philips CEO speech in JapanOctWord下载.docx

philips CEO speech in JapanOctWord下载.docx

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NikkeiGlobalManagementForumOctober29th:

“ManagementStrategiesforRealizingGlobalCompetitiveness”

∙Clickheretodownloadthepresentationslides

Transformthecompanytobecometrulymarket-driven

1Introslide

LadiesandGentlemen

It’sagreatprivilegetoaddresssuchadistinguishedaudienceonthebroadthemeofglobalcompetitiveness.

I’dlikemakeastartwithaveryobviouspointthat’spartlyhiddenbehindtheharmless-soundingword“competitiveness”.Youcan’thavecompetitivenesswithoutcompetitors.Tradingblocs,countries,industries,companies,technologiesandevenindividualsallcompetewitheachotherintheglobaleconomy.

It’scommonwisdomtosaythatcompetitionmakesonestronger.Ibelievecompetitionmakesuschangeandgrow.Mytopictodayistheprocessoftransformationthatcompaniesmustundergotobecometrulycompetitiveonaglobalscale.

EverychildknowsexactlywhatTransformersareandso,Ibelieve,doyou….TheywereinventedrighthereinJapan.

TransformersonlybecameabigworldwidehitthissummerthankstoaHollywoodmovie.OnemomentTransformersareharmlesschildren’stoyswithfamiliarshapes,andthenextamysteriouschangeturnsthemintorobotswithawesomepower.

ButevenHollywood’swildestimaginationisdwarfedbythepaceandscaleofchangeintherealworldunleashedbycompetition.

TodayIwanttotalkaboutTransformersinbusiness–andIhopeyou’llallowmeusemyowncompany,PhilipsElectronics,asacasestudyinchange-ledinnovation.SomystoryisallabouttransformingPhilipsfromahighvolumeelectronicscompanytoagloballeaderinHealthcare,LightingandConsumerLifestyle.

Weseehugechangesoutthereaffectingotherindustries–pharmaceuticals,telecomsandITtonamejustafew.IhopewhatIhavetosayaboutchangemaybeapplicabletoyourownareaofbusiness.

Slide2.Smilingcurveslide

Ourtransformationjourneystartedinthelate1990swiththeobservationthatthedaysofverticallyintegratedtechnologycompanieswerecounted.Intheworldofelectronics,wefoundthatmostaddedvaluewasincreasinglytobefoundatthetwoendsofthechain.Ontheonehand,alotofvalueiscreatedonthetechnologyside,i.e.inR&

D,bymeansofpatentsandthecreationofstandardswiththecorrespondinglicensingprograms.

Ontheotherhand,inaworldwheretheconsumerisfacedwithendlesschoices,astrongbrandanddirectcontactwiththeconsumerprovideexcellentopportunitiesforcreatingaddedvalue.Themiddlepart,thestraightforwardassemblyofelectronics,isnolongeranactivitywithwhichcompanieslikeourscandistinguishthemselvesorachieveacompetitiveedge.

Thisphenomenonisknownasthe‘SmilingCurve’,whichStanShih,thewell-knownfounderoftheTaiwanesecomputercompanyAcer,formulatedfortheHighVolumeElectronicssectorinthe1990s,andintoday’sdigitalworld,thisphenomenonisevenmoreapparent.

Soafterwenotedthis,theveryfirstthingwedidwasgettingridofourmanufacturingactivitieswherewedidnothaveacompetitiveadvantage.Mindyou,we’restillproducingalotofproductsourselves.Inlightingforexample,orinourrotatingshavingheads,thereisalotofhightechmanufacturingthatnoonecandobetterthanus.Butassemblytypeofworkhasallbeenoutsourcedlongago.

Buttherewasmoretodo.Werealizedthatincreasinglythetraditional,verticallyintegratedelectronicsindustryincreasinglywaspartingintothreedifferentsectors–atechnology-focused,componentstypeofindustry,amanufacturingindustryandanapplicationsindustry.Eachoftheseplayadifferentgame,withdifferentrules,andeachattractsdifferentstake-andshareholders.

WeatPhilipswereoneofthefirstcompaniestoanticipatethisdevelopmentandfundamentallyrepositionourselves.Wehavemadethestrategicchoicetoplaytheapplicationsgame.Thisdecisionformedthebasisofthetransformationprocesswehavesubsequentlypursued.

Slide3.Redefiningstrategy–becomingmarketdriven

Choosingtheapplicationsgamewasnotanobviouschoice,becauseatthattimePhilipswasverymuchperceivedandoperatingasatechnologycompany.OurvolatileSemiconductors,ComponentsandConsumerElectronicsdivisionswereattheheartofthecompany,whilethemoreapplicationorientedMedical,LightingandDomesticAppliancesbusinessesweresolidperformersinthebackground.

