ELECTROLUX AB:

MANAGING INNOVATION

Syndicate Group 5
29320072 Ely Rahmawati
29320050 Akhmad Kurnia
29320196 Taufiqurrohman
29320149 Fadhila Nurfida Hanif
29320219 Edi Priyo Yunianto

Electrolux was driven by the vision
of becoming “the best global
appliance company as measured by
customers, employees, and
shareholders” by using technology
to consistently deliver “more
efficient appliances at more
affordable prices”
Company Background
Established in1919 as a Strategy and structure of Business sectors:
result of a merger between Electrolux: 1. Food preparation
Elektromekaniska and 1. The operation/internal 2. Food preservation
AB – Lux, the home process is product- 3. Dish care
centric 4. Fabric care
appliances companies.
2. Product development 5. Home care
has been driven by 6. Small appliances
consideration of (including floor care
technology & finance products)
3. Grown through mergers 7. Professional Products
and acquisitions
Electrolux had a diversified geographic presence, operated 58 manufacturing
facilities across 19 countries as of the end of 2012. It was selling 40
million SKUs annually across 150 countries.
Electrolux had over 25 global brands like AEG, Frigidaire, Chef, Kelvinator,
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Eureka and Westinghouse.
1. How attractive is the appliance industry for growth and
profitability ?

1. The industry was valued at $225.2 billion in 2012 globally

2. Growth has been decline in 2008-2013 (due to recession),
but forecasted to improve during 2013-2018 at annualized
rate 0f 4.1% (revival of the global economy)
3. The demand will improve both in developed economies and
in emerging companies  will increase Revenues
4. Electrolux can gain more insight into how their product
satisfy customer’s need and by using IoT (Internet of
Things) to increase their sales
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2. What are the implications for Electrolux ? What is the significance
of innovation at Electrolux?

Culture Innovation Customers Growth

Electrolux has Those innovation Innovative products With a product great

succeeded in could be the keep companies demand by customers
establishing metrics sources of product relevant to than gaining economies
for recognizing differentiation for customers, by of scale which was a
innovation which Electrolux launching innovative goal that companies
would be a major products in tune pursued as part of
step to create a with their changing growing sales volumes,
culture of needs. market share and
innovation. margins
 Points related to create “culture of innovation”
• The team members — largely market researchers — spent hours at the homes of consumers, taking notes from observing the appliances being put to use
in order to shifting the company’s centre of gravity from the company’s engineers and accountants to the consumer. Also three critical issues: strategy
development, opportunity activation and organizational engagement, this is an innovation agenda framework
• Annual design competition, Undergraduate and graduate students of design worldwide were invited to present innovative ideas for “future” households.
The contest had since become a recruitment ground for the best talent in design every year.
• To Co-ordinate innovation initiatives, line manager and consultant commited to perform 4-fold of mandate:
1. we will concentrate on choosing the right ideas, finding a workable methodology, and getting products out
2. we will only facilitate innovation; we will not own it or get involved in execution
3. we will work with individual business sectors, products and geographies on an ongoing basis but focus only on projects requiring cross-pollination
4. we will identify the best practices company-wide, apply them on pilots, test their feasibility on the ground, and establish only the scalable ones as
global templates.
• Established innovation territories, that is, areas where company would look for innovative ideas for providing compelling benefits to the consumers and
delivering significant business value
• frontloading” each innovation opportunity; all relevant considerations — like consumer analytics, product technology and competitive dynamics —
would be fully factored in before a pilot was ready for testing. The advantage of frontloading was that it ensured — and also often forced — collaboration
of all stakeholders in an innovation project
• focus on internal communications to drive home the importance of innovation. They also developed an innovation nomenclature to arrive at a common
understanding of terms like innovation strategy, innovation portfolio, innovation pipeline, and innovation maturity level
• replicated the model to the global level by creating what it called the “Innovation Triangle” within its organization structure
• to promote closer collaboration within the group among the marketing, R&D and design functions, the triumvirate of chief technology officer, chief
marketing officer and chief design officer was inducted, for the first time in the history of Electrolux, into the Group Management team
 3. How would you rate Electrolux in regard to
innovation? What challenges is it facing?

