Since 2003, Philips has been engaged in a market-driven change program to rejuvenate its brand and approach to new product innovation with expertise on end-user insights. Six years later, the end-user insights approach has significantly influenced the way Philips innovates, in line with the new brand promise of ‘sense and simplicity’. Yet in 2000, new product innovation was still predominantly shaped by R&D, particularly in its lighting business. In that same year, Philips incurred a net loss of EUR 3206 million. Management was focused on dissolving the Components business, returning the Semiconductor business to profitability, simplifying the organization and making cost savings.
Philips’ role in the global lighting industry had always been dominant. Philips Lighting was Philips’ ‘cash cow’; it operated in a mature, low-growth oligopoly market in which finding new approaches to realize bottom-line growth was the main challenge. End-user driven innovation was a new approach to innovation, perhaps truly a ‘radical’ one given the division’s history. How was this new approach piloted?
Exploratory Stages
Following Albert Einstein’s notion that ‘insanity is doing the same things over and over again and expecting different results’, senior management realized that something had to change. Consequently, in early 2001 the Chief Technology Officer of the Lamps business initiated a set of complementary activities of an exploratory nature in order to catalyze learning opportunities and help shape a platform for a future vision. These activities were:
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• □ A vision team in the Central Lighting Development Lab. This involved four employees with an equal male and female representation, two of the people were new to the development lab, the other two were well established and anchored informal leaders. The team’s role was to bring outside inspiration into the development organization via lectures, workshops, visits and books. These activities resulted in the start of two ‘out of the box’ innovation projects in 2002, one of which led to the invention of Ambilight TV.
• □ An exploratory automotive project for car headlights. This involved piloting a combination of the Dialog Decision Process (DDP)1 and a Philips Design innovation process based on socio-cultural insights.
• □ A Philips Lighting ‘New Business Creation’ (NBC) group. This involved a team of four senior managers and one lateral thinker, whose role was to challenge mainstream business assumptions by asking simple questions. Established as a new organizational unit in a six month period, the NBC group was set up to provide the environment for ‘out of the box’ business development. Once the unit was created, the main open question was how to fill the NBC idea pipeline?
Think the Lighting Future Project
Building on the experiences of these three exploratory projects and using other Philips knowledge on radical innovation, the ‘Think the Lighting Future’ project (TTLF) was defined at the end of 2001. It was established in response to the CEO’s ambition to identify a 10% top-line growth opportunity (approximately EUR 500 million) which could be achieved in a five to seven year time-frame. Senior management was instrumental in initiating the TTLF project. The project had three tangible deliverables for the end of 2002:
• □ Clarify alternative scope definitions for Philips Lighting that could deliver 10% top-line growth in the longer term.
• □ Define two to three New Business Creation projects.
• □ Define a process for knowledge sharing and updating the NBC long-list.
In addition there were several ‘intangible’ aspirations for the project – for example, it was envisaged that it would:
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• □ Provide a ‘growing in opportunity’ for the senior management team, thus creating commitment for additional scope.
• □ Prepare for implementation (avoid ‘not invented here syndrome’) for critical mass of colleagues.
• □ Radiate, let involved colleagues experience that the whole exercise is about doing different things… and doing them differently…
• □ Create the confidence to deal with a stretching vision.
‘Think the Lighting Future’ was a ‘presidential project’ with core team participation from each Lighting business group, Philips Design and Philips Research: which was – next to its scope of 10 years ahead – an innovation in itself. In addition, special attention was put on forming a diverse team to enable different views to be captured. Importantly this project provided opportunities for learning and improvement of the corporate innovation process – for example, the original three-step design process (information sharing, ideation, idea development and concept definition) was expanded by a fourth step (translation to action).
Emphasis was also placed on creating broad ownership from the beginning both in management via the DDP approach and in the executing functions via multifunctional workshops. Subsequently the dialogue decision process was further expanded to a ‘trialog’ process involving the decision team, the core team (i.e. the decision preparation team) and the implementation team.
Vital to orchestrating communication was the set-up of Think the Lighting Future as an extended Dialogue (trialog) Decision Process around three key innovation dimensions:
• □ People – understanding and serving both end-users’ explicit current as well as their implicit emerging needs.
• □ Technology – understanding and using current and emerging technology options to enable user relevant functionality.
• □ Business – understanding current and emerging market characteristics and dynamics; applying appropriate and future-proof business models.
Thirty-two colleagues were invited to two workshops. They came from different innovation backgrounds (marketing, business development, R&D) and from different Lighting businesses, Design and Research teams. Maximal possible global presence was established. Since TTLF was a highly visible presidential project, workshop participation was seen as an honor. The workshops served several tangible and intangible purposes, including:
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• □ Enriching the core-team work by existing corporate knowledge.
• □ Generation of business ideas seeds.
• □ Preparing for later implementation.
• □ Building a ‘performing’ team around a shared vision.
All workshop flows and all tools used during the workshops were especially designed such that the holistic outcomes became highly probable by equally and simultaneously focusing on the different dimensions: people and their needs, technology enabling new solution spaces and business including generic competition and existing next to emerging business models facilitating value creation.
By the end of 2002, TTLF was concluded and was regarded as a successful exploration and visioning project. It led to the selection of a ‘theme’ for new business: Atmosphere Provider, which was about ‘empowering people to become their own light designers’. It also led to three new business creation projects and delivered a list of ideas for New Business Creation. However, no additional turnover had yet been generated. The real work was about to start…
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