Philips: From Light Bulb and Electronics Manufacturer to a Leader in Healthcare Technology
In 1891 Philips & Co was founded in Eindhoven, The Netherlands by Frederik Philips and his son Gerard. Recognizing the opportunity presented by the launch of reliable and cost-effective incandescent lamps, Phillips later stepped up to the world’s largest lighting company and is one of the world’s leading electrical equipment manufacturers.
In the 1980s, Philips’ profit margins dropped below 1%,
and by 1990 the company lost more than $2 billion (The largest loss in the history of the Netherlands).
The company’s troubles continued into the 1990s
as the status of a leading electronics company quickly lost its place from a company known for innovation became a company with more and more obsolete products.
When compared to competitors,
its market share was declining around the world until in 2011 the company had a loss of up to $1.7 billion and more than 60,000 employees were laid off, 40 businesses were sold, and 50 factories were closed.
In 1980, Philips implemented the wrong strategy with too much diversification.
- It has a group of 11 departments and more than 120 businesses, including video games. There’s too much variety in the product range, from multiple irons to vacuum cleaners, toothbrushes, and microchips.
- Although there are some advances in technology. But the profitability is too small. As a result, the profit margin dropped to less than 1 percent and the global market share declined.
- After unprecedented losses in the 1990s, the company had to lay off more than 60,000 employees and lose more than $300 million. Moreover, when compared with other global electronics companies, Philips still had too many employees and faced a revenue decrease of 14%.
- Philips also entered the mobile phone market with a joint venture with telecom maker Lucent. This failed after a year and resulted in a loss of about $500 million.
- In the mid-2000s, the world was entering the digital age. Philips has also stuck with analog TVs (CRTs) when competitors produce liquid crystal monitors (LCDs). Philips has been too slow to enter the LCD TV market and has been unable to compete with newcomers, both Samsung and LG. That left Philips once again behind. Philips television unit lost more than $1 billion. A similar story has happened with various Philips electronic products.
- In 2009, Philips sold 40 businesses and closed 50 factories.
Entering into The Transformation Era
Philips’ business transformation under the new mission has changed the business portfolio, business model, and culture. This included leaving the old business that had been part of the company’s identity for a long time.
Beginning in 2011,
Philips sold its TV, audio, and video business, separating the company’s new lighting division. This resulted in the layoffs of thousands of workers and a loss of 1,500 million euros. Later, the home appliance business was sold for up to 4.4 billion US dollars.
Creating a new structure
by bringing together previously disbanded teams to lead work focusing on customer outcomes and ecosystem partnerships, and bringing in talents so as to advance the technology, data, and software capabilities.
Philips has transformed into a health technology company offering integrated healthcare solutions and services by leveraging the power of data and AI at the point of service to continuously optimize healthcare from healthy living, disease prevention, diagnosis, treatment, and post-treatment care.
Philips offers seamless healthcare services
This provides integrated patient health care in a safe, smooth, and efficient manner by connecting the dots for customers and consumers. It supports the real-time flow of essential information needed for accurate diagnosis, treatment, and chronic care, as well as the adoption of virtual care (Telehealth) technology to help healthcare providers improve work efficiency and meet people’s health needs for better health and better outcomes.
Decode PHILIPS step-by-step business transformation with 9 boxes of Digital Transformation Canvas
