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Philips

philips

Philips | Fortune

Matthew Perrone

The Associated Press

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So Franz, it was kind of suprising when you became CEO that you decided to restructure Phillips. After all, your father had been a top executive at Phillips for a long time. You spent your whole career at this company. How did you know that it was time to dramatically transform this 126 year- old iconic company? Do that instead of just making some incremental changes. For me it was a deep felt conviction that we needed to get ahead of the game. Because in innovation company only is in demand if you bring something meaniful. And so that was so much ingrained on my mind, that from the get go that was the numbr one montra And the first decision I took was to get out of television. How difficult was it for you to sell this to your employees, your shareholders, investors? One of the tactics that we used is to paint the picture of where we were going, the North Star. And a very compelling one, because it is very motivational for people to be part of a company on a journey. To impact the lives, through innovation, of three billion people. And actually today, we attract more talent and better talent than before. You were a first time CEO of a very big enterprise, What did you have to do as a leader to get everybody on board and to accept your vision and to get everybody pointed in the same direction? It was not easy, and it takes a lot of dialogue and sometimes, also some friction. Don't be afraid of having a fight, because in the end, progress only comes through friction. You need to bring the conflict into your board room. And then work it out with your team. And for the people that don't want to be part of it. That's okay. Let them go elsewhere. For the people that want to be part of it, let's promote into that team. That is at the top of the company that starts plotting this course towards a great future. You have said that every company should be innovating with purpose. What do you mean by that? And how are you making sure that Phillips is doing that? So by chosing health, as one of the big unmet needs of the world. I mean, there's still so many people that live with issues around their health, that better solutions would help them. That is the purpose that we have, all right? And we have declared that Philips will improve the lives of 3 billion people. You only need to point people a little bit in the direction, and they go. And that's what the role of the leader is obviously. You set the path, but you are not dictating every move on that path. Where does risk taking fit into all of this? Because just about every CEO who I talk with, whether they're running a huge enterprise or a small startup, talk about the importance of risk taking and trying new things. Even if it means that it ends up in failure. I very much believe in a culture of continued improvement. A culture where You improve everyday a bit. In such a culture, its okay to make a mistake, as long as you pull the en dem and you say stop, this didn't work, let's improve it, let's change course. In an innovative company, you have to accept that mistakes will be made. And you need to reward people for it, they need to speak up, to say this didn't work, and now we take another practice. And that's the culture at Phillips. What funds all of this takes really great leadership. I'm just wondering that, was there anyone in your life that gave you some fantastic leadership advice that really made a difference for you? I had one of my moments of truth when I was, I guess about 15 years ago, when the then CEO of Phillips said, you know Well Franz you're a very smart guy, but don't think that your smartness will get you there. It is going to be people skills that get you there. And he sent me to Asia to be in charge of 20, 000 people. In Asia a common goal is much more part of the societal fabric. It's very normal to stand for a goal together. And people really value that they care for each other. And in my leadership I got exposed to that. That was really, really very valuable. [ BLANK_AUDIO ]

Frans van Houten of Philips doesn’t mind a little friction when comes to his achieving his goals.

