Innovation Capability at Electrolux

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Innovation Capability at Electrolux

Screening of innovation challenges

and development of action plan

LINA TORELL

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Innovation Capability at Electrolux

Screening of innovation challenges and development of action plan

By

Lina Torell

Master of Science Thesis MMK 2012:79 MCE 279 KTH Industrial Engineering and Management

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Examensarbete MMK 2012:79 MCE 279

Innovationsförmåga på Electrolux Genomlysning av innovationsutmaningar och

utveckling av handlingsplan Lina Torell Godkänt 2012-11-29 Examinator Lars Hagman Handledare

Gunilla Ölundh Sandström Uppdragsgivare

Electrolux

Kontaktperson Mats Ekblad

Sammanfattning

Detta Examensarbete studerar innovationsarbetet i ett team på Electrolux som verkar inom Forskning och Utveckling (FoU). Studien strävar efter att identifiera innovationsutmaningar och aktiviteter i syfte att öka innovationsförmågan inom teamet. Den metod som tillämpas i studien är samma som används i PIEp’s Innovationspilots process. PIEp (Product Innovation Engineering program) är ett svenskt forsknings- och förändringsprogram som syftar till att öka innovationsförmåga hos människor och organisationer. Metodiken som används är indelad i en genomlysning av företagets innovationsarbete och initiering av en förändringsprocess. Den första delen är en analys som utförs genom enkäter och intervjuer för att ge en bild av företagets nuvarande innovationsförmåga. Baserat på analysen tas en förändringsprocess fram i form av en handlingsplan i samråd med företaget genom en workshop. Syftet med workshopen är att involvera FoU-teamet i framtagandet av handlingsplanen som kommer att ligga till grund för förändringen och omfattar aktiviteter som möter innovationsutmaningarna, mål för aktiviteterna och ansvariga personer i teamet för var aktivitet.

Resultatet från analysen visar att det upplevda kreativa klimatet i Electrolux varierar mycket mellan olika regioner och att det klimatet på Electrolux i Stockholm upplevs mycket kreativt. Ytterligare framgick det av analysen att de största innovationsutmaningarna är tvärfunktionell integration och integration mellan regioner.

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Master of Science Thesis MMK 2012:79 MCE 279

Innovation Capability at Electrolux

Screening of innovation challenges and development of action plan Lina Torell Approved 2012-11-29 Examiner Lars Hagman Supervisor

Gunilla Ölundh Sandström Commissioner

Electrolux

Contact person Mats Ekblad

Abstract

This Master of Science Thesis studies the innovation work in an R&D team at Electrolux. The study strives to identify innovation challenges and activities in order to increase the innovation capability within the team. The methodology applied in the study is the same as used in PIEp Innovation Pilot Process. PIEp (Product Innovation Engineering program) is a research and change program that aims to increase innovation capability of people and organizations in Sweden. The methodology in PIEp Innovation Pilot Process is divided into an Innovation Screening and a Change Process. The first part is an analysis that is carried out from detailed surveys and interviews regarding the company's innovation capability and identifies innovation challenges. Based on the analysis a change process is planned in consultation with the company and is carried out through a workshop. The purpose of the workshop is to involve the R&D team in the development of an action plan that includes activities that meet the innovation challenges, targets and responsible persons in the team for each activity.

The result from the analysis show that the creative climate at Electrolux is varying a lot between different regions and that the climate in Stockholm is very creative. Further more it emerged from the analysis that the greatest innovation challenges are cross-functional integration and cross-regional integration.

Nine activities with targets were defined together with the R&D team during the workshop; all of them focusing on the cross-functional and cross-regional integration.

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FOREWORD

This section describes my gratitude to those who have supported me in different ways during the study.

I would like to dedicate my gratitude to my supervisor Gunilla Ölundh Sandström for her help, assistance and feedback throughout the process of the thesis. Furthermore, I would like to thank Mats Ekblad for valuable support, advice, and guidance during the work. I would also like to thank Electrolux in general and the Advanced Development of Food Preservation team in particular for good discussions, advice, and support. Finally, I would like to thank the people in the organization of Electrolux that have responded on the questionnaire survey, taken time for interviews and participated in the workshop.

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NOMENCLATURE

Here are the Abbreviations that are used in this Master thesis.

Abbreviations

CCQ Creative Climate Questionnaire

R&D Research & Development

PIEp Product Innovation Engineering program MINT Measuring Innovation Capability in Teams

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1. INTRODUCTION

This chapter describes the background and problem description, the purpose, the aims and limitations of the study.

1.1 Background and problem description

Over the last years, the demands from the market have grown faster than ever. Globalization, growing environmental awareness and faster technology development are some of the factors that contribute to the increasing demands and competitiveness of companies. The ability to come up with new products and services that meet these ever-changing demands is crucial for companies to stay competitive, it is therefor a constant challenge for companies to increase their innovation capability (Griffin, Hauser, 1996). Electrolux is one of the companies that strives to be more innovative by launching products that are perceived as new and valuable on the market. This thesis studies the innovation capability in the organization of Electrolux. Electrolux is a global leader in household appliances and appliances for professional use such as refrigerators, dishwashers, washing machines, vacuum cleaners, cookers and air-conditioners. Every year Electrolux is selling more than 40 million products in more than 150 markets. It is a Swedish company with headquarter in Stockholm. They have more than 52.000 employees around the world. Electrolux focuses on innovative products that are based on extensive consumer insight and thoughtfully designed to meet the needs of users and professionals,

Innovative thinking pervades the entire company but in particular the Advanced Development department where the new technology is being developed. As a means to highlight Innovation collaboration an “Innovation Triangle” is strived for, which implies increased collaboration between design, marketing and technology in product development projects. Today Electrolux is striving to be even more innovative through the development of radically new products and in the same time business-oriented products.

