philips - gssi june 2011 philips: organizing around customer and market transforming an hi-tech...
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Philips - GSSI
June 2011
Philips: Organizing Around Customer and MarketTransforming an Hi-tech company into a Health and Wellbeing organization
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 2
Company story: Unlocking Philips’ full potential
Our journey
2010: Organizing Around Customer and Market
How will we create our success?
We believe we can build a great promising future….
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 3
A well-respected, blue-chipcompany for 120 years
Founded in 1891Headquartered in Amsterdam, the Netherlands
Sales over EUR 25.4 billion in 2010 (USD 33.8 billion)33% of sales generated in emerging markets
Globally recognized brand (world top 50)Our brand value doubled to $8.7bln since 2004
119,000 employeesSales and service outlets in over 100 countries
€1.6 billion investment in R&D, 6% of sales50,000 patent rights – 36,000 registered trademarks – 63,000 design rights
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 4
Our focus on improving people’s livesOur portfolio leverages critical global trends
4Rise of emerging markets
Aging population
Increased consumer empowerment and sustainable lifestyles
Climate change and sustainable development
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 5
RegionalCardio
vascular
Unique leadership positions in many marketsCurrent NPS leadership positions1
RegionalRadiation
Oncology Systems
GlobalUltrasound
GlobalPatient
Monitoring
RegionalCardiac
resuscitation
RegionalHome
Healthcare
1 (Co)Leadership is defined as outperforming (>5%) or on par with best competitor, globally or regionally
RegionalMale electric
shaving & grooming
GlobalMother and Child
Care
RegionalBlenders
GlobalFemale
depilation
GlobalSteam irons
GlobalJuicers
RegionalPower
Toothbrushes
GlobalHigh Power
LEDs
GlobalLighting
Electronics
GlobalProfessional Luminaires
GlobalLamps
RegionalConsumer Luminaires
Healthcare
RegionalAutomotive
Lighting
ConsumerLifestyle
Lighting
1 (Co)Leadership is defined as outperforming (>5%) or on par with best competitor, globally or regionally
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 6
The world’s 42nd most valuable brand in 2010
Brand value doubled since 2004
4.4
5.96.7
7.78.3 8.1
8.7
2004 2005 2006 2007 2008 2009 2010
A strong brand drives salesA significant amount of sales is attributable to
the brand alone: Healthcare 29% Consumer Lifestyle 24% Lighting 21%
High brand value growthWith 7% in 2010, Philips outpacing the average
value increase of 4% shown by other brands
Strong internal brand82% of employees are “proud to work for Philips”
Brand campaign 2010Developing thought leadership in health and
well-being and making our trusted brand promise of ‘sense and simplicity’ meaningful in this area
Value of the Philips brand*USD billions
* Source: Interbrand Brand Valuation 2010
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 7
Philips defined: we are…
“…a global company of leading businesses creating value with meaningful innovations that improve people’s health and well-being.”
Health and well-beingA commitment to healthy, fulfilled lives in our communities and societies our world
Meaningful innovationsImproving people’s lives Going beyond technology Introduced at the right time
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 8
Creating meaningful innovationsImproving lives in new ways
Gain deep insights into people’s needs and aspirations by following a process requiring end-user input at every stage
Transform insights into innovations by combining the diverse perspectives of different disciplines
“Learn fast, fail cheap” by applying a rigorous process to assess value potential early
Lead in open innovation by working closely together with partners in a spirit of open innovation
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 9
OACM business contextAfter ~ two years of “crisis” growth and leadership is back on the agenda
Dubai Summit 2007
“Levers for Growth”*
Vision 2010 bottom line
Vision 2010 top-line
Summit September 2008
“Cash is King”
Summit October 2009
“Cost Agility & Execution”
Summit February 2010
“Driving growth”
*Levers addressed include granularity of growth; superior customer experience (NPS); innovation to win; and leading to win
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 10
Engage (EES)
Enable (IT)
Empower (Organization) Enhance
(Capabilities /NPS)
Introducing the 4 Es modelWe identified 4 key enablers that should capture link existing Sector programs and global program management
High performing companies always show an high level of engagement (commitment) of their sales force
Sales people are the real ambassador of the company in front of the outside world
Integral profitability reporting
B2B Online
One CRM
Pricing
BMCs
Commercial Competences, assessment and training
Talent Management (acquisition, reviewing and retention)
Career Path
Local programs within the Sectors to increase Market centricity
- DELIGHT!
- RnB
- OACM/District Model
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 11
Enhance: Commercial CapabilitiesCompetences stock taken and reinforcing partnership M&S in Commercial Organization
Increase customer centricity by empowering local markets and customer facing staffReinforcing Partnership Marketing and Sales in “Downstream Organization”, from Commonalities of Competences to Commonalities on Business Impact.
Building Talent Management around Commercial Organizations
1. Basic Competences Toolkit for ‘Downstream Organization’: One Commercial Competency Framework
1. Empower country organizations in change management projects: Alignment Sectors and Countries
1. Drive competency building for different channels/way to market: Competency for future success
1. Continuously assessing and training Sales Force: 360 On Line Development Survey for Sales force ww - Review the Sales/IKAM Curriculum
1. Setting high standard of recruiting: Talent Staffing
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 12
Enable: Value Space and Sales enablersThe Customer Excellence Value Space focuses on enabling the sales force with relevant tools and processes
Focus area Strong focus on key programs
Management Agenda• Philips OACM One
CRM, Pricing, VIPP• Philips Growth China• VS CE Focus
InStore (POS) Excellence, B2C Online, OneMobile
• Customer Excellence flagship projects:
• OneCRM – Pricing - Instore (POS) Excellence (CL) - OneMobile (HC)
• Focus programs in other Value Spaces:
• VIPP in Information excellence
• B2B Online in Marketing Excellence
Example enablers
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
We risk to lose our relevance
As we grew scale and efficiency increasingly became competitive drivers…
We centralized decision making, drove uniformity in products and systems and so were able to tightly manage our costs...
