philips CEO speech in JapanOctWord下载.docx

1、Nikkei Global Management Forum October 29th: “Management Strategies for Realizing Global Competitiveness” Click here to download the presentation slidesTransform the company to become truly market-driven1 Intro slideLadies and GentlemenIts a great privilege to address such a distinguished audience o

2、n the broad theme of global competitiveness.Id like make a start with a very obvious point thats partly hidden behind the harmless-sounding word “competitiveness”. You cant have competitiveness without competitors. Trading blocs, countries, industries, companies, technologies and even individuals al

3、l compete with each other in the global economy.Its common wisdom to say that competition makes one stronger. I believe competition makes us change and grow. My topic today is the process of transformation that companies must undergo to become truly competitive on a global scale.Every child knows ex

4、actly what Transformers are and so, I believe, do you . They were invented right here in Japan.Transformers only became a big worldwide hit this summer thanks to a Hollywood movie. One moment Transformers are harmless childrens toys with familiar shapes, and the next a mysterious change turns them i

5、nto robots with awesome power.But even Hollywoods wildest imagination is dwarfed by the pace and scale of change in the real world unleashed by competition.Today I want to talk about Transformers in business and I hope youll allow me use my own company, Philips Electronics, as a case study in change

6、-led innovation. So my story is all about transforming Philips from a high volume electronics company to a global leader in Healthcare, Lighting and Consumer Lifestyle.We see huge changes out there affecting other industries pharmaceuticals, telecoms and IT to name just a few. I hope what I have to

7、say about change may be applicable to your own area of business.Slide 2. Smiling curve slideOur transformation journey started in the late 1990s with the observation that the days of vertically integrated technology companies were counted. In the world of electronics, we found that most added value

8、was increasingly to be found at the two ends of the chain. On the one hand, a lot of value is created on the technology side, i.e. in R&D, by means of patents and the creation of standards with the corresponding licensing programs.On the other hand, in a world where the consumer is faced with endles

9、s choices, a strong brand and direct contact with the consumer provide excellent opportunities for creating added value. The middle part, the straightforward assembly of electronics, is no longer an activity with which companies like ours can distinguish themselves or achieve a competitive edge.This

10、 phenomenon is known as the Smiling Curve, which Stan Shih, the well-known founder of the Taiwanese computer company Acer, formulated for the High Volume Electronics sector in the 1990s, and in todays digital world, this phenomenon is even more apparent.So after we noted this, the very first thing w

11、e did was getting rid of our manufacturing activities where we did not have a competitive advantage. Mind you, were still producing a lot of products ourselves. In lighting for example, or in our rotating shaving heads, there is a lot of high tech manufacturing that no one can do better than us. But

12、 assembly type of work has all been outsourced long ago.But there was more to do. We realized that increasingly the traditional, vertically integrated electronics industry increasingly was parting into three different sectors a technology-focused, components type of industry, a manufacturing industr

13、y and an applications industry. Each of these play a different game, with different rules, and each attracts different stake- and shareholders.We at Philips were one of the first companies to anticipate this development and fundamentally reposition ourselves. We have made the strategic choice to pla

14、y the applications game. This decision formed the basis of the transformation process we have subsequently pursued.Slide 3. Redefining strategy becoming market drivenChoosing the applications game was not an obvious choice, because at that time Philips was very much perceived and operating as a tech

15、nology company. Our volatile Semiconductors, Components and Consumer Electronics divisions were at the heart of the company, while the more application oriented Medical, Lighting and Domestic Appliances businesses were solid performers in the background.We have completely rebuilt this portfolio. The

16、 majority of our Components activities have continued on their own or with others, for example the successful LCD manufacturer LG.Philips LCD was founded in 1999. Last year we had a major success in selling a majority stake of our semiconductor division to a group of private equity investors and fou

17、nding the new company NXP. On the other hand we have invested almost EUR 5 billion in acquisitions over the last two years alone to strengthen our healthcare and lighting business. And we fundamentally changed our consumer electronics strategy by going beyond traditional audio and video technology a

18、ppliances to consumers broader lifestyle, emotional and experiential needs and interests.But rebuilding the portfolio is not enough to transform a company with a century-old heritage. We realized that if we wanted to be in the applications business, we also needed to make the users of our applicatio

19、ns the focus point of all our decisions and actions. In short, Philips had to become people focused and market driven, rather than technology driven. This is the essence of our transformation, representing a huge turnaround compared with our position in the industry only a few years ago. A turnaroun

20、d that many of our competitors still have ahead of them. Let me go into more details on a few of the things we did to achieve that.We relaunched our brand in 2005 around the promise of sense and simplicity, reflecting our vision that people want the benefits from technology without the hassles. The

21、establishment of a strong, single, recognizable and appealing brand helped us rise from 65th to 42nd place in the Interbrand list of the worlds most valuable brands.Slide 4: Brand IcebergSimplicity isnt just a brand slogan: its our differentiation, both in the products and services we offer and in t

22、he way we interact internally and with our customers and stakeholders. Simplicity is way of behaving that affects everything we make and do. For instance, on November 15th all 128,000 Philips employees will celebrate Simplicity Day, during which everyone gets together to develop ideas and proposals

23、for living the brand.This illustrates that transforming a company involves many stages and has many layers some straightforward business school assignments, some involving the softer stuff of people motivation and cultural change.It involves remodeling the portfolio of businesses and relaunching the

24、 brand, as I just discussed. It involves a process of internal tidying up to increase efficiency and improve financial performance by optimizing the balance sheet. It means a sharper strategy and, as Ive said, a market led approach that ensures the business provides what its customers want. Thats th

25、e easy part.The harder part, is, as Ive hinted, the people-based bit. Truly great companies have common characteristics. An entrepreneurial culture. A workforce thats aligned and engaged to give of its best because there is enthusiastic acceptance of the vision and values of the company. Such people

26、 dont just come to work to get by: they come to work to do some good.And were prepared to engage customers, thought leaders and stakeholders in the product creation process. Last week we launched our third Simplicity Event in London. This features ground breaking concepts and working models that may

27、 or may not become Philips products. Like a jetlag-busting lighting system to soothe and restore travelers in international hotels. Like a family-friendly pre-natal scanner suite that allows couples to experience the wonder of a new baby, without technology getting in the way. Like a hospital room t

28、hat feels just like being at home, yet allows the doctors to do their work better.Slide 5: InnovationIve explained you that we made the choice to be in the applications industry, rather than in the technology industry. That does not mean weve given up innovation. On the contrary! We bet heavily on i

29、nnovation. Weve risen almost 30 places in the Business Week ranking of the worlds 100 most innovative companies, putting us on place 38.What has changed is our focus in innovation. Where in the past innovation was mainly driven by the latest technology, we now take user insights as the starting poin

30、t. Across the company we are using a tool called Value Proposition House, which is a standard way of representing a value proposition we want to bring to market, capturing whats in it for the target group, why they would believe it, and what makes the offering distinctive. We also make sure we bring

31、 the two ends of the innovation chain （R&D and marketing） together and we are involving end users in the very early stages of our R&D.We also changed innovation to focus much more on real break-through innovation rather than incremental steps. This has already paid off. Our new product rate has increased from about 25% in 2003 to well over 50%.Innovation means investing in ideas and the people who create them. Philips has a substantial R&D program. But more than that, we are a leader in exploring whats called Open innovation”. Instead of working on innovato