Since Electrolux is a global company with crucial functions in the chain of developing new products, commercializing them and launching them successfully on the market in various places in the world, there are numerous factors that influence on the innovativeness in the organization. Consequently there is a constant challenge to identify weaknesses and strengths in the development work that has an impact on the innovation capability.

1.2 Purpose and Aim

The purpose of this study is to create an initiation of a change process that will improve the innovation capabilities in a R&D team at Electrolux through studying the development work in the organization. The aim is to develop an action plan through identifying innovation challenges, defining activities that meet the challenges, defining indicators and setting targets.

1.3 Delimitations

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As a clear development process already exists, focus will be on how the team works in the process, for instance how they communicate, cooperate, share information what tools they use, and not at the process per se.

Moreover, the study is performed at Electrolux HQ office in Stockholm, which provides the possibility to have physical face-to-face meetings and discussions with employees in Stockholm, but not in other regions.

1.4 Introduction of Electrolux and PIEp

The study is performed at Electrolux and applies a methodology developed by PIEp. 1.4.1 Product development process at Electrolux

The product development process at Electrolux starts with a strategy and planning phase that is followed by an Innovation Activation phase. In the first phase a strategic guidance is defined. A strategy is set for functions, groups and sectors in order to encourage an improvement of the business. In the planning phase, the future product and service portfolio is defined so that it conforms to the strategy and other requirements. The Innovation Activation phase is where the actual product development starts, which includes opportunity assessment (advanced development and insights to innovation), product development and commercial launch. The Innovation Activation phase is design to achieve good insights into opportunities, many inspired ideas, short time to market and many “right products”. The development process is shown in Figure 1.

Figure 1. The figure shows the overall product development process at Electrolux. Source: Electrolux 20121. 1.4.2 Advanced Development at Electrolux

Advanced development at Electrolux is the process in which new technologies systematically are being developed for the creation of new products in early phases, also called Front End Innovation. The purpose with advanced development is to reduce uncertainties about

1_{Innovation Activation Brochure, Electrolux, 2012, pp.15.}

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Innovation Activation (IA)

IA in detail Strategy Planning Innovation Activation

Cyclical Process Linear Process

PRODUCT DEVELOPMENT ITC/GROUP/ FUNCTIONAL/ SECTOR/ STRATEG BRAND PRODUCT TECHNOLOGY PLANNING OPPORTUNITY ASSESSMENT PRODUCT DEVELOPMENT COMMERCIAL LAUNCH INSIGHTS TO INNOVATION ADVANCED DEVELOPMENT

IA itself contains the following elements: – Opportunity Assessment (OA), an analytical

activity where we gather and investigate new and existing knowledge to further shape opportunities. – Insights to Innovation (i2i), a creative activity

where a cross-functional team defines a concept/solution for Product Development and commercialization.

– Advanced Development (AD), a process where we systematically develop new technologies for the eventual creation of new or next generation product or production method innovations. – Product Development (PD), a process where we

do everything from defining a product concept, assessing feasibility, specifying and verifying a product to production start-up.

– Commercial Launch (CL), the process where we create the communications, marketing and sales strategy that we need in order to launch and have commercial success in the new product, accessory, consumable or service.

Good to Know: Insights to Innovation (i2i) and Advanced Development (AD) are optional sub-processes. Most innovations go directly from Opportunity Assessment (OA) into Product Development (PD) and Commercial Launch (CL).

In a nutshell...

Innovation Activation is a way of thinking in which collaboration and improved flow of information are critical. It will help unleash innovation and market success.

1. Helping us develop a long-term global innovation roadmap, making sure we bring more of the right products to market, faster. 2. Giving us market success based on strong brands that consumers aspire to own, with innovations more consumers prefer over best-in-class competitors.

3. Establishing a culture infused with inspired thinking and systematic innovation with the right people, ideas, tools and processes to develop innovations faster and with more market success.

Good to Know: To support Innovation Activation we’ve introduced several new support tools, for collaboration, record keeping, evaluation, creation and handover. We’ll refer to these as we need to in the following pages.

PMF Gate

PMF Gate is a tool supporting all parts of IA, both as a portfolio as well as a project management system.

In the system, main models, opportunities, projects and launches can be managed on a detailed level as well as visualized in Project Generation Plan (i.e. Launch Plans, Cycle Plans, Platforms and Project Portfolios and other reports).

Using the system is mandatory for all parts of IA, as defined in detailed process steps. Day-to-day data entry will enable the whole organization to collaborate, analyze and make informed decisions about the core of our business – products.

Read more about PMF Gate on E-gate here:

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technologies, study the feasibility and reduce time and cost for products. Figure 1 above shows Advanced Developments function in relation to other functions. At Electrolux’s headquarter in Stockholm nine people are working with advanced development of food preservation products. The group is working module based and with focus on bringing cutting edge technology and customer oriented products to the market. The advanced development is a part of R&D.

The advanced development process is composed by four phases and checkpoints, in which decisions are made whether to drop the project or to continue to the next phase. The process start with a pre-study called API2 in which the project idea is described and evaluated based on costumer needs, strategic fit and the resources the project needs. The API follows by three checkpoints, APC00, ACP0 and ACP13. In the phase after API, ideas are being created and different solutions to the problems are being screened. The best solution according to the criteria is chosen. In the solution & verification phase the chosen solution is further developed. The project passes this checkpoint if the core problems are solved or if the uncertainties are reduced to an acceptable level. At this point the collaboration and handover to the product development team are being planned. The last phase in the process is hardware & solution. This phase includes the development of hardware where all functions of the solution can be tested. At the last checkpoint the project is handed over to project development and the responsibility is transferred. The advanced development process is illustrated in Figure 2. (Electrolux, 2012)

Figure 2. Shows the Advanced Development process at Electrolux. Source: Electrolux 20124_.