Electrolux decided to Electrolux relocated They conducted

We would rate the innovation in move beyond its production to low- standardization of
core mid-market components, reduced
Electrolux is 8 (eight), because cost countries, the number of product
Electrolux did the innovation in all of segment into the rationalizing product variants,
high end and the low mix, reducing the
their business line. They was end — in developed rendered production
number of product
reinventing several aspects of its markets and simpler, and led to
platforms, and improvements in
operations like technology, business emerging markets reduced the number quality.
model and market segmentation. of vendors overall.
Challenges of innovation at Electrolux

Protect and expand the company’s Ensuring internal transparency was a

core businesses (like professional challenging task in an organization in
equipment, refrigerators and which silos — functional,
vacuum cleaners) geographical and hierarchical

To unleash new growth (from new The challenge with institutionalizing

categories) innovation lay in choosing the right
ideas, finding a methodology that
worked and getting things out.

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4. How are Lundberg and Rask doing? Are they on the right track?

• Lundberg and Rask came together to coordinate innovation initiatives at Electrolux.

• Their aims of building rooms for change in the methods of company sales have direct effects on the sales of
the company.

• They developed an innovation agenda framework that would place the consumer at the centre and address
three critical issues: strategy development, opportunity activation and organizational engagement.
• They also developed an innovation portfolio to estimate the three- to five-year market potential of each
category and to track and provide a transparent view of all the innovations at Electrolux, helping regional
offices/functions to plan their priorities in alignment with the company’s strategic goals.

Lundberg and Rask were on the right track

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 5. What does it take to be successful in
collaborative Environment
To be successful in a collaborative environment, Electrolux must have a system that
accommodates synergies in policy making to achieve organizational goals, including:

01
01 02
02 03
03

Forming an innovation triangle Foster collaboration "frontloading" every innovation

consisting of a chief Marketing across geographies opportunity; all relevant
Officer, Chief Technology and their functions to considerations - such as consumer
Officer and Chief Design enhance innovation analytics, product technology and
pathways competitive dynamics - are taken
Officer to accelerate product into account in decision making so
development by leveraging that this condition will encourage
synergies at global and collaboration of all stakeholders in
regional levels. an innovation project.
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6. What should Lundberg and Rask do
next? What should be their goals? What
areas do they need to focus on arrive
at results? What do you think of their
current options? How should they
execute them ?

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What should Lundberg and Rask do next?

Create a platform that allowed for easy

01
01 collaboration among individuals and
among business units
Create an innovation culture that
02
02 ensures employees across all
functions and businesses benefited
from each other’s learning.
If LG is seen as a competitor, then it
03
03 should be wary of the technology that
has been implemented by LG.
Electrolux should see innovations
implemented by competitors as sources
of innovation also, at least imitating then
modifying, with a better advantage, of
course.
 What should be their goals?

01
01 Collaboration in innovation 02
02
Employee Engagement in
Innovation
What areas do they need to focus on
arrive at results?
11 Product development : Market driven
development (Consumer- centric)

22 Operational Excellence : reducing cost to

enhance productivity
What do you think of their current
options?
01 Create a platform that allowed for easy 02 Create a innovation culture that
01 02
collaboration among individuals and ensures employees across all
among business units functions and businesses benefited
from each other’s learning.

Options :
Options :
 Offline Platform (Physical)
 Job Rotation
 Online Platform
 Peer Recognition
 Team : cross functional, cross
business, cross national  Reconfigure employee reward system
to recognize innovation
 Forum : subject-matter experts from
within and outside the company would
make presentations on matters
relevant to company
How should they execute them ?
Create a platform that allowed for easy
01
01
collaboration among individuals and
among business units
Create a innovation culture that
02
02
ensures employees across all
functions and businesses benefited
from each other’s learning.
 Since Electrolux is a global company it
is more efficient to use online platform.
 Cross functional and cross national
team are formed to collaborate and
share related innovation
Global innovation competition which
involved all business unit in Electrolux.
Each business unit could be asked to
nominate innovative ideas provided by its
employees, select the top five or 10 from
them and give the originators of each idea
an award on a day dedicated to it.
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THANK
YOU

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