Edited by Mary J. Cronin and Tiziana C. Dearing, Managing for Social Impact (Springer, 2017) represents a collaboration between academics and practitioners in the fields of corporate social responsibility and social impact. Subtitled Innovations in Responsible Enterprise, the book includes chapters by two Boston College alumni—Liz Delaney '00, program director at the Environmental Defense Fund in Boston, and Ruthbea Yesner Clarke, M.B.A./M.S.W. ’99, who directs the Smart Cities Strategies practice at International Data Corporation.
The book also features an in-depth case study of social innovation at Whirlpool, by Senior Lecturer Bridget Akinc (Marketing). Here are two passages from that chapter titled “Transformation Through Social Impact at Whirlpool Corporation.”
INTRODUCTION
In 2000, Whirlpool Corporation, the largest appliance manufacturer in the United States, was facing steep market competition and stalling sales growth. The 90-year old corporation faced significant costs and increased price pressures, particularly from manufacturers outside the United States. Although profits were still holding constant, much of this profitability was due to significant cost cutting the company had imposed throughout the 1990s. The industry as a whole appeared stuck in a commoditized environment where differentiation, let alone innovation, seemed impossible. “It’s a stalemate industry,” Whirlpool Vice President Nancy Snyder admitted. “If you walk into the appliance department at any retailer, everything looks the same. We call it the sea of white” (Parks 2003).
As Whirlpool was experiencing these challenges in the marketplace, the core urban areas of Benton Harbor, Michigan, where Whirlpool had been based for almost 90 years, were also in trouble. Benton Harbor’s economic conditions had declined along with other manufacturing hubs across the Great Lakes region, suffering thousands of job losses, and subsequent poverty, unemployment, and education challenges.
CEO David Whitwam, Whirlpool Corporation’s chairman and CEO in 2000, conceived of a way to rejuvenate the appliance manufacturer and think about competing on a global scale: by engaging employees on innovation from within. Whirlpool embarked on a prolonged, intensive effort to understand and respond to genuine customer needs in order to create breakthrough products and services that would cultivate long-term customer loyalty. Simultaneously, Whirlpool engaged with community partners, state and local government, and employees to understand and improve the economic conditions facing the urban areas of Benton Harbor, Michigan. With customers as the focus and innovation as the method across a global landscape, Whirlpool embarked on a journey to transform its business for long-term success. Whirlpool shifted from competing primarily on appliance features and price to a strategy of understanding and meeting deeper consumer needs. In the process, it discovered the power of purpose-driven engagement with employees, customers, and its community.
Today, Whirlpool’s sense of purpose drives its product innovation as well as its engagement with customers and the local community. Whirlpool differentiates itself through a clear sense of purpose, grounded in the values of community, family ties, and care for one another. On its corporate website, Whirlpool states: “We exist to create purposeful innovation that helps keep homes running smoothly so personal and family lives can flourish” (2016b). While many companies make similar declarations, Whirlpool executives will tell you that the challenging decision to stay and invest in the community of Benton Harbor, after most local manufacturers had moved or closed down, ignited a transformation at the core of its business. Whirlpool’s mid-level managers who have joined the company in the last decade point to the company’s commitment and reinvestment in Benton Harbor as playing a central role in its values as a business. This chapter analyzes the evolution of Whirlpool’s commitment to local corporate responsibility and broader social impact during the period between 2000 and 2016. Starting with the Board’s decision to stay in Benton Harbor and double down on economic redevelopment projects locally, it explores how prioritizing social impact helped to trigger a dramatic shift in the trajectory of a company entering its second century of business.
PURPOSEFUL PRODUCT INNOVATIONS
Inspired by Care as the Whirlpool brand purpose, product design teams started to reshape their conversations in product development away from features and functions to more human dimensions for how to make care easier, less time consuming, and more energy efficient. The design team embraced the tagline “Designed to Simplify,” which moved the focus from “bells and whistles” in the design process to making chores simplified and more efficient. Through observational market research on families preparing meals and doing laundry in urban and suburban households at different socioeconomic levels, the Whirlpool product teams focused their innovations on creating “care-driven products” that worked more efficiently for families and were better for the environment.
