Hans Stråberg took the reins of Electrolux in 2002, just in time to face the daunting challenge of a rapidly polarizing appliance market. Low-cost Asian players, such as Haier,¹ were applying pressure at the low end of the market, while premium competitors like Bosch, Sub-Zero, and Viking were continuing to grow at the expense of middle-of-the-road brands.² The result wasn’t a crisis for Electrolux but rather a slow erosion in performance, with EBITDA (earnings before interest, taxes, depreciation, and amortization) margins dropping steadily from 9 percent in 2002 to around 8 percent in 2005.³

The company’s response has extended far beyond cost cutting. To be sure, Stråberg has guided Electrolux through a major restructuring that includes importing more parts from Asia and shifting assembly operations from about 20 sites in Western Europe and the United States to lower-cost countries such as Hungary, Mexico, Poland, Russia, and Thailand. At the same time, he has pushed the company to sharpen its value proposition at both the high and low ends of the market by taking a fresh look at what consumers really want and by creating new products that are specifically aimed at the purchasing patterns and lifestyles of...