Wehavecompletelyrebuiltthisportfolio.ThemajorityofourComponentsactivitieshavecontinuedontheirownorwithothers,forexamplethesuccessfulLCDmanufacturerLG.PhilipsLCDwasfoundedin1999.LastyearwehadamajorsuccessinsellingamajoritystakeofoursemiconductordivisiontoagroupofprivateequityinvestorsandfoundingthenewcompanyNXP.OntheotherhandwehaveinvestedalmostEUR5billioninacquisitionsoverthelasttwoyearsalonetostrengthenourhealthcareandlightingbusiness.Andwefundamentallychangedourconsumerelectronicsstrategybygoingbeyondtraditionalaudioandvideotechnologyappliancestoconsumers’broaderlifestyle,emotionalandexperientialneedsandinterests.

Butrebuildingtheportfolioisnotenoughtotransformacompanywithacentury-oldheritage.Werealizedthatifwewantedtobeintheapplicationsbusiness,wealsoneededtomaketheusersofourapplicationsthefocuspointofallourdecisionsandactions.Inshort,Philipshadtobecomepeoplefocusedandmarketdriven,ratherthantechnologydriven.Thisistheessenceofourtransformation,representingahugeturnaroundcomparedwithourpositionintheindustryonlyafewyearsago.Aturnaroundthatmanyofourcompetitorsstillhaveaheadofthem.Letmegointomoredetailsonafewofthethingswedidtoachievethat.

Werelaunchedourbrandin2005aroundthepromiseofsenseandsimplicity,reflectingourvisionthatpeoplewantthebenefitsfromtechnologywithoutthehassles. 

Theestablishmentofastrong,single,recognizableandappealingbrandhelpedusrisefrom65thto42ndplaceintheInterbrandlistoftheworld’smostvaluablebrands.

Slide4:

BrandIceberg

Simplicityisn’tjustabrandslogan:

it’sourdifferentiation,bothintheproductsandservicesweofferandinthewayweinteractinternallyandwithourcustomersandstakeholders.Simplicityiswayofbehavingthataffectseverythingwemakeanddo.Forinstance,onNovember15thall128,000PhilipsemployeeswillcelebrateSimplicityDay,duringwhicheveryonegetstogethertodevelopideasandproposalsforlivingthebrand.

Thisillustratesthattransformingacompanyinvolvesmanystagesandhasmanylayers–somestraightforwardbusinessschoolassignments,someinvolvingthesofterstuffofpeoplemotivationandculturalchange.

Itinvolvesremodelingtheportfolioofbusinessesandrelaunchingthebrand,asIjustdiscussed.Itinvolvesaprocessofinternaltidyinguptoincreaseefficiencyandimprovefinancialperformancebyoptimizingthebalancesheet.Itmeansasharperstrategyand,asI’vesaid,amarketledapproachthatensuresthebusinessprovideswhatitscustomerswant.That’stheeasypart.

Theharderpart,is,asI’vehinted,thepeople-basedbit.Trulygreatcompanieshavecommoncharacteristics.Anentrepreneurialculture.Aworkforcethat’salignedandengagedtogiveofitsbestbecausethereisenthusiasticacceptanceofthevisionandvaluesofthecompany.Suchpeopledon’tjustcometoworktogetby:

theycometoworktodosomegood.

Andwe’repreparedtoengagecustomers,thoughtleadersandstakeholdersintheproductcreationprocess.LastweekwelaunchedourthirdSimplicityEventinLondon.Thisfeaturesgroundbreakingconceptsandworkingmodelsthatmay–ormaynot–becomePhilipsproducts.Likeajetlag-bustinglightingsystemtosootheandrestoretravelersininternationalhotels.Likeafamily-friendlypre-natalscannersuitethatallowscouplestoexperiencethewonderofanewbaby,withouttechnologygettingintheway.Likeahospitalroomthatfeelsjustlikebeingathome,yetallowsthedoctorstodotheirworkbetter.

Slide5:

Innovation

I’veexplainedyouthatwemadethechoicetobeintheapplicationsindustry,ratherthaninthetechnologyindustry.Thatdoesnotmeanwe’vegivenupinnovation.Onthecontrary!

Webetheavilyoninnovation.We’verisenalmost30placesintheBusinessWeekrankingoftheworld’s100mostinnovativecompanies,puttingusonplace38.

Whathaschangedisourfocusininnovation.Whereinthepastinnovationwasmainlydrivenbythelatesttechnology,wenowtakeuserinsightsasthestartingpoint.AcrossthecompanyweareusingatoolcalledValuePropositionHouse,whichisastandardwayofrepresentingavaluepropositionwewanttobringtomarket,capturingwhat'

sinitforthetargetgroup,whytheywouldbelieveit,andwhatmakestheofferingdistinctive.Wealsomakesurewebringthetwoendsoftheinnovationchain（R&

Dandmarketing）togetherandweareinvolvingendusersintheveryearlystagesofourR&

D.

Wealsochangedinnovationtofocusmuchmoreonrealbreak-throughinnovationratherthanincrementalsteps.Thishasalreadypaidoff.Ournewproductratehasincreasedfromabout25%in2003towellover50%.

Innovationmeansinvestinginideasandthepeoplewhocreatethem.PhilipshasasubstantialR&

Dprogram.Butmorethanthat,wearealeaderinexploringwhat’scalled‘Openinnovation”.Insteadofworkingoninnovato