Innovation at Philips Lighting

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Table of Contents

Introduction
Shared Vision, Leadership, Will to Innovate
Appropriate Structure & Key Individuals
Effective Team Working
High-involvement Innovation
Creative Climate with an External Focus
Conclusion
References

Introduction

Innovation is the key to sustainable growth. Innovation is the difference between a company’s survival and demise. Those who are not prepared and those who are afraid to change will soon find themselves obsolete. Great and exciting companies are born one day and after a few years they disappear without a trace of their former glory.

There must always be a continuous move forward when it comes to innovation because according to experts in this field, “Put very simply, innovation is a survival imperative” (Seebode & Harkin, 2009, p.1). The present success of the company is not an assurance of future success. An organization is never secure in its assets; it can only prevent dissolution by playing a tightly coordinated offence.

This is because innovation is not about paying it safe but going out there to take risks in the hope of gaining tremendous rewards that justifies what seems to be at first a daring venture. Many companies and many leaders would love to have the benefits of innovation but if they are not willing to pay the price then it is beyond their grasp.

The price to pay is not cheap because aside from the decision to take the road less travelled there is also the need to have strong leadership with a will to innovate (Tidd & Bessant, 2009, p.100). There is also the need to have the appropriate organisation design because without it, creativity, learning, and interaction will never happen and these are key ingredients to innovation (Tidd & Bessant, 2009, p.100).

Aside from these things there is also a need to identify key individuals that can be resource persons or leaders who can rally a team to generate ideas and implement the same (Tidd & Bessant, 2009, p.100). As a result there will be an effective team working on a common goal (Tidd & Bessant, 2009, p.100). The activities geared towards innovation must not be seasonal, it must be continuous and this can only be achieved if there is an appropriate climate that will support this mindset (Tidd & Bessant, 2009, p.100).

Finally, the focus of the group must not only from within the organisation but it must prioritise an external focus – oriented towards the customers (Tidd & Bessant, 2009, p.100). If these principles are followed then one can expect innovation.

There is one company that consistently demonstrated its will to innovate over the years and as a consequence of that commitment Philips, a Dutch multinational corporation has been around since 1891 (Seebode & Harkin, 2009, p.2). There are only a few companies that can claim the same distinction.

This is evident in the fact that Philips is known as an electronics company but obviously it did not start that way and today it is proud to be known as a health and well-being company with a focus on healthcare, consumer lifestyle and lighting (Seebode & Harkin, 2009, p.2).

The innovations made were diverse but one of the most compelling example can be seen in how the company transformed its manufacturing and marketing strategies when it came to selling light bulbs.

As a result Philips changed the way people see the humble light bulb – that aside from lighting requirements it must now become “light embedded in furniture” (Seebode & Harkin, 2009, p.6). The following will discuss in detail how this innovation came to be.

Shared Vision, Leadership, Will to Innovate

As mentioned earlier there is a need for a strong and committee leader willing to innovate. But this does not mean a thing if this leader is ignorant about the power of vision. It is the leader with a vision that makes a compelling argument and when his arguments is heard by his subordinates and team members they suddenly become able and willing to follow this leader even to the ends of the earth.

This is a known fact in business circles and good managers are also aware of this principle. However, in the case of Philips Lighting the elements of leadership, vision and will were there but it came from an unexpected source.

One would expect a powerful presentation and very compelling speech coming from the CEO that can turn everything around but in this case the seed of innovation was planted by the manager of the Central Lighting Development Lab when he organized an innovation workshop and challenged the managers in attendance to “safeguard the lighting future” of Philips Lighting (Seebode & Harkin, 2009, p.3).

The workshop was in the year 2000 and the following year what this manager had planted started to bear fruit.

Nevertheless, without the support of the Chief Technology Officer who took the contributions made by the Central Lighting Development Lab manager and the ideas generated from the workshops, and turn it into a readily understandable vision that the workers can accept and follow-through there would have been no innovative product produced by the company.

It is also impossible to accomplish without the support of top corporate leaders. In fact, when the project came to an end, the team were visited by four board members of the company, including the CEO Mr. Gerald Kleisterlee (Seebode & Harkin, 2009, p.8). These leaders challenged their people that they cannot afford to simply do a better job because what they need is a radical new vision (Seebode & Harkin, 2009, p.3).