Now we’ve lost some of our agility, speed of decision making and adaptability to local needs.
Competition is growing faster, and our market share loss across many businesses confirms the immediate urgency to act...
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 14
We must accelerate to seize our opportunity
Our future success depends on our ability to understand and anticipate customer requirements and act on these quickly…
Recognizing local and global trends - aging population, urbanization and sustainability…
We must team up to excel by using our global power combined with strong entrepreneurship in our Markets....
to act quicker, drive local innovation and accelerate growth…
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Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
The business priorities in Markets will be underpinned and properly resourced to win for short and long term growth goals
Define 17 market clusters lead by teams with the same geographical scope. Will enable gaining traction in the market place
Fully dedicated Market leaders and Sector Market leaders in 10 out of those 17 markets. Will increase capacity, focus and dedication
5 shifts Changes and benefits
The BMC handshake and the collaborative P&L enable people to team up to excel, taking ownership and win in the market place
Investments will be made in improving BMC performance as well as business development and new business creation
A commercial shift in summary
Resourcing to meet Our Growth Ambitions
Enabling decision Making Closer To The Customer
Support for Local Business Opportunities
Aligning Market Clusters
Strengthening Market Teams
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2
3
4
5
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Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
Our new mindsets and behaviors
Mindsets and behaviors What they concretely mean for Customer Centricity
2Take ownership
▪ 04/19/23, e.g. local teams have local room to act
▪ 04/19/23, remove roadblocks that stop us from winning
▪ Take courageous decisions ▪ Empower and hold each other accountable to
deliver ▪ Execute rigorously, see things through▪ Focus on results over activity
3Team up to excel
▪ 04/19/23 between businesses and markets, e.g. co-create the strategic plan and co-ownership for the P&L
▪ Identify opportunities for cooperation or synergies
▪ Have open and tough dialogues, productive conclusions
▪ Collaborate, leverage each other▪ Celebrate success▪ Learn, improve, develop
1Eager to win
▪ 04/19/23▪ Identify growth opportunities on top of BMC
plans▪ 04/19/23▪ Building required local capabilities
▪ Take an outside in perspective, serve our customers
▪ Adapt to the diversity of Businesses and Markets▪ Ensure speed of action, outpace competition▪ Resource to win for long term leadership
ver 4 June 2011
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 17
Philips investment propositionVision 2015
Main financial objectives:
• Comparable sales growth on annual average basis equal to real GDP + a minimum of 2%
• Reported EBITA margin between 10% and 13% of sales of which:
Healthcare 16-18% Consumer Lifestyle 9-11% Lighting 12-14%
• Grow EPS at double the rate of comparable annual sales growth
• Generate a return on invested capital of at least 4% above Weighted Average Cost of Capital
“Philips’ strategy is to become the leading company in health and well-being. We believe that a steadily growing demand for healthcare, a healthy lifestyle and energy-efficient lighting solutions will – driven by an aging population, increased environmental awareness and expanding emerging markets – allow Philips to generate double-digit EBITA margins.”
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011 18
Sustainability as a driver for growth
Our commitment One of the strategic drivers behind our targets is a commitment to
sustainability Success of EcoVision4 program:
Our Green Product sales represented around 30% of sales in 2009, 3 years ahead of our 2012 target
EcoVision5 program Targets for the period 2010 – 2015• Bringing care to more than 500 million people• Improving the energy efficiency of Philips overall portfolio by 50%• Doubling the global collection and recycling amounts of our products, as
well as double the amount of recycled materials in our products
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Philips SimplyHealthy@Schools
SimplyHealthy@Schools program reaches children across new borders, teaching them about healthy lifestyles
Health and well-being solutions that make a difference
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
Rapid urbanization More than half the world’s population already lives in cities and urban areas – this is predicted to rise to almost 70% by 2050
Livable cities: Improving health and well-being in the urban environment
Safety and security, overcrowding.
Pressure on resources, clean air and water, energy and waste management.
Public health, longer life expectancy, anxiety levels.
A sense of physical, economic and social well-being.
New social, economic and environmental challenges
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
Livable citiesHow can we make a difference for the people who
inhabit, work in and visit them?
As a leading global company in health and well-being,Philips is helping define and shape the dialogue on
livable cities.
Confidential Philips - GSSI, Felice Valente - CHRM, June 2011
Living in a city should be an opportunity to thrive, not a burden
Livable Cities is an achievable visionAs long as the citizen is empowered to participate in the dialog and there is sufficient cooperation between city dwellers and the public and private sectors.
Joint ownershipLivable Cities is not an ‘ownable’ space but rather a shared, public forum which encompasses and engages every layer of society.
Pragmatic innovationSolutions firmly grounded in practical applications – already available today – will help secure the long-term future of our cities and their citizens.
Our roleIn addition to developing relevant solutions, we are also facilitating dialogue, encouraging partnerships and sharing key insights among stakeholders.