Industry Special :Innovation: The heart of what makes Philips unique

For the past 120 years, Royal Philips Electronics has had a positive impact on millions of lives around the world, so it was no surprise for people around the globe to greet the company's 120th anniversary on May 15.

Philips says that it has a mission, to "improve society and people's lives through the timely introduction of meaningful innovations".

It is a part of Philips' DNA. And it has been an innovation powerhouse since its start as a manufacturer of light bulbs in 1891, to the rotary shaver and CD.

Its many inventions have changed people's lives and, according to the US' Business Week and the Boston Consulting Group, Philips is one of the world's 50 most innovative companies.

It had sales of 22.3 billion euros ($31.6 billion) in 2010.

Frans van Houten, CEO of Royal Philips Electronics, has said that, "Innovation is at the heart of what makes us unique. And innovation is a fundamental condition for profitable growth of Philips in the future."

Philips is also a world leading company in the areas of health and well-being, one that focuses on healthcare, lighting and consumer lifestyles.

For Philips, innovation means fully understanding the needs and aspirations of people and providing them with unique and creative solutions.

Customer insight is the critical starting point and the foundation, which ensure that products and services are accepted by the market, and really improve people's lives.

Philips has a people-centric approach to research activities - it develops innovations designed around the users.

Long China connection

Philips' China history goes back a long way, since its trade here started in the 1920s. These days, it can be found in more than 500 Chinese cities, with 26 legal entities and over 15,000 employees.

In the first quarter of 2011, China became Philips' second largest market, surpassing Germany.

In 2011, Philips announced a strategic plan to make China another global home.

"China is and will remain an important growth market for Philips and we're investing more to make it a global home. We'll accelerate growth by innovating for Chinese health and well-being needs", Frans van Houten explained.

Philips passed a milestone on Jan 1, 2011 when it relocated the global headquarter of its Consumer Lifestyle's Business Group Domestic Appliance to China, to provide local innovations faster to consumers and to compete with local players.

It also set up an innovation center for kitchen appliances in Shanghai.

With its long-term commitment to China, Philips has gone from "innovating for China" to "innovating in China" to stay ahead of the competition.

It has over 1,500 R&D personnel, 12 R&D centers, and an annual R&D spending of more than 73 million euros ($103 million) in China, so it has a strong local-for-local and local-for-global R&D competence here.

In 2000, Philips Research Asia was set up in Shanghai, as one of three global research labs.

Open innovation

Philips believes that innovation is in fact a collective process and an open, cooperative mindset is needed these days if a company wants to be an innovator.

Philips advocates an "open innovation" approach, with the premise of respecting intellectual property rights.

This is done through multilateral cooperation, technical sharing, division of responsibility, and collaboration and benefit sharing, for the purpose of maximizing the value of R&D resources and using a diversified approach to technical development.

It is through this open innovation that Philips is committed to making a contribution to an innovative society in China.

It collaborates with various institutes, academia and partners, fostering the growth of talent locally, and helping it establish an effective site for knowledge exchanges with Europe.

Its strategic partnerships include some of the top higher learning institutions such as Zhejiang, Tsinghua, Southeast, Northeastern, Shanghai Jiaotong, and Fudan universities.

Philips continuously invests on innovation. In 2010 the company's investment in R&D was 1.5 billion euros ($2.13 billion), 7 percent of its sales.

For each business Philips has an innovation roadmap which follows the developments of markets and is strongly driven by consumer / customer insights.

In China, Philips is accelerating growth and capturing opportunities by innovating for Chinese consumers' needs in health and well-being.

By locating business closer to the market, the company will accelerate to bring China-focused innovation to the market.

(China Daily 06/01/2011 page10)