Over the next five years, Philips is expecting and preparing for increased competition as lighting shifts ‘from analogue to digital’, and Asian-based low cost manufacturers enter the market with lighting products. Laura Ashton is at the forefront of the battle to keep Philips ahead as the competition heats up. She is relying on innovation inside Philips.
Rafe Ring: You talk about the importance of innovation to keep Philips in a leadership position. We’ve spoken with Citibank, Microsoft, Diageo and many others. It seems every company has a different take on what innovation means. How do you see innovation, and how critical it is from a strategic point of view for Philip’s future growth?
Laura Ashton: Innovation is critically important for our company going forward. And one of the reasons I took on this role is because innovation has been Philips lifeblood for 120 years and will be for the future. It is very clear to me that today it is the cornerstone of our strategy. Across our three businesses of health care, lighting and consumer lifestyle, the company is clearly committed to delivering meaningful innovation to improve people’s lives.
Rafe Ring: You say innovation is Philips lifeblood. How is that evidenced in the way Philips operates internally?
Laura Ashton: Well as you know I recently joined Philips, but in the short time I’ve been here I have been really impressed at the role innovation plays in the lighting business. There have been very important innovations in the past and today there are strategies, programs and budgets in place to unlock more potential and plenty of encouragement to use insight, foresight, and technology, to take risks and to go faster in order to understand what customers need and get innovative products and services to them when they need it.
What matters most is that innovation be people-centric. Whether it is a product, service, business process or marketing approach, innovation must at its core, be about anticipating, understanding and meeting customer needs.
Philips is number-one worldwide in lighting. Innovation is seen most obviously as our R&D teams develop better, more cost-effective LED solutions or energy saving break-throughs in fluorescent lighting. But I think some of the ways we are combining products and services are really setting the bar at new heights.
Rafe Ring: What do you mean specifically by ‘setting the bar at new heights’ ?
Laura Ashton: Well, a good example is CityTouch , an intelligent lighting-management system for cities that will make planning, controlling and managing lighting city-wide easier and cheaper. It will work with lamps, fixtures and controls from multiple brands, not just Philips, so municipal customers are still in control. I think this approach is incredibly customer-centric and far-sighted as it helps municipalities create safe, sustainable, liveable cities.
You know before I joined the company, my perception of the lighting business was that it was mainly about the reasonably high-tech business of manufacturing light bulbs of various sorts, or “lamps” as they are called in the industry. And I was also aware of big changes in energy efficiency, with a shift from old-fashioned Thomas Edison-style incandescent bulbs toward LED and those squiggly lamps known as compact fluorescents. Essentially the business is shifting from analogue to digital.
But now that I am on the inside, I have become aware of the really impressive work being done in a number of areas that combine products and services. For example, we’ve been carrying out important projects with cities around the world on their urban lighting – road lighting, illuminating public buildings and parks and so on. We help retailers show off their fashions and produce to best possible effect. We help create lighting for offices and schools that help people do better work and for hospitals to help patients recover faster. We help hotels and shopping malls save thousands of dollars in energy bills through energy-saving, low maintenance innovations. For homes, we have products like the magical remote controlled Living Colours (an awesome Christmas gift, by the way) that can produce literally millions of colours to create moods and zones for relaxing or entertaining. We are also behind the lighting for many of the world’s biggest sports arenas. Have you ever noticed how green and shadow-free the fields on televised sporting events look? This can only happen with precise lighting design and lamps and fixtures with perfect optics.
Rafe Ring: You mention the shift from analogue to digital. Can you explain how that is changing what Philips offer and how you go to market?
