Putting the Recession to Work for Innovation

Rather than hunkering down and staying the course, companies should use today’s challenges as an opportunity to promote innovation.

In the direst times, great ideas are realized. In 1930, just four months after the stock market crashed, Fortune Magazine was launched; in 1932 in the midst of the Great Depression, Revlon was created; and in 1933, Kraft introduced a revolutionary new product—Miracle Whip, according to an article titled “Innovating Through Recession: When the Going Gets Tough, the Tough Innovate,” by Northwestern University professor Andrew J. Razeghi.

Rather than hunkering down and staying the course, companies should use this recession as an opportunity to innovate or at least begin the process of embedding innovation.

“Without the innovative products that we have in the market, Whirlpool would be in a much different place than we are today,” said Nancy Tennant, corporate vice president for leadership and strategic competencies at home appliance manufacturer Whirlpool Corp., and co-author of “Unleashing Innovation: How Whirlpool Transformed an Industry.”

“They’ve helped us tremendously because they get a higher return than non-innovative products [and they keep] consumers in the marketplace.”

In 1999, the 100-year-old legacy company began to embed innovation—the idea that anyone anywhere in Whirlpool can innovate—into its organization. When Whirlpool began this journey, there were no models to follow.

“We had to invent a lot of it as we went along and that in and of itself was an amazing learning process,” Tennant said. “We would try something and it would work or not work and then we’d tweak it; and today 10 years later, we’re still doing it.”

Whirlpool, which was in an industry not known for innovation, began this transformation by training 75 people from around the world on a common set of tools and a process of innovation, but that was not enough.

“We had to put a whole management system in place around the innovators and the process,” Tennant said. “[It] required us to go back into systems that were in place and re-engineer them to make sure they didn’t kill innovation.”

To help its 80,000 employees innovate, Whirlpool created I-Mentors.

“They’re to innovation what Six Sigma Black Belts are to Six Sigma,” Tennant said. “They’re very highly trained in the process [and] the tools, and over the [last] 10 years, we’ve trained about 1,200 I-Mentors. If you have an idea, you’re stuck or you’re just trying to figure out innovation in general, you can go to one of them and get help.”

Whirlpool tracks revenue generated from innovation in the marketplace, and has seen success as a result of the transformation. In 2008, the company reported that innovative products produced about $3.8 billion.

“We keep tracking [products] as long as they meet the definition of innovation,” Tennant said. “The definition is it meets a customer need and it’s unique; it creates a competitive advantage; and it gets a higher premium. As long as it meets those three criteria, we track it.”

She said there is an S-curve when you embed innovation. The first phase is the launch, where you have alignment and you begin to prove the concept. Most companies never leave this stage, Tennant said. Next is the scale stage. In this phase at Whirlpool, Tennant said they had to prove on a smaller level that “everyone no matter where they were in the organization could come together and create an innovation” and then they scaled it. In the third phase, innovation is embedded and you begin to track it.

“If you haven’t started yet, now is a really good time to start,” Tennant said. “You can begin your planning so that when the economy turns for your business sector, you’re ready to really invest and begin to scale up innovation.”

Because learning and innovation go hand-in-hand, it’s crucial for the learning function to be a key contributor in the transition.

“The learning in innovation is so unlike anything else,” Tennant said. “It’s such an expansive kind of learning. It forces you to think about how big an idea can be, how many things you can attach to it and where it can go. From an individual standpoint, innovation has a learning component built into [it.] It’s all about learning the market, learning the customer and learning to solve problems.”