1.4.3 Introduction of PIEp

PIEp (Product Innovation Engineering program) is a research and change program that aims to increase innovation capability of people and organizations in Sweden. PIEp operates from five Swedish universities together with researchers, teachers and students, which are all included in PIEp network. The five nodes are Luleå University of Technology, School of Design at Umeå University, Royal Institute of Technology, Center for Technology in Medicine and Health, Jönköping University and Lund Institute of Technology. The network operates in close collaboration with the industries.

PIEp’s aims are reached through three sub categories;

• By creating a premise for a new climate of innovation through a dynamic network with a broad knowledge base.

• By running demand-driven research, regeneration in education and strengthening of cooperation with industry and society.

• By appealing to organizations that want to be competitive in the long run, innovative

2_{Advanced Project Initiation, (Electrolux, 2012)} 3_{Advanced Development Checkpoint, (Electrolux, 2012)} 4_{Innovation Activation Brochure, Electrolux, 2012, pp.33.}

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Advanced Development (AD)

Pre-study – API

An Advanced Development project starts with a pre-study evaluation, during which the project idea is described, formulated and evaluated by management in terms of customer needs, strategic fit and the resources it needs.

In the Advanced Project Initiation checkpoint, a decision is made on whether to start the Creation of Ideas phase of a new Advanced Development project or not. At the checkpoint, a project manager and a steering team for the project are appointed and resources for the project are booked.

Add the AD Project as a New Project in PMF Gate.

Creation of Ideas – ACP00

During the Creation of Ideas phase, different solutions to the problem are screened and the most promising ones are chosen. The selection criteria and the data are documented and included in the product concept definition (‘Product’ here means the expected outcome of the project). Market needs are analyzed. A project plan and organizational structure are created and key suppliers are identified.

At ACP00 the steering team or the project owner assess the selected solutions to see if they are good enough and check that the project is still in line with business targets. Based on this, they decide whether to continue the project, stop the project or to initiate a new loop of creation of ideas.

Solution & Verification – ACP0

This phase includes activities to further develop the chosen solutions and verify their technical and commercial feasibility and effectiveness.

This checkpoint takes place when core problems have been solved or uncertainties reduced to an acceptable level.

At this point, a decision is made either to place the result of the project as a verified idea in the idea bank, or continue the project up to ACP1 and create a hardware solution. The project proceeds to a hardware solution if the intention is to develop a completely modularized or standardized sub-system or product. At this stage a receiving Product Development project is normally identified.

To prepare the hand-over of the Advanced Development project output to the Product Development (PD) project team, members of the receiving project are appointed to be part of the ‘Hardware and Solution’ phase of the Advanced Development project, with a clear definition of responsibilities for activities and deliverables (e.g. testing, design for manufacturing, etc.). Further, it is verified that the AD project is compliant with the PD time plan, delivers solutions that respond to the requested performance levels and market needs, and features an acceptable cost impact on the PD project.

The common AD/PD planning and activities are signed off at this point.

Hardware & Solution -– ACP1

This phase includes all activities necessary to develop a hardware solution whose functions can be tested (i.e. a functional prototype).

At ACP1 the hardware solution is verified, and the application is proven, ready to transfer to Product Development and to be stored in the Advanced Development bank. These solutions can now be allocated to specific Product Development projects. For the hand-over to the receiving Product Development project, we verify that the presented prototype delivers solutions that respond to the requested performance levels and market needs, features an acceptable cost impact on the PD project, and is ready for integration into the Product Development project in the Project Feasibility phase with no need of additional testing.

ACP1 is where handover is signed off, transferring responsibility from the AD to the PD organization. This requires recognition and acceptance of the prototyped solution by the PD Project Manager, and the commitment of relevant AD resources for the PD project up to CPPF, and possibly also to CP00.

All documentation and checkpoint management should be handled in PMF Gate.

02

Creation of Ideas

01

Pre-study 03Solution & Verification

04

Hardware & Solution

API ACP00 ACP0 ACP1

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and want to increase their innovative capability.

PIEp builds on the integration of the competencies of engineering design, industrial design and business economy for sustainable future development.

1.4.4 PIEp Innovation Pilot Program

The Innovation Pilot Program is developed by PIEp and is intended for students in their 4th or 5th year of university studies with direction to innovation, design or management. The students are being trained in different methods developed by PIEp that can be applied to companies and organizations. Subsequently, the students will use the methods and act as innovation agents in an assigned organization in order to improve the innovation capability in organizations.

The purpose with the program is to organize researchers and students in network as competence resources to companies. The companies that are primarily targeted are small and medium sized technology and service companies. This summer the Innovation Pilot network includes 21 companies, 25 students and 6 researchers.

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2. METHODOLOGY AND PROCESS

This chapter describes the methodology of the study, the outline of the report and the literature study that is presented continuously in the report.

2.1 PIEp Innovation Pilot process

The thesis cover theoretical studies and applies the methodology of PIEp Innovation Pilot process, which is described in this section.

The methodology of PIEp Innovation Pilots process includes two steps. The first is an innovation screening (analysis of current situation) including interviews and a questionnaire survey about the creative climate. The second step is a change process, carried out as a MINT (Measuring Innovation Capability in Teams) workshop. The workshop that is performed at Electrolux is an adapted version of the MINT workshop. The process for this Master thesis is illustrated in the Figure 3 below. A more detailed description of the innovation screening and the change process is following in chapter 3 and 4.

Figure 3. The figure shows a modified version of the Innovation Pilot process applied in this Master thesis.

