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SKUNK WORKS
The Garage That Saved Whirlpool's Soul
A worker-run innovation team has led the stagnating appliance maker to entirely new markets -- and the launch of its first breakout product in 50 years.
By Bob Parks, February 2003 Issue

Three years ago, the nation's biggest appliance maker, $10 billion Whirlpool (WHR), seemed to have reached a dead end. Sales growth had stalled. Price pressure was unrelenting. And though profits were holding steady, it was partly because of brutal cost cuts the company had imposed throughout the 1990s. As for the opportunity to turn things around with a breakout product -- well, let's face it: Washing machines are washing machines. "It's a stalemate industry," Whirlpool vice president Nancy Snyder admits. "If you walk into the appliance department at any retailer, everything looks the same. We call it the sea of white."

David Whitwam, Whirlpool's chairman and CEO, came up with an idea to save the 90-year-old American brand from ossification: He'd put his employees in charge of helping to plot the company's future. Whitwam called corporate innovation guru Gary Hamel, whose consultancy Strategos was known for helping companies launch employee-run skunk works. A Strategos team parachuted in and picked two dozen workers from every part of the company's U.S. operations to head up a new-ideas team. Whitwam set aside $50 million, or 20 percent of Whirlpool's entire research and development budget, to get the ideas launched.

The first results of that experiment are finally in. In November the company unveiled Gladiator, its first major brand in nearly 50 years, joining Whirlpool, Kenmore, KitchenAid, and several others. But Gladiator doesn't wash clothes, do the dishes, or make dough. It consists of slick-looking appliances for tidying up a garage: hooks for a wall organizing system, tool chests, even a "Beer Box" -- a supersize fridge for suds. While the old Whirlpool machines appeal mainly to women, the new Gladiator line, called GarageWorks, beckons to workshop-proud males between 35 and 55. Now on sale in 850 Lowe's (LOW) stores around the country, Gladiator is expected to generate $300 million in annual revenue by 2007. Whitwam is so encouraged that he has since upped the skunk-works budget by 60 percent to $80 million.

Gladiator's emergence from the suggestion box could be considered a small miracle. Some execs fought Whitwam's program at first; others were simply nonplussed. When Todd Starr, a former warehouse manager and logistics expert, was chosen to join the ideas group, he went to his boss and asked, "Can you make that go away?" But eventually he warmed to the task. First, Starr and others set up an intranet site where any of Whirlpool's 25,000 U.S. employees could post ideas for new products. The team tracked an idea as either "gearing up," "in limbo," or "shelved." If it had legs, the employee who suggested it would pair up with a "sponsor" like Starr, then pitch the "I-Board" -- a kind of internal venture capital outfit -- for R&D funding. After a group of marketers and engineers sent in their brainstorm for the garage, Starr led Gladiator from concept to working prototype in six months. (With trial came error, of course; last year 73 new ideas were mothballed, including "KleenShoe," a gizmo that cleans your brogans while they're still on your feet.)

New additions to Gladiator continue to pop up on the company intranet. Last year six workers at a Whirlpool manufacturing plant in Oxford, Miss., asked company president Jeff Fettig to check out a mock-up. What they had built was an all-in-one tailgate party system for the car, with a microwave, refrigerator, and beer tap all built in. Called Gater Pak, it fits snugly in the back of a minivan or SUV and slides under the Gladiator workbench for handy storage. It's due in stores in time for next football season. Gater Pak's product manager? Erstwhile warehouse boss and reluctant innovator Todd Starr.

Suggestion-Box R&D
Ideas from the rank and file that got Gladiator to the garage.
Concept to prototype: 6 months
Target customer: 35- to 55-year-old male
Projected revenue by 2007: $300 million
1. Tough-guy tread plate. A worker at one of Whirlpool's manufacturing plants suggested using muy macho tread plate -- the nonskid steel surface on the bumpers of fire trucks -- to finish the cabinets.
2. A nod to neatniks. Flecks of gray in the "hammered granite" paint help disguise dust.
3. Supersize everything. Casters and door handles are all larger than necessary, making the cabinets look extra-sturdy.
4. Creature comforts.The 2-foot-wide Beer Box keeps frosties cool in the summer, and its built-in heater keeps them from turning into ice blocks in the winter.




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