Philips publicatie vision2010a - News center | · PDF fileVision 2010 establishes the...

Vision 2010Building the leading brand in Health and Well-being

Philips publications June 2008

Philips_publicatie_vision2010a.indd 1 30-06-2008 13:38:29

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© 2008 Koninklijke Philips Electronics N.V.

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Vision 2010 establishes

the character of Philips

as a people-focused,

market-driven company that

is organized around customers

and markets. By understanding

trends in society and obtaining deep insight into issues

confronting people in their daily lives, we ensure that

people’s needs remain at the heart of everything we do.

This booklet summarizes the main points of Vision 2010,

and explains the thinking behind them. It looks first at

the general overall picture, and then zooms in to look at our

three sectors of Healthcare, Lighting and Consumer Lifestyle.


2Philips Publications

Vision 2010 is based firmly on our Mission:

“ Improve the quality of people’s lives through timely introduction of meaningful innovations”

Innovation does not only mean

“new technology”. It can also mean

an exciting application, a new business

model or a unique customer proposition

brought about by an innovative partnership.

In other words, an innovation is not

the same as an invention. Technology

remains very important, but insight into

the needs and aspirations of consumers

and customers is equally, if not more

important and must always be our

starting point.

Vision 2010 is also based on our general

corporate Vision:

“In a world where complexity increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to people”

The Vision describes what we see as one

of the biggest challenges facing people

today – and how we can help them meet

that challenge. We have identified

the difficulty of coping with complexity as

a major challenge for people in our time.

One of the things that makes life today

so complex is the fact that technological

progress comes to us very often in a way

that is too difficult to experience.

We believe that this situation can be

changed, and that we can help to make

the benefits of our products and solutions

easier to access and more relevant to

people’s needs and aspirations.

Our Mission Our Vision


3 June 2008

We express this view in our Brand

Promise – “sense and simplicity”.

It encapsulates our commitment to deliver

solutions that are advanced, easy to use,

and designed around the needs of all our

users. By delivering on this Promise,

we empower people to fully benefit from

innovation and technological advancement.

To reflect the ambitions we have laid down

in Vision 2010, our Values have recently

been updated. The Values, the four Ds,

are like a compass – guiding us in how

we behave every day, and reminding us

of the attitudes we should have towards

our work, our customers and our

colleagues. Living and working according

to our Values will be crucial for Philips

as a company and in helping us realize

our Vision 2010 ambitions.

Delight customersWe anticipate and exceed customer expectations

•WedemonstratepassionforPhilipsand “sense and simplicity”

•Wecreatesuperiorcustomerexperiences, based on deep insights

•WeactasOnePhilipsambassadors all the time

Deliver great resultsWe continually raise the bar

•Weplaytowinbig,andalwayssetambitious targets

•Wechallengethestatusquoandexperiment with new ways

•Wetakecleardecisionsandimplementwith speed and discipline

Develop people We get the best from ourselves and each other

•Weattractthebestplayerstocreatestrong and diverse teams

•Wetakerisksbygivingpeople stretch assignments to accelerate their development

•Wepersonallyinvestsignificanttime to coach and recognize people

Depend on each other We deliver more value by working as One Philips

•WethinkasOnePhilipsandact as owners

•Wetrustandempowereachother to contribute our best

•Weteamupandallocateresources to the most promising opportunities

Our Brand Promise Our Values



We seek to improve the quality of people’s

lives through focusing on their health and

well-being. Quite simply, we want to

help people live a healthy, fulfilled life.

By “health” here we mean not only

medical-related aspects of health,

but also keeping fit, eating a healthy diet,

and generally living a healthy lifestyle.

By “well-being” we mean a general sense

of fulfillment, feeling good, and at ease.

“Well-being” also refers to the sense of

comfort, safety and security people feel

in their environment – at home, at work,

when shopping or on the road. Our focus

on Health and Well-being automatically

implies that we contribute to building

a sustainable society.

Health and Well-being


5 June 2008

Three sectors

Our Philips positioning as a leading brand

in Health and Well-being is implemented

through our activities in the areas of

Healthcare, Lighting and Consumer

Lifestyle. As of January 2008, we have

simplified our organizational structure

to fully align with these markets.

We refer to our new organizational

units as “sectors” rather than “product

divisions”, because “sector” here refers

to sectors of the market rather than

products. The names of the sectors also

focus our attention on the needs we aim

to meet, rather than on the products and

services with which we might meet them,

i.e., we take an “outside-in” rather than

an “inside-out” perspective.