2.2 Outline of the report

Five main modules have been processed and presented in this Master thesis report. Firstly, the section 1. Introduction is given in order to give the reader an overview of the study and understanding of the conditions, than 2. Methodology and process describes the outline of the study. Subsequently, 3. Theory on innovation and change management presents the existing knowledge and former performed research in the field of innovation and change that is necessary for understanding the research. Thereafter the performed research is described in 4. Innovation Screening and 5. Change Process, MINT, where the research steps are being separately analysed, discussed and concluded. The methodology is then being discussed and concluded in 6. Analysis, discussion and conclusion of the methodology. Lastly, recommendations and suggestions on future work is presented in 7, Recommendations and future work. The outline is illustrated in Figure 4.

Innovation

Screening Change Process

Analysis carried out in form of deep interviews,

questionnaire surveys and observations of the organization.

Presentations of the results from the Innovation Screening Preparations

and training

The setup for this change process is a modified version of MINT, based on a discussion between the researcher/pilot and companies based on the analysis results.

Innovation Screening insight and expertise

Change processes action plan and new innovations

Time

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Figure 4. The outline of the Master thesis report.

Since the chapters 4. Innovation screening and 5.Change process are fairly extensive; Figure 5 and Figure 6 illustrate the outline of these chapters in order to provide an overview of the performance and layup of those parts.

Figure 5. The outline of chapter 4. Innovation Screening.

Interviews* • Result** • Analysis* • Discussion** Surveys* • Result* • Analysis* • Discussion* Discussion*and* conclusion** • Discussion*of*the* Innova9on*Screening* • Conclusion*of*the* Innova9on*Challenges* Theory*of*the* iden9ﬁed* Innova9on* Challenges* • Cross> func9onal* integra?on* • Integra9on* between* regions* Identified innovation challenges Interviews Surveys

Workshop Action plan

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Figure 6. The outline of chapter 5. Change Process, MINT.

2.3 Literature study

A thorough literature study was conducted to examine existing research within the covered fields in this study and it is presented continuously in the report as the study progresses. Chapter 3. Theory on Innovation and change is the first section that presents a part of the literature study, including literature that the methodology is based on, which enables analysis of the methodology and process. Further on, when the innovation screening was completed and the innovation challenges was identified, a literature study of the found innovation challenges was done. The literature of the innovation challenges is later used to interpret and analyse the result of the action plan. A literature study was also done before the workshop in chapter 5. Change Process, MINT that demonstrates the need and value of the workshop. Literature on interview techniques was also studied in order to facilitate the interview research as well as a workshop-facilitating course was taken.

Various databases were used such as Google Scholar, KTH Primo and Science Direct to find and download scientific publications from journals. This was complemented by written sources and electronic websites.

2.4 Criticism of sources

In this Master of Thesis mostly primary and secondary sources are used. The primary sources consist of the performed interviews, a survey research and one performed workshop and the secondary of articles, electronic websites and other literature.

The respondents of the survey and interviews have been chosen based on relevancy and accessibility. The acquired information from the survey and interviews is considered to be sufficient to give an indication that is needed in this Master thesis report, although the acquired information may not be sufficient for a research that is based on information with high validity. However, the validity of the primary sources can be discussed. More over, the secondary sources were chosen based on relevance and are assessed to be real.

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3. THEORY ON INNOVATION AND CHANGE

MANAGEMENT

This chapter is a summary of the existing knowledge and former performed research in the field of innovation and change management.

3.1 Innovation

Innovation is a broadly used concept that means different things to different organizations. Even within an organization the employees and managers may have a range of different views on innovation and the value of innovation. To promote implementation of an innovation strategy it is important to have a clear and common understanding of the characteristics of innovation within an organization. PIEp (2012) proposes a definition of innovation as: “Innovation is the process of creating and realizing new products or services that are successful in the market” and innovation capability as “Innovation capability is the ability to lead and drive the innovation process: to adapt to changes in the world, to understand what the customer wants to pay for, to motivate and develop employees for both problem identification and problem solving involving that includes idea management and realization of new offerings”. (PIEp, 2012)

To demonstrate some more aspects on innovation, The Austrian economic Joseph Schumpeter defined five different aspects of innovation in the year 1930:

“1. The introduction of a good (product), which is new to consumers, or one of increased quality than was available in the past;

2. Methods of production, which are new to a particular branch of industry. These are not necessarily based on new scientific discoveries and may have, for example, already been used in other industrial sectors.

3. The opening of new markets. 4. The use of new sources of supply.

5. New forms of competition, which lead to the re-structuring of an industry.”

When comparing the definitions they seem to differ a lot. However, what almost all the definitions have in common is that they contain the word “new”. Several common elements can also be found in each definition such as that something is changed (product or process), how much it is changed (completely new or only perceived as new), source of change (technology or other) and the influence of the change (commercial value or other). (Goffin & Mitchell, 2010, p.7-8)

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Figure 7. The Dimensions of Innovation in the Manufacturing Sector. Source: Adapted from Goffin &Mitchell, 20105

Electrolux view on innovation is stated in Innovation Activation Brochure (2012, p.30); “Innovation are not only new products and product categories. At Electrolux, innovations can have different dimensions: they range from upgrades to radical innovations, and can come from various areas in the organization. Innovations can be products, services, accessories, consumables and/or business models.” Since this study is performed at Electrolux their definition of innovation pervades the Master thesis work.

3.2 Innovation Capability

Lawson and Samson (2001) define innovation capability as ” the ability to continuously transform knowledge and ideas into new products, processes and systems for the benefit of the firm and its stakeholders”.

There are many different views on the factors in the product development work that influences on the innovation capability, these are described and categorized differently by several authors. Mabert et al., (1992) argue that there are in particular four structural elements that influence on the innovation capability, which are motivation, workings of teams, external vendor's cooperation with the teams and project control. Further on, Powell et al., (1996) mean that factors that are critical for the NPD process are a clear product strategy, entrepreneurial climate, recourses for the project, senior management and cross-functional teams.

