Identify the key stages in the development process, starting at the initial brie

CASE STUDY 9

New Concept Development at
Philips

Philips

Philips
has a proud history of innovation and has been responsible for launching
several ‘new to the world’ product categories, like X-ray tubes in its early
days, the Compact Cassette in the 1960s followed by the Compact Disc in the
1980s, and more recently Ambilight TV. These successes are linked to Philips’
deep understanding of innovation, enabled notably by significant R&D
investments and strong traditions in design.

Since
2003, Philips has been engaged in a market-driven change programme 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 organisation 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 realise 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 realised 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 catalyse learning opportunities and help shape a
platform for a future vision. These activities were:

· 
 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 organisation via lectures, workshops, visits and books.
These activities 407408resulted 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 organisational 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:

Top of Form

· 
□ 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: 408409which 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 honour. The workshops served several tangible and
intangible purposes, including:

Top of Form

· 
□ 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.

409410

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…

Atmosphere Provider Programme

In
July 2003 senior management launched the ‘Atmosphere Provider’ programme. The
programme lasted two and half years and was given some explicit and several
implicit deliverables:

· 
□ Bring ‘Atmosphere Provider’ as a theme to life.

o  ○ Create a ‘need-scape’ for the
new innovation area.

o  ○ Envisage the
boundaries/solution space of the innovation and growth opportunities.

· 
□ Initiate the creation of a related patent portfolio.

· 
□ Prove the business potential by piloting the three new business
creation projects.

· 
□ Exploration towards new business proposition definition including
initial product concepts.

o  ○ Prototyping and market testing.

o  ○ Business case development and
transfer to mainstream business.

And
implicitly –

· 
□ Prepare for transfer and scaling up.

· 
□ Initiate the building of an Atmosphere Provider network (with
shared vision, creativity, cross-functional and discipline perspectives,
embracing the required new way of working, etc.).

· 
□ Pioneer the end-user driven innovation approach.

The
programme’s architecture was designed to ensure cross-fertilization between the
development of the broader business theme and the three new business creation
projects; emerging insights from creating the new business were captured via
foundation documents; general observations derived from the theme development
were fed back into NBC projects.

The core of the programme comprised a team of four people: the
overall programme manager who had led the TTLF project and three project
managers, of whom one had been a TTLF core team member whilst the other two
were new to Philips Lighting. Over time, a small support team became involved:
a lighting designer, an experienced market researcher, a marketing specialist
and several colleagues from Philips Design. The team was small and flexible;
additional skills and 410411capacity were brought in on an as-needed basis, which in turn
required good communication skills from the project managers and the commitment
from senior management to ensure the needed resources were made available to
the team when required.

Initiation:

· 
□ 10 July 2003 in the Philips Lighting Senior Management meeting.

Deliverables:

· 
□ Bring the Atmosphere Provider theme to life.

· 
□ Show proof points via business potential in the three selected
projects.

· 
□ Investment: EUR 2.85 million from August 2003 to December 2005.

Context of assignment:

· 
□ Cross-functional with impact on Philips Lighting level beyond a
single Business Group, positioned under Global Marketing, unclear ownership on
executive level, no standard processes or tools => learn as you go.

Characteristics of assignment:

· 
 Innovation for additional profitable growth (out of the box),
market-led, pioneering, emphasis on results in the form of content, high risk
and high reward, phase 1 of change management.

Core team:

· 
□ Dorothea Seebode, Gerard Harkin, Benedicte van Houtert, Paul Brulez,
followed up by Stefan Verbrugh (from April 2004).

Extended team:

· 
□ Markus Reisinger, Liesbeth Ploeg (from Dec.04), Ronald Dalderup
(from Jan.05).

Mindset:

· 
□ Focus on results, commitment, dialogue.

By the end of 2005:

· 
□ in total over 1800 people had been involved globally, across and
beyond Philips Lighting.

· 
□ Three foundation documents were published with over 1000 copies
distributed.

· 
□ Patents: > 50 IDs submitted, > 25 patents filed, > 10
patents in pipeline.

Read Case Study 9 and respond to question 1.

Identify the key stages in the development process,
starting at the initial brief to the final selection of the three business
cases

Your response should be at least one page long and conform to APA Version 6 standards.