Appropriate Structure & Key Individuals

It is easy to develop teams to generate ideas and then develop products. In the case of Philips Lighting they did not only created a structure to delegate responsibilities, they thought about the composition of these groups.

For instance in the development of the vision team from the lighting lab they chose four employees, two females and two males and then two of the team members were newcomers to the development lab while the other two were veterans.

This means that they were able to bring in new people into the team to provide them a different worldview. The same thing can be seen in the creation of the New Business Creation composed of four senior managers and one lateral thinker who challenged the senior managers with regards to their business assumptions (Seebode & Harkin, 2009, p.3).

Effective Team Working

When the vision was made clear and the strategy simplified into: light embedded in furniture, the next step was to create the project team but this was not done haphazardly, the company provided guidelines for team members to follow.

Seebode and Harkin, former employees of Philips Electronics and had intimate knowledge regarding these project teams and they revealed that team members must follow three critical phases: exploration; prototyping and marketing; and writing the business case (Seebode & Harkin, 2009, p.7).

The effectiveness of the team working for these special projects was not only attributed to the guidelines but also in the way they understood the difference and significance of incremental innovation as opposed to radical innovation. In this regard project leaders and corporate leaders were realistic about their goals and yet at the same time they will not allow the company to settle in a comfort zone.

The moment that they had a clear grasp of a new approach they were not afraid to bring it to a new level which was termed as “entrepreneurial risk-taking” characterised by the creation of new business models (Seebode & Harkin, 2009, p.1).

High-involvement Innovation

If other companies would like to emulate Philips Lighting then they have to make room for “high-involvement innovation”; this simply means that every member of the organisation is ready to help.

For example the TTLF team was composed of a lighting designer, several colleagues from Philips Design, an experienced market researcher, a marketing specialist and additional skills and capacity were brought in when needed by the team (Seebode & Harkin, 2009, p.6).

In the case of Philips Lighting the creation of a new business model was the result of “collaborative innovation across a company’s business groups and its networks of suppliers, customers, and others” (Seebode & Harkin, 2009, p.24).

Creative Climate with an External Focus

There are those who may stumble upon the success story of Philips and begin to develop focus groups and innovation teams that will create ideas and implement change. It would be of great help to them to know that innovation within the Philips company is not something that they can turn on and off like a switch. They are able to innovate because they are steep in the climate and culture of radical innovation.

This was in full display when the Philips Lighting Company, the North American division of the Dutch company Philips Electronics “recreated its industrial lighting business by shifting down-stream from purchasers to influencers” (Christensen et al., year, p.15). In the past the manufacturing and marketing strategies were geared towards the purchasers among their client companies.

Everyone in the industry would sell their products through competitive pricing and how long their lightbulbs would last (Christensen, year, p.15). But the people from Philips began made innovations in the design of the lightbulb and they discovered their clients spend more because of the high disposal cost brought upon by the mercury content of a traditionally made lightbulb.

Thus, in 1995 the company created the Alto a mercury-free lightbulb and marketed it as an environmentally friendly product that would reduce the cost of disposal (Christensen et al., year, p.16). This is the kind of creative atmosphere that permeates through the Philips organisation and has clearly affected the way they view the importance of innovation.

Finally, success was achieved because Philips Lighting and the project leaders did not only focus on what can be done within the organisation, their mindset was to go out there and find out what the customer needs. Based on what they saw and heard they began to develop new business models. The result was a radical innovation such as lighting embedded in furniture and the creation of soothing and relaxing atmosphere by using Philips designed products in home fixtures.

Conclusion

Innovation is a risky venture but the rewards will more than compensate with the necessary investment in time and effort. Nevertheless, it is still difficult to shift gears, change the mindset of the people, and engage in a novel way of doing things. However, those who refuse to innovate will be left behind. The reason why there are only a few companies who lived past the century mark.

One of them is Philips Electronics. This company was started in 1891 but today it is multinational corporation known all over the world as a producer of quality products. The company was able to offer new products because its corporate leaders understood the value of creating a culture of creativity and established an organisational structure that favours innovative thinking and risk-taking.

References

Seebode, D. & G. Harkin. (2009). “Radical Innovations at Philips Lighting.” Web.

Christensen, C. et al. (2001). Harvard Business Review on Innovation. MA: Harvard Business School Publishing.

Tidd, J. & J. Bessant. (2009). Managing Innovation, Integrating Technological, Market & Organizational. New Jersey: John Wiley & Sons.

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