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The Dimensions of Innovation in the Manufacturing Sector, Adapted from Goffin &Mitchell, pp.12. Commercial Innovation New Products New Services Manufacturing

Processes _ProcessesBusiness Business _Models

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Moreover, Lawson and Samson (2001) believe that there are mainly seven elements that improve the innovation capability in companies. These are: vision and strategy, harnessing the competence base, organisational intelligence, creativity and idea management, organisational structure and systems, culture and climate, and the management of technology. These are summarized by Lawson and Samson (2001) in a model to describe how innovation-focused firms can achieve success, and they claim that firms that invest in these factors have a higher likelihood of achieving sustainable innovation outcomes.

Tidd, Bessant and Pavitt (2005) argue that innovative organizations contain an integrated set of components that work together to nurture the innovative environment in the organization:

• Shared vision, leadership and will to innovate

Meaning a clearly formulated and shared vision of purpose and management commitment and support.

• An appropriate structure

An organization design with favourable surroundings that enables creativity, interaction and learning.

• Key individuals

The presence of key enabling roles such as gatekeepers, champions and promoters that energize innovation and internal venturing.

• Effective team working

Appropriate use of teams, with emphasis on cross-functional and inter-organizational teams and bringing together different perspectives and temporary teams.

• Continuing and stretching individual development

Long-term education and training to think and work “outside the box” and to ensure high levels of competence.

• Extensive communication

Communication in every direction, both internally in and externally in the organization but also between hierarchical levels and functions.

• High involvement in innovation

High involvement from employees in improvement activities may provide a powerful aid to effective management of change.

• External focus

Extensive networking to open up new options and to extend customer insight. • Creative climate

Fostering an open, creative environment receptive to new and challenging ideas. Support for intrapreneurial approach.

• Learning organization

Communication and sharing of knowledge and experiences. Learning across boundaries and into networks.

3.3 Change Management

In order to increase the innovation capability, organisations sometimes have to enforce a change process to implement new structures or behaviours that will improve the innovation performance. Christiansen, (2000) suggest companies to follow a guideline that includes three steps that should be repeated in a cycle until desired result is achieved, which are:

1. ”Diagnose what is not working well within the company

2. Decide which of the problems identified to begin working on first

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“Repeat 1. Assess progress, and reassess what is not working Repeat 2. Decide what to work on next

Repeat 3. Do the work, and make the changes “

1. Diagnose what is not working well within the company can be done by using a process also outlined by Christiansen (2000) that is described in 3.3.1 Diagnosing problems in an innovation system.

During the diagnosis of what is not working well within the company there is a possibility that the company discovers that they have problems in numerous of areas. Christiansen (2000) recommend that instead of trying to work on them all at the same time, you pick three or four of them to start with. Work on many problems in the same time will most likely result in overload and result in less being accomplished.

Before initiation of a change process it is important to be aware of what are going to be change and in what sequence, but also how the change will affect the people in the organization, meaning if they have to be trained for instance.

3.3.1 Diagnosing problems in an innovation system

Christiansen (2000) recommend a process for diagnosing problems in innovation systems and to identify means of fixing the problems. The process can be summarized into finding the problems, diagnosing their source, and designing a solution. The best way through this process is to ask a lot of questions, following below is a sequence of questions that is most likely to lead to a solution;

Step 1.

What is the problem?

What goal are we not reaching?

For example: are the costs too high? Too slow production? Or doesn’t the products fit with the costumers’ needs?

This step will answer what is the real issue that is failing the management’s expectations. Step 2.

What part of the innovation system is the source of the problem? For example: Idea generation? Funding? Development?

This step will answer what part of the innovation system is the source of the problem, and in which phase the problem does arise.

Step 3.

What management systems could be contributing to the problem?

For example: Project management system? Business management system? Senior management system?

This step answer what aspects of the company’s management system offer the most potential for achievement of the desired outcomes.

Step 4.

How do we change the management system that are contributing to the problem? This step answer how the company can improve to meet the problem in step 1.

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4. INNOVATION SCREENING

The innovation screening is divided into two parts; semi structured interviews and an electronic questionnaire on creative climate, in order to get a holistic view of the current innovation work and to identify innovation challenges. In this section the interviews and surveys are further described, analysed, discussed and concluded. This section does also present theory including existing knowledge and former performed research on the found innovation challenges.

4.1 Interviews

12 semi-structured interviews have been performed with persons from several departments, levels and regions at Electrolux. The interviews have been face-to-face meetings, telephone meetings and videoconference meetings and they have lasted between 60 to 90 minutes each. The positions and working roles of the interview persons are varying in order to get as holistic understanding of the organization as possible, including various regions and various disciplines. The functions that have been covered in the interviews are marketing, R&D and design, although R&D is most represented. The regions that have been covered are Europe, Asian Pacific, North America and South America. As a support in the interviews, an interview guide developed by PIEp was used to cover all relevant areas.

In order to facilitate the performance of the interviews, literature on interview technique were studied and applied, primarily written by Håkan Jonsson. In his work Praktisk Intervjuteknik (2009) he describes what preparations that are necessary for interviews, things that are important too keep in mind during the actual execution and how the post processing can be done.

4.1.1 PIEp Interview guide

The interview guide is developed by PIEp and is divided into different sections where each section focuses on a specific part of the innovation work and contains several questions related to that specific area. The guide used at Electrolux is adapted to the organization and incudes an additional area. The adapted interview guide includes questions that covers the following areas:

Innovation as value creation

Innovation is creating value by generating and utilize new ideas. This section aims to describe the respondent's approach to innovation - what it is for her/him. The point is trying to capture an image of the value that the company generates for its customers - what do they sell and who is the customer?

Vision and strategy

The innovation strategy is a part of the company's overall business strategy. It shows what kind of innovation that is needed in order to meet organizational goals and indicates a direction on how it should be done. If the strategy is not documented it can be found through these questions to get a picture of how the company looks at the innovation performance. This section highlights the view of how the company's innovation work is anchored and spread throughout the organization.

