Management of Innovation, Technology and

Entrepreneurship

Electrolux AB: Managing Innovation

GROUP 5

Salman Fajri 29319072

Amanda Di Fauzi S 29319093
Galih Ghanesa Cakra N 29319103
Christopher Bonauli 29319130
Djeri Oktafyan Wowiling 29319162
Nabila Dianisa 29319172

General Management 9
COMPANY BACKGROUND
Vision: the best global appliance company as measured by customers, employees and shareholders.

- Established in 1919
- A merger between two Stockholm-based companies -- Elektromekaniska and AB Lux
- Electrolux sought to realize its strategy through a matrix organization structure characterized by
dual-reporting.
- Manufacturing was localized so that it would be as close to the consumption market as possible.

A four-pronged growth strategy:

1. Invest in growth markets Three board business segments:
2. Maintain market share in core markets generating
1. Major appliances
earning
2. Small appliances
3. Leverage global scale and scope
3. Professional equipment
4. Create condition for profitable growth through
innovation
SEVEN BUSINESS SECTORS
1. Food preparation
products
2. Food preservation
products
3. Dish care products
comprising Major Appliances – the largest business segment.
4. Fabric case products Responsibility for product development, purchasing and
5. Home care products manufacturing

6. Small appliances
7. Professional products
Each sectors were supported by common staff resources departments like
Finance, Legal, Human Resources, Marketing & Branding, Technology,
Design & Communication.
THE FOUR-FOLD

1. 3.
Concentrate on choosing Work with individual business
the right ideas, finding a sectors, products and
workable methodology, geographies
and getting products out

2.
Only facilitate innovation 4.
Identify the best practice
company-wide
 GEOGRAPHIC PRESENCE

58 Manufacturing Over 25 Global

Facilities Brands
Such as AEG, Frigidaire, Chef,
Across 19 countries Kelvinator, Eureka and
Westinghouse

Selling 40 million
SKU
Across 150 countries
 INNOVATION AT ELECTROLUX
- Electrolux was reinventing several aspects
of its operations like technology, business
model, and market segmentation. Challenges of Innovation at
- In 2002, the company decide to move Electrolux :
beyond its core mid-market segment into 1. Protect and expand the
the high end and the low end company’s core business
- About the same time, electrolux started 2. Unleash new growth from new
relocating production to low-cost countries, category
rationalizing product mix, adn reducing the
number of product platforms. These steps
enable standardization of components,
reduced the number of product variants
INNOVATION TRIANGLE
● Close cooperation between R&D, design and
marketing to increase the pace of launching
relevant products in the market
● The objective is to accelerate product
development by leveraging synergies at global
and regional levels
● Innovation Triangle Council
➔ Consist of head of marketing, design, R&D,
product lines, regional and global
representative.
➔ The council would meet 4 times a year
QUESTIONS
1. How attractive is the appliance industry for growth and profitability?

● The industry was valued at $225.2 billion in 2013 globally

● Growth had been decline in 2008-2013 but forecast to improve at an
annualized rate of 4.1% during 2013-2018 due to revival of the global
economy
● The demand would improve, both in developed economies and in emerging
companies. The industry was also expected to benefit from a general
increase in demand for energy-efficient product.
● Electrolux could gain more insights into how their products satisfy customers’
needs and by using Internet of Things (IoT) to boost their sales.
2. What are the implications for Electrolux? What is the significance of
innovation at Electrolux?
To put into the context, the growth of appliance industry have serious implication for Electrolux, since he
company vision of becoming “the global appliance company as measure by customer, employee, and
shareholder” Moreover, Electrolux is the second biggest of market share in appliance industry

Internal:
External:
1. Innovation in selling: They attract
1. Relevant Products: Electrolux were able to
customers by making cold calls during the
establish products that are in tune with the
evening or weekend when people
consumer changing needs or what the
(customers) are commonly in their free
consumers want;
time;
2. Consumer’s willingness to pay: As the
2. Innovation in operation: They made
company mindset has changed, the
some improvements in the products and
company focused to make products that
services. Moreover, they were able to
consumers are willing to pay with several
save money by establishing
innovations that are able to beat its
manufacturing operations in developing
competitors (ex: future household products).
countries to lower their production cost.
3. How would you rate Electrolux in regard to innovation (on a scale of
1-10)? How is it doing? What challenges is it facing?
We would rate the of innovation in electrolux is 8 (eight). The company already realize that in order to stay up in
competition and stay relevant to market, they have to do an innovation in all of it business line.
We take a look at the company have four-pronged growth strategy that include innovation in order to achieve the
profitability growth :
1. Invest in growth markets
2. Maintain market share in core markets generating earning
3. Leverage global scale and scope
4. Create condition for profitable growth through innovation

The company is also pursuing the market pull innovation approach, mean that the product will be developed around the
market needs. In 2002, the company decide to move beyond its core mid-market segment into the high end and the low
end, so that the company need to foster innovation inside the company. The company Developed an innovation
nomenclature to arrive at a common understanding of term like innovation strategy, innovation pipeline, and innovation
maturity level.

Challenges of Innovation at Electrolux :

5. Protect and expand the company’s core business
6. Unleash new growth from new category
7. Ensuring internal transparency
8. Institutionalizing innovation (choosing the right idea, finding a methodology that worked out and getting things out)
4. How are Lundberg and Rask doing? Are they on the right track?

Their goals to create rooms for improvement in the company sales methods give direct
impacts toward the company sales.

Furthermore, they addressed the relevant stakeholders concerns, tackled their weakness
(more collaboration is needed between functional departments) and fostered the innovation
processes in the company which then become their strategy development is one of the vital
points for the company’s success.

Lastly, they always open for improvements in terms of the innovation agenda for the
products development in which the product will be tested on consumer test panel. This
method gives higher chances for the company products to withstand against the market
competition. In conclusion, Lundberg and Rask have played their role very well.
5. What does it take to be successful in a collaborative environment?

What is needed from electrolux to succeed in a collaborative environment is to

have a system where there is a conscious effort on creating strategies, policies,
and structures to institutionalize values, behaviors, and practices that promote
cooperation among various parties in an organization between countries to
achieve organizational goals. The high level of collaborative capacity undertaken
by electrolux will later enable more effective work both at the local and daily level,
and at the global level and in the long run.

A well-designed collaborative work system will overcome natural barriers to

communication problems, they also build a cooperative work culture that is an
integral part of the organizational structure.
6. What should Lundberg and Rask do next? What should be their
goals? What areas do they need to focus on to arrive at results? What
do you think of their current option? How should they execute them?

The ideal way to move forward is to combine a few of Lundberg & Rask's ideas into one company-wide program
such as the implementation of Brazil's idea of combining marketing, design, and R&D teams into a transparent
cohesive group that works together popularly known as the “Innovation Triangle Council.“ → to solve past problems
such as communication and transparency) and aid in generating better efficient ideas at a greater pace.

→ Adopt crowdsourcing to generate a more transparent organization (online approach to sharing ideas and
innovation) which would help the team to not only generate ideas but will also act as the online forum that will link
cross-country and international teams together and could help Electrolux share their valuable resources and hereby,
devoting more time to R&D/sales and marketing., thereby leading to higher profits and time utilization. Moreover, the
forum can be further incentivized through peer recognition., where individuals and teams can nominate their best
ideas thereby, giving the employees the incentive to be innovative. This recognition, can help create employee
loyalty and buy-in to the vision.
Thank You