Is Philips as innovative as it wants you to believe it is?

 

If there’s one word that describes what Philips India showcased on Thursday at its global media onsite in Bangalore, it’s “schizophrenic”. Not the medical condition that we all know of, but the business management tenet that Harvard Business School professor Michael Porter thinks companies should have in order to succeed in today’s fast-paced environment. Schizophrenic companies, according to Porter, are those that are able to maintain continuity of strategy as well as manage to improve continuously.

 

From launching one product – conceived, prototyped, developed, and commercialised in India – in 2011 to 11 products in 2013, Philips has demonstrated it is serious in keeping its earlier promise of new products from India, for India and the rest of the world. (You can read my posts from 2013 and 2012). On April 3, Philips India launched five new products for the global market from its Innovation Campus (PIC) in Bangalore and flew in press persons from eight countries. It was apparent its 18-year-old PIC had arrived.

 

Team leaders were pulling out brand new devices – an ECG machine and an ultra-sound scanner, both having off-the-shelf tablets as their display units – from their pockets, literally. Okay, it was staged-managed, but it was good fun nonetheless. (At a time when most companies, multinationals in particular, micro-manage their communications and don’t let their executives talk to the media without the corporate communication gatekeeper, to have a bunch of top ranking, easy-going executives to answer your queries throughout the day was a welcome change.)

Philips' pocket-sized ECG machine

Philips’ pocket-sized ECG machine

Looking at the new launches, continuity and change were evident. The pocket-sized ECG and ultrasound machines with enhanced diagnostic capabilities and apps are an extension of its existing businesses. In fact, by opening up these imaging areas to the dizzying world of apps, Philips is entering a brave new world of opportunities. It will cannibalize its legacy ultrasound and ECG businesses to an extent but Chief Strategy and Innovation Officer Jim Andrew believes if Philips doesn’t cannibalize itself, someone else will.

 

Many companies say this, but few stay the course. If Philips starts selling its portable ultrasound Visiq next week, as it says, it will enter the latter category. At about Rs10.5 lakh for a piece (it will come in many variants), Visiq is nearly half the price of an equivalent product. Some four years ago, GE unveiled, what then seemed revolutionary, a hand-held, iPhone-looking ultrasound device called V-scan. We were told that doctors wanted to even replace the good, old stethoscope with V-scan. Probably it was work-in-progress on display then and GE couldn’t match the buzz it created with product development and commercialization. Today, V-scan is “only available for sales via the internet in the United States.”

 

In the consumer lifestyle segment, which accounts for 20 percent of its € 23.3 billion in sales, Philips has now added a new product category: Air purifier. It’s a sleek standalone purifier which comes in four ranges (Rs 16,000 to Rs 35,000) and through its four-stage filtration technology removes 99.7 percent airborne particles. Philips India MD Krishna Kumar and Jayati Singh, business head, Air, reeled out numbers on outdoor and indoor air pollution in India. But frankly speaking, that was not needed. Air quality issues in India are legendary and any technology that makes a dent could be easily adopted. The World Bank has estimated the annual economic losses from air pollution in India to be $18 billion and the WHO has linked one in eight deaths in the world to be linked to air pollution.

The need is there, the product is made. Now, can Philips drum up the demand (i.e. create awareness and drive adoption) and make it widely available? The company says the price could fall to as low as Rs 10,000 once the demand picks up.

 

It’s in lighting that Philips has been launching impressive products and solutions. It’d be fair to say it has brought a painter’s canvas to people’s fingertips. With 1.6 million shades of light at the touch of a button, its lighting products, Hue in particular, have changed the way we look at lighting. While most of us still view the electric bulb as the symbol of innovation, by digitising and personalising light and giving it intelligence, Philips has changed the course of light; metaphorically, of course.

 

While Hue is yet to launch in India, on Thursday Philips showed a connected LED lighting powered over Ethernet. It uses Power-over-Ethernet to connect office lighting fixtures to a building’s IT network. Using their smartphones and the lighting information pathway, office users can control various services. For instances, using an app, you could control a particular light, say, dim or increase it in a conference room.

 

A solar powered, DC grid with LED lights is a new attempt to break the DC-AC challenge in renewable energy. (Photovoltaic cells generate DC power, which need to be converted to AC for storage/distribution and back to DC for end use in homes or offices.) This DC grid based lighting system, says Philips, is an improvement over stand-alone (one pole, one PV panel, one control system and one battery unit) solar energy lighting solutions. Having tested this in two university campuses, Philips is ready to roll this customisable LED-lighting offering. Manufacturing units, which can remotely control it, are the most suited for early adoption, believes Krishna Kumar. Beaming with better than expected growth in 2013, he hints that more new products are to hit the market in healthcare later this year.

 

In 2011 when Jim Andrew came to Philips from consulting, the company decided to merge innovation and strategy. Most companies keep them separate. Perhaps Andrew’s long stint in Boston Consulting Group, where he also set up its India business in the mid 1990s, helped him take a dispassionate view in redrafting Philips’ vision. The Dutch major needed it as it was somewhat confused – was it a marketing company or a manufacturing company?

 

When I asked him what he did differently at Philips, he said, casually, “At least I knew where to start.” For a man who believes “every business in the world is the people business,” Andrew began asking if Philips had the right people for the digital domain, and if the company was making the right choices.

 

Health care contributes 43 percent to the parent company’s revenue. Some transformations have come about in this segment, but will Philips impact health care the way it has the lighting industry? How will it leverage its innovation and understanding of LED (which, like light bulb, was invented at GE) to improve health care?

 

These are interesting questions to ask, maybe at their next media onsite!

 

2 comments to “Is Philips as innovative as it wants you to believe it is?”

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  1. Interesting post and I like your continuity which provides a good context. But I am curious how come you don’t have any numbers from Philips on how they’ve grown from the time they launched one product to 2013 when they launched 11 products. Most of these companies reveal limited information but it’d be good to know how these products have fared globally, esp in the context of what you mention about V-scan. Sometimes executives talk of such lists and then the products just fizzle out and never reach the market.

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