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This section gives a description on how the company understands its environment and its changes that may affect the company's direction. It describes how the company perceives signals in the environment to identify opportunities and threats and how the company interacts with external actors.

Idea management

Idea identification is a source for innovation and highlights how the company generates and collects ideas for innovation. This sections gives a clearer picture of how the respondent and the company is working to (1) generating ideas internally and how open it is to generate ideas together with customers and external partners, (2) how the organization collects ideas internally and externally. It also gives a picture if they use systematic methods to generate or collect ideas and how ideas are being evaluated.

Selection of project

Selection of projects is an activity where decisions are made about which projects that are actually proceeding to the next development phase. Is important to get an understanding of the decision making process. Some companies have structured processes where explicit criteria are used in the analysis. This section strives to describe the company’s approach, both formal and informal working methods, and to get a picture of how the portfolio of projects looks like, and if they have an explicit strategy for it.

Project execution

This section describes how the development process is working in practice, in other words how the work is organized, for instance if the work is organized in line functions or in special project teams, and if so, whether the teams are assembled temporarily or permanently. The section strives to answer the questions if there is a formal development process, what phases it includes and what tools are being used.

People and creative climate

An important part of innovation is the company's employees and the creative atmosphere, which has a significant impact on the innovative capability. This section describes how innovation is communicated within the company, how education and learning occurs, and if there are special incentives for innovation.

Adaption of the interview guide

Since Electrolux is a global company with complex organization that extends across continents, the collaboration between regions is interesting to study and analyse. One further section was therefor added to the interview guide called “collaboration between regions”. The purpose with the section is to get an overview of communication and integration between different locations and cultures.

4.1.2 Results

Following below is a summery of the viewpoints and thoughts that emerged from the 12 interviews. To clarify, the summery below may not reflect the entire organization but it might provide an understanding in the right direction of the current situation. The interview persons are anonymous and cannot be found in the reference list.

Innovation as value creation

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also to communicate the value of the product to the customer. An innovation has to be something new to the market; it has to be perceived as new in the customer’s eyes and provide the customer with benefits. All respondents think that it is very important for Electrolux to be innovative to stay competitive on the market.

Vision and strategy

Many respondents claim that the business strategy does not include a pronounced innovation strategy. But there is an organizational strategy that has started to be implemented in the business strategy. The new organizational strategy aims to work more cross-functional over the boarders, not only between different functions but also between regions. The three top chiefs of marketing, design and R&D have started a collaboration called Innovation Triangle to symbolize the new cross-functional organization.

Idea management

The fact that there are a lot of good ideas within the organization but few of them are presented and stored properly was substantiated through the interviews. It seems common that the value of the idea/concept is not fully communicated when presenting the idea since there is a knowledge gap between different functions. One respondent claim that communication of ideas should happen more spontaneous. Another respondent argue that the climate should be more open where ideas get better receiving and feedback when they are presented.

Selection of project

It appeared from the interviews that the selection of projects is mainly based on trends and opportunity areas. The criteria that are used when ranking the projects are level of innovation, time to market, pay back time and other financial aspects. There are no tools used when selecting projects, but the process is more structured now than a couple years ago. The people that make the selections are very experienced and base the selections on gut feeling. Some respondents find it hard to get resources to proceed with projects and some argue that too few risks are taken and that the climate has to be more risk-taking in order to let people to come up with more innovative ideas.

Project execution

The respondents give the impression that there is a clear product development process with well-defined checkpoints where decisions are being made if the project passes the checkpoint or if it drops out. The advanced development begins with the development of the technology; thereafter it is handed over to the product development that puts the product together and coordinates the rest of the functions such as design and marketing to mention a few.

Some think that the project goals can be better defined in order to facilitate the work during the project for different functions and some wish more feedback during the projects. There should be more integration on a lower level during the projects and the handover of projects from Advanced Development to Product Development should be more smoothly.

Collaboration between regions

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importance of establishing professional relationships between regions and documentation of the performed work.

People and creative climate

“Innovation is not a process; it’s a creative climate where you have the ability to express your ideas, and the management has to encourage the creative climate” was stated by one responded.

It also emerged from the interviews that the communication has been improved between departments during the last couple of years. Now there are younger engineers that are interested in other areas than just technology, they are more open to design. Even the designers are more interested in technology so there is a greater respect on all sides. There is also a great ambition to put the development forward.

4.1.3 Analysis and findings from the interviews

The respondents’ interest and motivation for innovation seems to be high since all of them believe that innovation is an important area for Electrolux to stay competitive on the market. The over all impression is that they have a rather clear vision about innovation and what it means for the company. However, the innovation challenges that appeared most frequently in the interviews are the integration between regions and cross-functional integration, and to some extent the formulation of project targets and the risk-taking climate. These are areas that the advanced development team is able to influence on, which is important because the innovation challenges will be the basis for the change process that involves the team in the process.

Cross-functional integration

A major part of the respondents stated that it is important with cross-functional development and that there should be more integration between functions. Some emphasized that the handover from Advanced Development to Product Development should be integrated earlier in the process and that the Innovation Triangle is a good structure, but needs to be followed better.

Integration between regions

Further analysis of the interviews showed that more than half of the respondents pointed out that there is a need for more global collaboration and better ways and structures to communicate. They expressed different problematic in this area, for example the need for transparency and to create relationships and a common language.

Formulation of project targets

Less than half of the respondents expressed a wish for clearer stated projects targets and better-formulated project briefs. One respondent claimed that; “the tighter project brief, the more creative you can be” and proposed that the value proposition always should be stated in the brief before starting with the project.