Laura Ashton: Well, historically lighting has been relatively high tech with considerable barriers to entry. You had to be able to make very precise glass bulbs containing gases and filaments. It has required PhDs in lab coats and expensive factories to run, and has not been an easy business to get into. Barriers to entry, certainly at the low end, are dropping. New competitors who are familiar with electronic assembly and LEDS, for example, flat screen TVs, are beginning to enter. To them, basic LED lights are simply another application. But winning in this business is much more nuanced. At Philips, innovation starts with a good idea, which comes from true understanding of your customers and markets. It means that we have to offer the right products and technologies and services that people need. We need the right partners, collaborators and customer relationships. And we have to bring the propositions to market fast and effectively. If we get that whole chain right, a good idea will become a successful innovation, grow the business and will become relevant for our customers and society in general.
Rafe Ring: Does the company have any prescribed process for innovation - is it viewed as a discipline within the organisation - or is it more organic, unstructured, and spontaneous?
Laura Ashton: From a narrow product development point of view there is a well-defined innovation funnel, similar to the innovation funnels that many companies would have - a staged gate process. But innovation doesn’t happen in a vacuum; it takes collaboration with creative, like-minded individuals who can explore possibilities from multiple angles and areas of expertise. We often work with talented designers on amazing projects – and these are not limited to the lighting designers who work on beautiful buildings and spaces. For instance, in June this year at The Black Eyed Peas sold-out concert at the Stade de France, Fergie wore revolutionary costumes designed and created by the Philips design team. Our team worked closely with the band’s people to use LED and advanced OLED technology to create stage costumes that interacted wirelessly with the stage lighting and the beat of the music.
Great innovation isn’t about making a thing – it’s about achieving an end effect that is simply better for the customer than other alternatives. In coming up with new products and services in the lighting space, we use knowledge from different sources. We place a great deal of emphasis on customer and market trend watching. We do this through research into what is happening with consumer, professional and industrial market places, what is changing in our customer’s worlds. Sometimes, customers can tell us what they need but often we need to have foresight and recognise the patterns even before the customer is able to articulate the specific requirement.
Rafe Ring: Can you talk about how innovation applies to your marketing approach?
Laura Ashton: Well naturally this is an area I am very interested in. For example, our shopper research has uncovered important insights into how Asian shoppers buy lighting. In response to the complicated, convoluted, and stressful experience that they normally face, with too much disorganised choice, not enough help and too many unknowns to decode, we have turned our innovation focus toward retailing. Today we have hundreds of dedicated Philips lighting stores all across India, China and Southeast Asia. They are uncluttered and inviting with an intuitive and pleasant in-store experience, helpful well-trained staff who can help with functional or decorative product suggestions, explain the difference between different types of energy-saving lights or offer some practical design advice, even a big table where you can sit with your own contractor and talk about your project.
Rafe Ring: Most marketers we speak with talk about shrinking budgets and increased demands. Doing more with less. That is affecting agencies as well as marketers? How do you see the role of traditional advertising in your business today?
Laura Ashton: Well sadly, the glory days of simple, linear advertising campaigns, a few TV stations and programmes watched by everyone, 17.65 per cent fees and long boozy Friday lunches are gone. Throughout Asia, our Consumer and Professional Lighting marketing use a more nuanced, segmented approach – a blend of useful, accurate information, direct interactions, CRM, brand-building, sales-driving and accountable activities. It is no longer about a one-way monologue but about understanding customers, consumers and influencers, engagement, interaction and securing the customer’s trust by helping them make the right purchase that will create repeat business and a positive attitude toward the brand. Our execution may vary slightly by market, but our message, “See What Light Can Do For You” invites both consumers and B2B customers to learn and explore and understand what Philips has to offer.
Rafe Ring: Finally, what advice would you give other marketing leaders who want to embed innovation into their company’s DNA?
Laura Ashton: Make marketing innovation experiential at work. For example there are many innovative service providers, companies that are doing things that can potentially unleash a lot of value from unusual sources. I’ve been bringing these companies in so that the team can start to dimensionalize the potential of some of these new things. Not just a credentials presentation but actual hands on working sessions where the team can start to play and let their imagination move a bit. Take some risks. Make some mistakes. Have some fun. For innovation to become part of your internal culture, your people have to experience it. Live it. That’s when light bulbs start to turn on!
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