Let's talk

If the world is flat due to globalization and the worldwide Web, as business theorists say, there are many ways to motivate employees around a mutual goal with the help of the Internet, conference calls, Wikipedia or the 3D virtual world Second Life.

But the Dutch firm Royal Philips Electronics chose a seemingly traditional approach - giving a full day off to all employees so they could sit together in a massive brainstorming session.

On November 15, 128,100 employees of the Dutch lighting, medical and home appliance maker took a break from their work and gathered for discussions on how to make their processes, products and technologies simpler.

Some companies might not see the benefit - more than 180,000 people not working might be seen as an enormous sacrifice of time and energy. It could also mean lost revenue as most sales staff did not visit customers that day.

Yet Philips says it was a worthwhile investment to unite employees through dialog to develop collective wisdom crucial for the company to achieve its ambitious goals.

"'Sense and Simplicity' used to be mainly a top-down brand campaign, but now we hope to bring that promise to a higher level through this bottom-up transformation in our company," says David Chang, executive vice-president of Philips and CEO of Philips Greater China.

Philips gave up its previous slogan "Let's make life better" in September 2004 and turned to Sense and Simplicity. The goal is to simplify its processes, technologies and products for ease of use, high flexibility in an increasingly competitive market, and a focus on high-margin and stable business segments.

The brand promise is part of the company's mission to improve the quality of life through the introduction of innovation, using it as a framework for the transformation into a market-driven, people-centric company.

In line with that strategy, Gerard Kleisterlee, president and CEO, decided to focus on Philips' businesses in healthcare, lighting and consumer lifestyle products, selling off volatile and low-margin divisions like semiconductor and mobile phone manufacturing.

With the transformation, Philips has turned into a steadily growing profitable business. Its brand value rose from 65th in 2004 to 42nd in 2007 on the Interbrand brand value ranking list.

Previous campaigns on the new approach were mainly initiated by executives, while only 8,000 employees took part in online dialogs on Sense and Simplicity.

At a Simplicity summit in Chicago in May, more than 200 top executives gathered together to evaluate the effectiveness of the brand campaign and they decided the catchwords still needed to become deeply ingrained in every employee, each themselves a brand ambassador.

It became even more important to them after the company set ambitious goals to deliver 6 percent annual sales growth from 2008 to 2010 and increase its pre-tax profit margin from 7.5 percent in 2006 to 10 percent.

In Beijing, some 200 Philips employees generated 17 ideas for Sense and Simplicity. Four staff members were selected to join a three-month online global contest in which more than 1,200 ideas will be considered and the top 10 selected.

Some ideas suggested that Philips should have standard tool boxes for engineers, not only making their work easier, but as a vehicle to promote the company's brand. Others say too much time is spent writing and reading mail, which reduces efficiency, so people should stop sending mail on Friday, instead using other direct ways of communications.

"I was very excited to see our people take part in the program with so much passion and we do not want it to be just one time, but long lasting," says Chang, who was also the brand ambassador at the Beijing event.

The group effort also helped promote the company notion of "One Philips".

Like many other multinationals, Philips was before divided vertically, so its lighting business had little cooperation with its medical equipment business.

Philips says it needs to break barriers in business groups and increase synergy so it has been trying to accelerate cooperation among its divisions.

(China Daily 01/05/2008 page7)