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News: Philips accelerates innovation
Source: Business-improvement.eu
Philips wants to Accelerate
By Dr Jaap van Ede, editor-in-chief business-improvement.eu, 14-03-2012

Two years ago, there were two separate improvement methods within Philips Consumer Lifestyle:

  1. A successful people based approach in factories called Simply Philips, to get everyone involved in continuously improving production processes.
  2. A Lean Six Sigma Black Belt program for rapid breakthrough improvement, which was also a management development program for future leaders.

In 2011, these two approaches merged into one new Simply Philips program. Besides that, a new initiative called Accelerate! was launched to increase business speed and innovation.  

MEDIC, Six Sigma, Lean product development, Lean Six Sigma, Simply Philips…. The programs within Philips for process improvement and innovation seem more complex and variable than within other multinationals.

Take for example  Unilever (TPM), Heineken (TPM), Shell (Lean Six Sigma & Business Process Re-engineering) and Sara Lee (Lean).

Those companies chose one method and stuck to it. During the years they added tools from other methods, but their management structure for process improvement remained the same. What makes Philips different?

Philips wants faster innovation
Philips wants faster innovation  

‘We have a large variation in products and in business models, business-to-consumer and business-to-business’, explains Michael Unverwerth, head of the Simply Philips improvement program. ‘In that case, choosing only one methodology can be a disadvantage. When you only have a hammer, every problem looks like a nail. We need a large toolkit. That is the reason why different approaches were developed within Philips. Nevertheless, we are now converging our improvement efforts.’

Change management
To clarify this, Unverwerth first explains the history of Simply Philips. ‘The old Simply Philips program, thus without the Lean Six Sigma part, originated about 3,5 years ago within Philips Consumer Lifestyle. In essence it is a very successful change management approach to implement Lean manufacturing, in five phases of which the last one is worldclass. The goal of this program is to educate people, to change their behavior, to use their competences fully, and to secure improvements made step by step. This program makes people really enthusiastic to help improve every day.’
Management development

Like Simply Philips, the Lean Six Sigma program is approximately three years old, and again the business-sector Consumer Lifestyle took the lead to develop it.

Lean Six Sigma arose from the MEDIC-approach, at the time Philips-jargon for the DMAIC-cycle of Six Sigma. ‘Above all, Lean Six Sigma within Philips is a management development program’, explains Unverwerth. ‘High potentials execute Lean Six Sigma Black Belt projects to acquire fact-based decision skills. Of course their projects are chosen to fulfill our most important improvement needs.’

In 2011, the idea occurred to combine the Simply Philips change program, which is in part a bottom-up approach, with the Lean Six Sigma program, a top-down approach to solve complex problems and to train new managers simultaneously. The result should be one program for people development and process improvement, called (new) Simply Philips.

Fundamental difference
This looks ideal on paper, but the question rises how this will be done. There is a fundamental difference between a People Based Lean management program, like old Simply Philips, and Lean Six Sigma.

In a Lean company many people – ideally everyone - help improve, by taking many small steps. Typically this is done with a lot of trail-and-error, be it in a structured way. In a (Lean) Six Sigma company a selected and well-trained group of people (the Black Belts) gather information and develop fact-based solutions, to make improvement in relatively large and trail-blazing steps.

Business Speed
To become more successful, Philips needs faster innovation, increased business speed, excellence of execution, more collaboration between markets and businesses, and teams which are equipped with the right resources. Regarding innovation, the end-to-end process from idea to product should accelerate.

Innovation is less predictable and less repetitive then production. Therefore I (the writer of this article) think it will be a challenge to optimize this process. However, it can be done. This is for example proven by Sara Lee. According to Arjan Gerritsen, senior manager continuous improvement at this company, Sara Lee succesfully applies value stream mapping to innovation and marketing activities.

Another company which succeeded to sytematize innovation is Procter & Gamble1. Their aim was (and is) to combine two concepts of two centuries ago: the industrial reseach lab of Thomas Edison of 1870, and the mass production system developed by Henry Ford a few decades later. The result is a new-growth factory, for the mass production of ideas, which tripled the innovation success rate. One of the pillars of this system are transaction learning experiments: an innovation team makes and sells a little amount of a new product, thus letting consumers vote with their wallets.

In several Dutch newspapers like Trouw, Philips CEO Frans van Houten broke a lance to let employees behave more like entrepreneurs. As shining example he mentioned a local Philips-team in Singapore, who submitted a tender themselves for medical and lighting equipment for a new hospital.

A new change program specifically aimed to increase the business speed of Philips, launched recently, is called Accelerate! This program is built around 3 core behaviors Frans van Houten wants all Philips employees to embrace: Be eager to win, Take ownership and Team up to excel!

‘To make it a success, all management layers will have to live up to it’, says Unverwerth.

1) Source: How P&G tripled its innovation succes rate, Harvard Business Review, june 2011, page 64-72.

See also: Lean Six Sigma boosts value creation within Philips Consumer Lifestyle
See also: Simply Philips pursues optimal balance in applying Lean and Six Sigma

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