Risk-taking climate

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19 4.1.4 Discussion

Integration and communication of messages internally in the organization are areas that frequently appeared in the interviews. It is not surprising that those are important areas since Electrolux is a global and complex organization with distributed product development, which requires a lot of communication to share knowledge across the company. Further more, the risk-taking climate also appeared from the interviews as an important area. The risk-taking climate seems to be perceived differently to the respondents. Some argued that it risk taking ha a clear correlation with the resources and investments given on high-risk projects and that it is an area for managers to handle.

The interviews have been subjective analysed by the author, which means that it is the author’s understanding of the responses that forms the basis for the identification of the innovation challenges. In order to get a more objective view the understanding of the responses could have been ensured by a follow up session or a questionnaire survey that covers the same areas as the interview but provided to a larger amount of people in the organization, for instance. Another alternative could have been that more than one person performs and analyse the interviews. The way the interviews should be performed and what exact areas it should cover in order to get fruitful results depend on the organization and the conditions.

Furthermore, it can be discussed if the way of responding the interview questions is influenced by cultural conditions since people in some region were more talkative and had a more positive approach than in others.

4.2 Creative Climate Questionnaire

In addition to the interviews the innovation screening also includes a quantitative study of the creative climate across the organization. The quantitative study is being carried out in form of an electronic questionnaire that is being provided to employees in different regions, levels and functions via e-mail. The questionnaire is developed by Göran Ekvall and is further described in the following section.

4.2.1 Organizational climate for Creativity and Innovation

Göran Ekvall, emeritus professor of organizational psychology, got interested in proposal operations in the 1960th. In his tries to explain why some suggestion boxes in organizations always where empty and why some of them were full with ideas he coined the expression “working climate”. The working climate is defined as the behaviours, attitudes, feelings and moods that characterize a situation at the working place. Simply it is an attribute of the workplace, a behaviour that recurs in different situations. Ekvall (1996) formulated a number of dimensions that he considers are required to awake the employees' problem solving skills and creativity. The dimensions are described below:

Challenge

It is important that the members feel emotional involvement in their jobs. People are experiencing joy and meaningfulness in a high-challenge climate and therefore they invest more energy.

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Freedom in an organization makes people take initiatives, make decisions and discuss problems and alternatives. The opposite climate makes people passive and stay in establish boundaries.

Idea Support

In a supporting climate people are listening to each other and encourage initiatives and the ideas are received in a supportive way by workmates and bosses. In a climate where the idea support is low the responding to ideas are usually by raising obstacles and finding faults.

Trust/Openness

If the emotional safety in the organizations is high, the people dare to express their ideas and opinions. Communication is open and straightforward and initiatives can be taken without fear of ridicule in case of failure. In an organization where trust is missing people are afraid of being robbed of their good ideas and suspicious of each other.

Dynamism/Liveliness

In an organization with dynamism new things are happening all the time and there is a kind of psychological turbulence. Where the dynamism is low there are no new projects, no new plans and no surprises.

Playfulness/Humour

In a playful organization the atmosphere is relaxed and includes jokes and laughter. The opposite atmosphere is characterized by seriousness and stiffness where jokes are regarded as improper.

Debates

In a debating organization there are clashes between different viewpoints and ideas and many voices are being heard. Without debates people are following patterns without questioning.

Conflicts

In an organization where the level of conflicts is high, there are personal and emotional tensions where people dislike each other and have no control of impulses. Traps, gossip and slander are not unusual elements in this kind of organization.

Risk Taking

In a high risk-taking climate decisions are made rapidly and opportunities are taken. In the opposite climate people tend to hesitate a lot and they want to be on the “safe side” when they have to make a decision.

Idea Time

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Ekvall (1996) means that the organizational climate influences on the process that can bring innovative outcome such as the decision making, problem solving, coordination, communication, controlling, psychological processes of learning, motivation and creation. This relationship is illustrated in Figure 8.

Figure 8. Organizational climate as an intervening variable. Source: Ekvall, 19966

Ekvall spent many years during the 70’s and 80’s studying the creative climate in various organizations. He studied a sample of 27 Swedish organizations and divided them into 15 average organizations, 4 stagnated organizations and 8 innovative organizations. According to Ekvall an innovative organizations has the ability to develop new profitable products fast and to provide products with high commercial success, where a stagnant industry is unable to handle newness effectively and where the products are not very successful on the market. By letting the organizations answer a questionnaire that he named Creative Climate Questionnaire (CCQ) that looked at the ten dimensions mentioned above, each organization could be scored for their organizational climate. The stagnant group scored the lowest in all dimensions except from conflicts and the innovative group scored the highest on all dimensions except conflict. The results from the studies are shown in the Figure 9. Based on these studies a framework to analyse the questionnaire was taking form. The CCQ can be used as a tool to for organizations to measure the creative climate and compare the result with the reference organizations’ results. The CCQ is covering 10 dimensions of the organizational climate including five questions per dimension. (Ekvall, 1996 and M1Creativity, 2012)

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Figure 9. Result from Evall's studies that shows the creative climate in an innovative and stagnant organization. Source: Adapded from Ekvall, 19967

4.2.2 Results

Due to the research availability the CCQ was provided to approximate 200 people in different regions and function as an electronic survey, where the R&D function was overrepresented. 98 people responded and completed the questionnaire, which corresponds to a response rate of 49%. Table 1 and 2 below shows the distribution of the responses.

Table 1. Number of responses per location.

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Result from Evall's studies that shows the creative climate in an innovative and stagnant organization from Ekvall, 1996, pp.106-122.

Location Number of responses

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Table 2. Number of responses per function

The result from the responses is shown in Figure 10 below where the green line is representing an innovative organization and the red line a stagnant organization. The blue line in between is representing the creative climate at Electrolux. More information about Ekvall’s CCQ and the reference companies can be found in previous section. The survey questions cannot be shown in this Master thesis due to publish rights but the response rate from the employees can be found in appendix 9.1.