One such new product was the CookCoach system: a Whirlpool wall oven that contains a digital thermometer, reducing cooking time and measuring food temperatures to alert the home chef to when everything is done. Another innovation came with the HybridCare Dryer that uses a ventless technology to allow families to install their laundry machines virtually anywhere, including tight spaces in smaller apartments and homes, and an Eco-Dry setting that uses 73% less energy than traditional washer/dryer pairs to help families care for the planet and save on power Transformation Through Social Impact at Whirlpool Corporation cronin@bc.edu 120 bills (Whirlpool Brand 2016). Another product, Whirlpool’s top load washer, received the top award at the 2016 Consumer Electronics Show as an example of “Tech for a Better World.” This new Smart Top Load Washer was one of the first appliance brands to integrate to Amazon Dash Replenishment, so that families would not have to go out to purchase more detergent. Instead, the appliances estimate when detergent is running low and automatically order it from Amazon’s replenishment service.
Another innovation that created a new path for shared caring is the Connect to Care feature, for the first time inviting interested consumers to share in and support Whirlpool’s work with Habitat for Humanity while doing the laundry. With Connect to Care, families can opt in through a mobile application to make an automatic donation to Habitat for Humanity of 15, 25, or 50 cents with every wash cycle. For each load of wash, the charitable donation is made through Habitat for a family in need. Explained by Ben Artis, the Senior Category Manager for the Connected Home, “We’ve seen this trend for automated giving and one-for-one donations, but we really haven’t seen that take place in the Smart Home. Whirlpool is excited and proud to be the first to recognize that the Smart Home gives us a new platform to extend that donation to those in need.” Launched for the 2016 year, the total amount of customer donations during the year depends on the number of participants in the program and frequency and level of their donations, but Whirlpool has committed to a direct donation to Habitat of up to $100,000 in year one as a contribution to the program (Whirlpool 2016c).
These innovations have garnered Whirlpool more recognition than an appliance manufacturer is accustomed to receiving; for example, at the Consumer Electronics Show in 2016, where awards are given to products for outstanding design and engineering across 28 product categories, Whirlpool received an unprecedented nine awards for its appliances, including categories for Eco-Design and Sustainable Technologies. Over the past 2 years, Whirlpool has transformed its company to integrate its purpose in helping families through its product innovations, and tying their products to philanthropy for families in need.
PURPOSE-DRIVEN PACKAGING
Mindful that a consumer’s experience with a new product begins with the package, Whirlpool’s packaging team looked for ways it could also listen to the consumer and create a deeper connection. The packaging team found three ways that it could embrace the brand purpose for families. The first and most obvious example was to ensure that recyclable cardboard was incorporated in the packaging, to minimize the impact on the environment. The two more subtle ways of rethinking appliance packaging materials considered how to reach the families receiving the new packages. First, through observational data, Whirlpool found that a vast number of its customers had children who wanted to take the big appliance box and invent an imaginary toy from it. Embracing the idea of the repurposing of the box for an imaginative toy, B. Akinc cronin@bc.edu 121 Whirlpool began uploading videos and printing instructions for kids to create different kinds of vehicles, from cars to rockets, out of the huge appliance boxes. This Every day, care™ packaging embraced the whimsical wishes of families to reuse these big boxes for imaginary toys.
Second, Whirlpool created new, Post-Purchase Care Packages. With a note entitled Made with Care “from our family to yours” signed by the Whirlpool employees involved in making and shipping the appliance, the care packages included treats and goodies that can be used with the new appliances, themed to the product category. For example, a new microwave care package for “Family Movie Night” contains microwaveable popcorn, a coupon for free movie rental, a microwave cookbook, and the use and care guide with installation instructions. With this small packet, the ordinary packaging of the appliance manual was transformed into a tangible gesture of support for how customers use appliances in practice.