Philips CEO Wants Employees Who Are Committed to Long-Term Company Vision

Leadership

With China professing to be the driver of globalization now, is that something that you would approach differently? Well obviously, there are certain things that stay the same, and certain things that are different. And obviously, this is a different China. That global companies are operating in. Multinational companies are than they were five or ten or 15 years ago. But certain things are still the same and one of them is I get asked all the time by global companies, How do we How do we get a good management team? How do we do this or that? And what I say to them is you have to begin by putting your very best people here. And that was the same as it was years ago. Not put someone who you think you can spare. But you have to put someone here to figure it out And work it out on the ground. And there are huge opportunities, but they are huge challenges. And it's becoming more complicated and difficult all the time. If you are a global company, there is a whole new set of regulations. You need to figure out There's still not a level playing field but there's big opportunity. And broadly speaking, I mean, the U. S. was seen as the driver of globalization. What do you think about U. S. China relations today? Wow. Okay. Well, I would say Nina, frankly, I'm a bit concerned. When I look at you as China relations. Start with the positive. At the top, the two heads of state, two presidents, have a good relationship and a good rapport. And what does that mean? That means if there are really difficult, complicated issues like North Korea, there's a greater Possibility of making progress on those. But then there are many other significant issues that need to be dealt with. And that takes good people on each team to work together. So as I look at it today, one of the things that disturbs me or concerns me Is I see other than North Korea, I don't see what the issues are even though we have many issues where there are shared interest where you see the two sides working together collaboratively toward a common goal and so we have a situation where President Trump campaigned on In a rebalancing trade and the economic relations. And I'm all for that. And so it shouldn't be any surprise that you the answer you get on market economy status or the aluminum trade case or the 301 investigation or the national security legislation making its way through congress. It is more or less targeted. Toward China. But the thing it is missing is where are the areas that we're working together? Okay. And why aren't we working on bilateral investment that's gonna create jobs? What about. Working together to solve environmental problems and helping the US export more environmental goods and services to China. Or working on export capacity or opening up key markets. So again, as I look at it, President Trump is just about to have his first and really only major domestic legislative achievement, which is tax reform. And when that is behind him, and that's done, I think he is naturally going to Turn to his domestic constituents, and he's gonna focus on foreign policies and trade areas where he can do things unilaterally. That's gonna bring trade tension, and what you'd like to have is then some, I liked the comprehensive economic dialogue. That has stalled, right? And that's got the potential. You need some system, some mechanized for organizing and prioritizing and keeping the relationship on an even keel while you're gonna have the trade issues. So again, We need more momentum around things that we're working on together, particularly in the economic area. [ BLANK_AUDIO ]

According to Henry Paulson, Former U.S. Secretary of the Treasury

The U.S. and China Need A Common Interest Beyond North Korea

France when people here the name Phillips, they think lightbulbs, consumer electronics, but now you're completely in the healthcare business. Why did you decide to change things up? Well, where are 126 years old and we are an innovation company. Andy Grove once said " only the paranoid survive ". But for sure, an innovation company needs to direct its attention to the unmet needs. And when I became CEO Really worried that we were in commoditizing segments, that we were mature and no longer growing. So we made a radical pivot into health technology because that is one of the world's unmet needs. Why healthcare? We are already today in a world with 7 billion people of which A couple of billion don't have access to care. At the same time society is dealing with the cost of care. More chronic disease, aging population, and then the whole world is growing to nine billion. So we know one thing for sure, that the world of health and healthcare is going to be very important in the future. And I also believe that technology is going to play increasingly a break through In delivering care with better outcomes and better productivity. Well healthcare is a huge market, and, as you know, intensely competitive. Where does Phillips fit in? Well Phillips has a strong portfolio in healthcare already. We are about 18 billion Euro company in health technology. With strength in diagnostic imaging. Image interpretation, so we can really advise doctors what is wrong with a patient. It's going to be a very strong and minimally invasive surgery operating rooms but also the smart catheters that go inside of the body. We are a market leader in patient monitoring. Everybody talks about the quantified self. That's what we do. We measure people. We measure how people are doing. We can actually even predict when a patient would get a heart attack, six hours from now. That's prospective artificial intelligence. So it's really cool stuff. So, how big a player do you think that Phillips can be? Down the road, five years from now, how will we be describing your company? Well, we are currently a top five health technology player. So we're already big. Phillips has set a goal for itself to improve the lives of three billion people by the year 2025. Today we reach 2. 1 billion every year. So the Phillips brand really penetrates the world Deeply. And if we are innovating we can be more relevant to more people, and that's our goal. I wanna switch gears a little bit and talk to you about Obama care because after all Phillips does a lot of business in the United States. And given that there's still so much uncertainty about the future of the American healthcare system System and still plenty of debate about repeal and replace. How does all this uncertainty impact what Phillips is trying to do? Our strategy is focused on driving better outcomes for patients and higher productivity for hospitals That is so much in demand. And it's universally true whatever happens to the legislation in this country. So, no matter what kind of plan comes up, if it goes to a single payer system, or some other version. Of the current Obamacare, not a problem for Phillips? Well I mean, any change will cause disruption and uncertainty that also affects us. But I do believe that the world is moving towards value- based care. So it is only natural that together we try to improve the productivity and the outcomes And you see also that consumers as they have higher copays start becoming involved. And the fact that information is now so much more available through the Internet, it also means that we can expect more accountability to be taken by consumers and patients. [ BLANK_AUDIO ]

Frans van Houten saw unlimited opportunity in a worldwide un-met need.

How Royal Philips CEO Is Invested In Improving Lives

Philips

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