Electrolux AB-Managing Innovation Case Study

CASE WRITE UP “Electrolux AB - Managing innovation”
Prepared by: Emilio Ramirez Zuñiga 000126489, Nov 2015

INTRODUCTION

Established in 1919 Electrolux was a result of a merger between two Stockholm-based companies. Now at days, it is the second largest kitchen and home appliances company worldwide with $16.3 billions in revenue, employing more than 60, 000 people and operating in 12 home appliances product categories.
The company growth strategy was principally through mergers and acquisitions. Which has an impact in the organizational culture and diversity.
Electrolux had a diversified geographic presence, operating 58 manufacturing facilities in 19 countries, selling 40 million SKUs annually across 150 countries and had over 25 global brands.

What is the role of innovation at Electrolux?

Innovation at Electrolux first surfaced in the 1920 when the salesmen technique was to sell products from house to house by demonstration and after the technique evolved into an industry known as “direct sales”, this is a clear example that innovation was present since the beginning and was important.
Electrolux constantly reinvent their operations segments such as technology, business model and market segmentation.
In 2002 they moved beyond its core mid-market segment, the attribute of product durability was reinforced by product design and product affordability and individual business units were setting up “customer insight teams”, which shifted the company center of gravity to the consumers. Also, production was reallocated to low-cost countries; product mix was rationalized and reduce product platforms in order to enable the standardization
In 2003 they established an annual design competition called Electrolux Design Lab were the contest became a recruitment ground for talent in design.
In 2011 Lundberg and Rask came together to coordinate innovation initiatives by taking into consideration the company core business and with the objective of unleashing new growth, in order to achieve a differentiation by

Have a better due diligence from the companies they are acquiring in order to fit the innovation.
Advantages a) new talented with outside, new and fresh ideas, b) Great fit between the objective and the new companies, c) New efficient processes and consumer needs fulfill
Disadvantages a) Smaller companies with lower market penetrations, b) new employees afraid of big companies and have a bad fit, c) have a bad fit with the current status of the brand.

2. Partner up with companies such as Google, Samsung, Apple and Facebook.
Advantages a) have a better understanding of the final consumer with data from Google or Facebook b) have a connection with home appliances and mobiles such as apple and Samsung c) share some insights of the consumers tastes of innovation or design.
Disadvantages a) bad fit between the brands (social network and home appliances), b) Don’t have interest one of the parties because doesn’t add value to the