Philips Has to Become Less Complex, Take More Risk, CEO Says
Royal Philips Electronics NV has to take more risk while making sure research departments produce results rather than just concepts, Chief Executive Officer Frans van Houten.
“We have to create a highway rather than a road full of speed bumps,” Van Houten said at an innovation event, where Philips revealed new products such as a skin rejuvenation laser device, nurturing products and its latest LED-lamps.
Van Houten is also pushing for less complexity, meaning divisions have to improve collaboration.
The CEO is deepening cost cuts to streamline the portfolio. The Amsterdam-based company, which is targeting savings of 800 million euros ($1.09 billion), has pulled out of television production, and is reviewing management layers and staffing as he tackles the company’s complexity. He’s seeking to restore investor confidence after a 41 percent share slide this year.
At the same time the company is stepping up investments in market penetration and innovation by an additional investment of 200 million euros. “You may get out of the crisis by innovating”, Van Houten said today.
Van Houten stressed innovations are key for the future of Philips as the company aims to benefit from aging population, the rise of chronic diseases and environmental issues.
“To be successful innovators, we need to be fast. Philips can only unlock its full potential if we get faster in responding to customers,” Van Houten said. “An innovation that comes too late is not an innovation at all.”
To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
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