Change at Whirlpool: An Analysis Essay Example

and marketed by the company. The current CEO Jeff Fettig said that Whirlpool's performance was attributed to "innovation, productivity, and leverage from our global operating platform" (Whirlpoolcorp. com, 2006). The 2005 Harvard Business Review case ‘Change at Whirlpool Corporation’ illustrates the steps taken by Whirlpool’s top management team to make innovation a core competence and to bring forward a change in their corporate culture.

Analysts felt that these efforts had facilitated pursuant growth in Whirlpool's revenues since 2002. The HBR case illustrates the consistent improvement (OD) initiatives the Whirlpool put in place to create a new culture that focused on innovation and value creation within the organisation. Whirlpool had successfully managed to reinvent itself and to prevent itself from a possible loss of market share and revenue. Innovative corporate culture also helped them develop and accumulate the ability to further increase market share and compete in the competitive white goods market (Rivkin et al, 2005).

Type of change

We would describe the change that took place at Whirlpool as a paradigm shift as the company was moving from a technical focus (engineering) to customer focused (emotion). They were shifting from producing a product to providing a service. This is the punctuated equilibrium model as there was an attempt to break from the past and the old way of doing things to now doing things differently (Hayes, 2010). The company’s new focus was on developing an emotional connection with the customer and increasing brand loyalty.

The change was to re-positioning the company towards a customer service approach. This later became the business model that other white good manufacturers would benchmark themselves against.

The CEO at the time made it clear that, the company was aware of changing consumer trends, and wanted to appease the customer’s hybrid needs. Nancy Snyder, who was appointed Whirlpool's Vice President of Leadership and Strategic Competency Development, said, "You begin to see the magnitude of infrastructure that has to change to support it (plans to reinvent the corporate culture to embed innovation as a core competency). And remember, we weren't adding on to a core competency. We were creating one that didn't exist" (cited in Rivkin et al, 2005).

Forces For and Against Change

The key force for change was firstly the economic change. Given the rise of globalisation and in turn increased competition, change played an important part to maintain market share and further more increase it. Secondly change in pricing trends created the need to offer added value and new innovative products that would offer value for money (Rivkin et al, 2005).

Change in such an organisation is complicated, as it is highly technical, and the focus in the 90s was on improving current products in relation to energy efficiency. Secondly, the organisations chain of command is top-down, thus creating red tape and stifling new ideas. Even with the saturated domestic market in 1994, Whirlpool could still be described as a successful corporation. Their success possibly made it hard to acknowledge the need for change.

This inability to see the need for change due to success is known as a 'death syndrome' (Hayes, 2010). It was probably due to hesitant and complacent attitudes that lead to Whitwam two previous failures to bring about change. What further hampered the

change process was management confusion and hesitant attitudes during the preliminary change process. They were initially unclear about new job descriptions and there was miscommunication about the innovation processes. The recession also made them more cautious.

When it came to mergers that Whirlpool had previously undertaken there were alignment issues with technology and skills that further hampered efforts to change (Rivkin et al, 2005).

Initiating Change

The company first identified why they had to change. They researched other companies of similar expertise, but failed to produce the much needed information. They brought in a consultant who was very aligned with their new mission to help them with their new endeavour to be more customer focused (Rivkin et al, 2005).

Whirlpool used resources like the CEO's seed fund and reward incentive like the 30% bonus for managers that got their team to innovate. Structural change was necessary and it evolved into a more de-layered and dynamic structure (I-teams, I-board etc) helped breach the comfort zone of employees. These teams consisted of mixed employees (different departments, ages, lifers etc), which created an array of expertise and views which helped innovate and brainstorm ideas from various angles (Rivkin et al, 2005). The initial teams formed their 'guiding coalition' for change (Hayes, 2010).

Strategy and Purpose

Whirlpool adopted different strategies during its history. Increased domestic competition and Electrolux’s moves in the USA as well as decreasing profit margins forced Whirlpool to take a decision to operate in the global market. Their initial strategy was to improve its cost and quality levels. However, their profit margins continued to decline due to competition and local

market’s being at a mature level. Therefore, a new strategy guided by the vision ‘Reaching Worldwide To Bring Excellence Home’ was approved by the executive committee to operate globally in 1988.

As a result of the globalization strategy, Whirlpool purchased a majority stake at Philips (European Appliance Business) and established alliances in Brazil and joint ventures in Asia. As a result, Whirlpool operated 44 facilities in 13 countries (Rivkin et al, 2005). Under Whitwam’s management, the company tried to shift its focus from operation to customers with different strategies. ‘Dominant Consumer Franchise’ was the first initiative on focusing customers aiming to be appealing to customers not only with competitive prices.

New features were added to the existing products which caused increase in cost and service incident rate and this initiative failed (Rivkin et al, 2005). Whitwam’s aim to move the company’s focus from operational/manufacturing to customers continued and as a result, the executive committee approved the new vision of ‘Every Home…Every Where…with Pride, Passion, and Performance’. The strategy to meet this vision was identified as ‘Brand Focused Value Creation’. This strategy focused on brands to achieve customer loyalty through creating embedded competencies such as innovation. To create focus on brands Whitwam moved Profit & Loss responsibility from product categories to individual brands (Rivkin et al, 2005).

Structure

With the start of globalization strategy, the company’s structure changed through alliances, joint ventures and purchasing new companies abroad. After announcing the new vision of ‘Every Home…Every Where…with Pride, Passion, and Performance’ a customer passion team, an employee pride team and a shareholder performance team were established to gather information and create a relevant strategy.