

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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

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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”

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Culture and Values

Cultural and Values Descriptions of Whirlpool

Potential Cultural Enablers for Innovation Potential Cultural Barriers for Innovation

Midwest or “small town” like Everyone can say no-risk averse

Friendly Lack of alignment and consistency

Ethical Too may programs and projects

Deterministic Not-invented-here syndrome

Integrity Change averse

Respect Not customer centered

Team decision making Silo mentality

Cost containment and quality centered Internal or trade only focused

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Culture and Values

Cultural and Values Descriptions of Whirlpool

Values Description

Respect We do our best work when we trust one another as individuals, encourage diversity in our workplace, value the capabilities and contributions of each person, and recognize that work is but one part of a full and rewarding life.

Integrity We conduct all aspects of our business in an honorable way, recognizing that there is no right way to do a wrong thing.

Teamwork Pride results in our working together to unleash the potential of every person. By working together, we will achieve exceptional results.

Inclusion & Diversity The broad diversity of our people and their ideas is the fundamental foundation for the future success of our company. Differences create value. Inclusion allows everyone to contribute to her or his fullest potential.

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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

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Resource Creation

Creation vs Allocation

Resource Allocation Resource Creation

Annual or scheduled funding through the planning calendar

Funding as needed

Triggered by a traditional profit planning process; starts with the precedent from last cycle

Triggered by an innovation process, but within the profit planning process; no precedent exists, so each is a one-off Judgment

Generally manages downside risk Seeks out and funds upside potential

Entitlement based, meeting certain thresholds or history of spending

Determinist based, by the assessment of the potential innovation

Trigger: An allowance where everyone gets something

Trigger: A creation where only those with innovation ideas attract funding

Dispersed from the top of the Hierarchy Dispersed close to the ideas

Sources: Internal—funded by the pockets of the enterprise

Sources: Internal, partnerships, venture capitalists, and others, that is, funded by potential investors and the pockets of the enterprise

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Resource Creation

Resource Creation Funding Communiqué People Talent

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Knowledge Mgmt & Learning Systems

Knowledge Management Efforts I-Pipe

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Knowledge Management Efforts Innovation E-Space

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Developing Knowledge Management Knowledge Management Team Knowledge Management Primer Common Knowledge Management Definitions

Knowledge Management VisionWhirlpool 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.

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Common Knowledge Management Definitions

Knowledge Management (KM)KM is the ability to acquire, integrate, store and share knowledge in a continual manner using both human and electronic or technical systems. KM systems address:• What knowledge needs to be managed and shared?• How do we acquire that knowledge?• How is that knowledge stored?• How it is distributed, shared and re-used to create leverage or new knowledge?• KM has a human as well as the technical side.

Types of KnowledgeThere are two types of knowledge: explicit and tacit. Both are critical aspects of a knowledge management system. Often we fail to capture tacit knowledge because it is harder to codify in an information system—it often requires face to face interaction.• Explicit information includes data, records, presentations, and what people report. For us, in the customer knowledge

area, this meant hard data about customer satisfaction, preference, needs and wants, often collected from interviews, focus groups, external sources and surveys.

• 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.

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Common Knowledge Management Definitions

ExpertsPeople 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 InterestGroups 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.

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Strat. Communications & Change Mgmt

Path of Change Management

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Path of Change Management

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Path of Change Management Change at Individual Level

Formal Dimension Psychological Dimension Social Dimension

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Path to Strategic Communications Corporate Communications Innovation Days and Road Shows

Desired Outcomes Change Focus Suggested StrategicCommunications Focus

Business results Outside layer of embedment wheel:Vision and Goals. Written in terms of the desired final state, as well as transitional goals at an organization level. Requires use of measurement and reporting systems.

Three to five strategic recurring themes, to be used in all major communications for all employees.

Embedment Second layer of the embedment wheel:Review of all categories of the inner layer at the organization level.

Customized to groups or strategic business units. Information sharing and interactive. Continually ties changes from the embedment wheel to the overall outcome.

Individual change Strategic communications and change management:Measurement is done using the commitment curve and review of leadership accountabilities and development.

One-on-one communications, customized by where each person is situated on the commitment curve.

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Rewards & Recognition

The Power of Intrinsic RewardsIndividual 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

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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

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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 MeasuresSystem and Process Alignment

Human Resource Product Development Finance Systems Other Systems

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Conclusion

No idea at the moment…

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Questions & Answers

Thank You!