Swedish Electrolux Moves from Capital-intense to Talent-intense

by Robert F Brands

Swedish Electrolux Moves from Capital-intense to Talent-intenseAfter getting your house in order it is time to move from ideation to the NPD processes. This process is defined as the complete cycle of creating and bringing a new product to fruition – from idea creation to product sale; from concept to launch. New Product Development is addressed in the third step in Robert’s Rules of Innovation, and global appliance leader, Electrolux, teaches by example:

Electrolux, a Swedish Appliance Company is the second largest global appliance supplier behind Whirlpool. The company sells products branded as Frigidaire, Molteni, and AEG and their Grand Cuisine Line offers high-end kitchen appliances. Carol Matlack from BusinessWeek.com provides some insight into Electrolux’s transition from “being a capital-intensive organization to trying to be a talent-intensive organization”.

Step 1: Generating New Ideas

“What is the most unpleasant thing about vacuuming? Swedish appliance maker Electrolux (ELUXA:SS) has a lot riding on the answer. So two years ago the company’s market researchers spent hours in homes in Australia, France, and Russia, watching and asking questions as people vacuumed, then cataloging the ‘pain points.’”

Ask yourself when is the last time you used your product or service? Many Innovations, product and service improvements can originate from this effort. Look for product improvements, easier assembly, better packing, a better service experience…

The answer to both fuels new ideas.

Step 2: Screening the Idea

“Bagels vacuum cleaners are rapidly gaining market share globally, and Electrolux wanted to introduce a model that would stand out from competitors such as Dyson and Hoover.”

Electrolux asked several customers what they felt were the most annoying things about vacuuming.  Their researchers then spent hours observing homeowners vacuuming their carpets and recording their findings.  These briefs were then turned over to designers for modification ideas.

Step 3: Testing the Concept

“The company tests potential [UltraCaptic] designs with focus groups. Anything with a less than 70 percent approval rating is deemed not ready for prime time.”

The UltraCaptic design was originally a modification to an existing vacuum created by research and development after studying some of the unsavory characteristics of existing vacuums.

Step 4: Business Analytics

“The R&D side of the triangle weighed in next, assessing the pros and cons of different approaches. For example, a motorized compactor would be more powerful than a manual piston, but would be more expensive and require batteries. In the end, the manual compressor won.”

R&D became involved in the new product development process only after two rounds of focus groups were conducted with potential consumers.  The first priority of the company was to find out what customers wanted in a vacuum.

Innovation should not be just R&D’s responsibility; all should be involved from customer, to sales, finance, customer service and operations.

Step 5: Beta / Marketability Tests

“The company tests potential designs with focus groups. Anything with a less than 70 percent approval rating is deemed not ready for prime time.”

Electrolux went through three separate rounds of focus groups: one before design and two after initial designs to ensure the UltraCaptic was a vacuum cleaner that consumers wanted. 

Step 6: Technicalities + Product Development

“Before settling on a final design, Electrolux convened additional focus groups to review the alternatives, pitting them against models offered by rival companies, with brand names concealed. The 70 percent rule was applied at each stage.”

Design variations were made and compared to existing products from competitors.

image credit: electrolux.com

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In his Innovate to Thrive andResults Driven Innovation Robert Brands shares the secrets of his ten rules of innovation. You will learn how to continually create and sustain the innovative concepts your business needs to stay ahead in the game. Connect with Robert on www.innovationcoach.com to learn more.