Source: Business Week, December 11, 2006 pp. 50
Thinking Simple at Philips
A panel of outside experts is helping the electronics giant reinvent itself
By Kerry Capell
Two years ago, British fashion designer Sara Berman got an unexpected call from Andrea Ragnetti, the chief marketing officer for Royal Philips Electronics. Figuring the Dutch company wanted her to design some sort of wearable technology, she was prepared to politely decline the proposal. Instead, she spent an hour engaged in a freewheeling discussion on the meaning of simplicity, and by the end of the chat she had accepted Ragnetti's invitation to join Philips' Simplicity Advisory Board, a new panel of outside experts.
What does a fashion designer know about technology? Not much. But that's the point. To drive change following a radical restructuring, Philips reckoned it needed a fresh perspective from creative types with no ties to the company. So it formed the simplicity board, a group of specialists in health care, fashion, design, and architecture. 'Philips was too inward-looking,' Ragnetti says. 'To really embed simplicity into the company's DNA, we needed an element of vision.'
For Philips, the promise of simplicity isn't just about making products that are easier to use. The bigger challenge is rewiring the entire organization and 'using creative chaos to affect lasting change.' That's trickier than it might sound. But simplicity is actually a very complex topic.
Find out what Philips has done during recent years and is still doing to adapt and change itself through CEO Kleisterlee.
Is Philips successful in your opinion? Give evidence and your arguments.
Find recent information on the latest developments at Philips.
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Recent developments during the financial crisis since 2008 make Philips focus on cash and reduce its workforce.
Source: Financial Times, January 27, 2009
Philips focuses on cash as it reduces workforce
By Richard Milne in London
Philips' chief executive yesterday underlined how the Dutch industrial group was focusing on cash flow at the expense of profitability. Corporate priorities have changed during the financial crisis.
Unveiling the first quarterly loss in five years and 6,000 job losses, Gerard Kleisterlee told the Financial Times that cutting inventory and focusing closely on working capital had boosted Philips' cashflow.
The move underlines how Philips is responding to the new mood of many investors who are focusing less on profit and loss and more generating cash.
Philips, which makes healthcare, consumer and lighting products, increased its cashflow to €1.75bn ($2.3bn) in the fourth quarter, up from €1.36bn a year earlier and €182m in the previous quarter.
It had made €836m in working capital improvements, mostly by reducing its inventory levels. This had affected earnings by at least €60m, the company said.
'We have seen from a number of markets that, on the consumer side, there is a couple of weeks less inventory,' Mr Kleisterlee said, talking of the destocking phenomenon taking place in the supply chains of many industries.
Announcing the 6,000 job losses, he said 2009 would be a year of restructuring for much of the European industry. 'At Philips we want to be proactive and early in taking measures,' he added.
The Dutch group would be on the lookout to use its cash for the 'opportunities' that would certainly arise, he said. But he added that he would do nothing to 'stretch the company in these challenging times'.