Figure 10. The graph shows the perceived creative climate at Electrolux, based on the responses from CCQ In order to compare the perceived creative climate between the different regions, the result from the survey was disaggregated by regions, see Figure 11.

Function Number of responses

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Figure 11. The graph shows the perceived creative climate disaggregated by regions, based on the responses from CCQ

Figure 12 below shows the results of Swedish responses in comparison to the average responses of the climate at Electrolux, where the green line is representing Sweden and the blue line represents the rest of the company.

Figure 12. The graph shows Sweden’s perception of their creative climate in comparison to the average perceived climate at Electrolux, based on the responses from CCQ

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The analysis of the result from the CCQ at Electrolux is done in relation to Ekvall’s analysis of the reference industries and their levels of the dimensions. See section 4.2.1 Organizational climate for Creativity and Innovation for a more detailed description of each dimension.

Electrolux in general

As Figure 10 shows, the result from the CCQ indicates that the creative climate in Electrolux’s organization is overall good. However, the graph also indicates that challenge, freedom and playfulness/humour are approaching the stagnant line.

Low challenge can be identified by the employees are feeling indifference, apathy and lack of interest for the job. A climate with low freedom includes passive people who are not taking own initiatives or decisions and are anxious to stay inside established boundaries. And a climate with low playfulness can be characterized by seriousness and gravity where the atmosphere is stiff and jokes are regarded as improper.

On the other hand the result shows that the climate includes many good debates, there is strong level of trust/openness, risks are being taking and there is a good support for ideas. In a debating climate there is room for different viewpoints and many voices are being heard. The strong trust and openness means that the communication is open and straightforward in the same time as people not are suspicious and where initiatives can be taken without fear. A risk taking climate is characterized by decisions being made fast and arising opportunities are taken.

A good support for ideas means that ideas and suggestions are being received in a supportive way by workmates and managers. (Ekvall, 1996)

Figure 11 shows the result from responses disaggregated by region. The figure demonstrates that the responses are very scattered over the regions. The creative climate seems to differ a lot depending on the location.

Latin America

According to the responses from the CCQ, the climate is appeared to be most creative in Latin America where the responses indicate that Latin America is the region with most creative climate in almost all dimensions. However, Latin America has poorly result in the conflict dimension where the responses correspond to a stagnant organization. According to Ekvall (1996) a high level of conflicts means that there is a presence of personal and emotional tensions and where people dislike each other.

North America

The Figure 11 also shows that North America’s perceived climate is less creative in every dimension except from conflicts, where they have they second less creative climate with a high presence of conflicts. The perceived climate is approaching a stagnant climate in almost all dimensions.

Europe

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26 Asian Pacific

The Asian Pacific climate is perceived to be moderate in many dimensions. According to Ekvall (1996) the responses imply that there are many good debates and there is a trust/openness in the organization, but on the other hand there is little playfulness/humour, challenge and freedom.

Sweden

Figure 12 shows that Sweden’s creative climate is perceived as superior to the climate in the rest of the organization. The graph shows that the climate in Sweden is perceived better than the climate in the innovative reference companies in most of the dimensions. The dimensions that are far better in Sweden than in the rest of the organization are idea time, freedom, debates and trust/openness. However, the responses indicate that the dimensions that do not differ a lot from the rest of the organization are risk-taking, conflicts and dynamism/liveliness.

4.2.4 Discussion

The reason why the creative climate appears to differ much between the regions may depend on different factors, one possible explanation is that the cultural differences affect the climate. Latin America might have a culture that in general is more creative and open while North America’s culture might be stricter with more boundaries and duties, which could be reflected in the organizational climate.

One other explanation could be that the cultural differences affect the way people respond to questionnaires where the cultural attitude is reflected in the way the score the different dimensions. Latin America might have a positive approach where they rather score too high than too low if they are uncertain, while North America could have the opposite scoring approach.

The explanation to why Sweden’s climate is superior to the rest of the organization’s climate could also depend on different factors. One factor could depend on the establishment of structures and processes, which in turn depends on the office size. Since the HQ is in Sweden it make sense that it is the largest office with set structures and processes. It could also depend on the culture we have in Sweden.

Further cultural studies and analysis are required to get a reliable understanding of the underlying causes of the varying regional climates and why Electrolux’s climate has good debates but low challenge and low playfulness/humour.

4.3 Discussion innovation screening

The innovation screening provides a holistic view of the current situation across the organization. The analysis was summarized into only a couple of innovation challenges. Only the most occurring innovation challenges are highlighted in the result and analysis of the interviews, which means that it does not have to be the most critical ones.

The CCQ focuses on the creative climate, which only is a part of the innovation capability together with many other aspects. Tidd, Bessant and Pavitt (2005) argue that there are several elements for improving the innovation capability in an organization:

• Shared vision, leadership and will to innovate • An appropriate structure

• Key individuals

Innovation Capability at Electrolux

Innovation Capability at Electrolux

Screening of innovation challenges

and development of action plan

LINA TORELL

Innovation Capability at Electrolux

Screening of innovation challenges and development of action plan

By

Lina Torell

Sammanfattning

Abstract

FOREWORD

NOMENCLATURE

Abbreviations

TABLE OF CONTENTS

1. INTRODUCTION

1.1 Background and problem description

1.2 Purpose and Aim

1.3 Delimitations

1.4 Introduction of Electrolux and PIEp

2. METHODOLOGY AND PROCESS

2.1 PIEp Innovation Pilot process

2.2 Outline of the report

Innovation Screening insight and expertise

Change processes action plan and new innovations

2.3 Literature study

2.4 Criticism of sources

3. THEORY ON INNOVATION AND CHANGE

MANAGEMENT

3.1 Innovation

3.2 Innovation Capability

3.3 Change Management

4. INNOVATION SCREENING

4.1 Interviews

4.2 Creative Climate Questionnaire

4.3 Discussion innovation screening