solvay_live243_p02a04 somEdito

Dossier SolvayInnovationTrophy2006
20
The lighting market is under heavy pressure from
an invasion of Chinese products. How do we
react to such a situation? How can we protect our
know-how? Should we relocate? Innovation
is central to Philips Lighting’s response.
Innovating
to stay up front
Lighting life has changed 360 degrees in
recent years”, was Klaas Vegter's opening shot. “The
good old days when Philips, General Electric and
Osram together shared 70% of the world lighting
Philips
“At
products market between them are long since gone”, the Chief
Technology Officer of the Lamps business group told Solvay live.
The shock came from the Far East. For the past fifteen years,
Chinese companies have been flooding the lighting market (incandescent
and TL lamps) with lower quality but very cheap products.
“They penetrate the market through major retail chains”, Klaas
Vegter explains. “So we set up shop in China where we produce certain
low energy consumption lamps – real ‘commodity’ products –
whilst improving their quality to maintain our brand value.”
Protecting one’s know-how
Philips Lighting, on the other hand, protects its mainstream business.
“Office lighting, industrial lighting and street lighting are sectors
where longevity, quality and reliability are still criteria of choice.
In certain environments it is an expensive job replacing blown lamps!”
There’s no question of know-how transfer or cooperation with
China. “Here we jealously guard our know-how”, Klaas Vegter warns.
But competition is not just about products. New technologies have
irrupted into the lighting market, totally changing the entry barriers
to the profession. Semiconductors were foreign to the Philips culture.
Today, Taiwan alone has hundred of companies which together
can feed the entire world market with light-emitting diodes (LEDs,
OLEDs). Philips’ response to this situation was to acquire
Californian LED producer Limuleds. “Diode production is still marginal
to our main business. However, we cannot rule out that one day
we will need diodes in our traditional applications, where we want
LED die (Light Emitting Diode).
to remain present.” Semiconductor technology is so different,
though, from that of traditional lighting, that the two worlds live
their own separate lives at Philips.
Innovating to maintain a lead
It is in traditional lighting that Philips remains leader. Here too
though, the Dutch company is feeling the growing pressure from
China. “We will remain the best only if we maintain our lead”,
Klaas Vegter acknowledges. The research department is first of
all confronted with a question of internal organization and recognition
of its true mission, see-sawing between “obligatory
service” to the operating units that finance its research projects,
and its need to pursue a longer-term vision, by definition of less
immediate interest to the operating units. Greater financial
autonomy was the first necessary step. “15% of our budget is now
devoted to long-term projects. I’m careful to make sure we do not
take on missions that are really the job of the operating units. I’m
putting my team back on the track of their real profession, that of
finding new ideas. Each team member is given 5% of his or her time
to explore new avenues, with bonuses for success! This has redynamized
my team.” Klaas Vegter has also demanded that each
team that is developing a new idea construct a demonstration