•Healthcare

Good health is a prerequisite for quality

of life. The Healthcare sector focuses

on improving healthcare, at lower cost,

around the world. This includes helping

to reduce the incidence and severity of

many of today’s deadly and debilitating

diseases, such as cancer and heart

disease. By approaching healthcare

from the perspective of a patient

or a physician, we believe we can

ultimately create the best solutions for

them. Whether it is in the hospital or

in the home, we seek to improve patient

outcomes throughout the entire “cycle

of care” – from preventive medicine,

including screening, through diagnosis

and treatment in hospital, to recovery

and, where needed, long-term disease

or health management in the home.

•Lighting

Human life revolves around light.

Light can affect our mood, improve our

well-being, and enable us to experience

and achieve more. It is therefore a vital

part of making our lives fuller,

more productive and safer. The Lighting

sector focuses on new ways of using

light to enhance people’s well-being and

safety – in the home, at school, at work,

in shops and public places, as well as

on the road. Recognizing how resource

conservation and climate protection

will play an increasingly significant part

in human health and well-being, we pay

special attention to maximizing the effect

of lighting while minimizing the energy

required to produce it.



•ConsumerLifestyle

Quality of life is about more than just

being healthy and productive. It’s about

enjoyment, socializing, looking good and

keeping fit, as well as caring for others

and our environment. In short, it’s about

living a fulfilled, balanced and responsible

life. The Consumer Lifestyle sector

will build on our deep understanding

of people’s needs and aspirations in these

areas in order to create innovations that

help consumers achieve their lifestyle

ambitions.

More than the sum of the parts

As is clear from the descriptions above,

our sectors overlap. Good health

is supported by a healthy lifestyle.

Consumers buy retail products to manage

their health. Care cycles often start and

end in the home. And lighting not only

caters to the lifestyle of consumers,

but also serves the needs of professionals

in many different ways. So there can be

no clear boundaries between Healthcare,

Lighting and Lifestyle – which is another

reason why we have called them “sectors”

rather than “divisions”. Divisions divide;

sectors overlap and work seamlessly

together. And through all of this runs

the life blood of Philips – our ability to

innovate by combining great technology

with deep customer insight, delivering

our brand promise of “sense and

simplicity”. Vision 2010 lays down

explicit financial targets that will increase

shareholder value.


7 June 2008

Our Vision 2010 contains the following

financial targets (updated in April 2008):

•AGroupEBITAmarginof10–11%

in 2010

•ThisGrouptargetisunderpinnedbythe

following sector EBITA targets for 2010:

-Healthcare15–17%

-Lighting12–14%

-ConsumerLifestyle8–10%.

•Drivingcomparablesalesgrowthat

aminimumof6%averageperyearfor

the period 2008 – 2010

•Returnoninvestedcapitalof12–13%

by 2010

With the above revenue and EBITA margin

targets and with our continued drive

towards a more efficient capital structure,

we expect to double our EBITA per

common share by 2010 from the level

in 2007.

Our ambition



Vision 2010 identifies seven specific points

that we will need to pay special attention

to during the next few years in order

to achieve our ambition:

•Weareapeople-centriccompanythat

is organized around customers and

markets. We allow ourselves to be

guided by the market – that is, by what

people want.

•Weinvestinastrongbrandand

consistently deliver on our Brand

Promise of “sense and simplicity” in all

our actions, products and services – not

just in our interactions with customers,

but also with each other, our suppliers,

our trade customers and all our

stakeholders.

•Wedeliverinnovationbyinvesting

our world-class strengths in end-user

insights, technology, design and superior

supplier networks. It is important not to

confuse an innovation with an invention.

An invention does not become an

innovation until it is successful in

the market. And an innovation is not

always the result of an invention: it may

also be the innovative use of existing

technologies or ideas.

•Wedevelopourpeopleleadership,talent

and engagement and compare ourselves

with the best. We are guided by the

market, not by internal considerations.

•Weinvestinhighgrowthandprofitable

businesses and in emerging geographies

where we can build a sustainable

advantage to achieve market leadership

positions. We are aware that emerging

markets sometimes behave differently

from the mature markets we are familiar

with. We are committed to allocating

marketing and innovation resources

to capture local opportunities.

•Wearecommittedtosustainability,

and we focus on making the difference

in efficient energy use. We have set

ourselves some important targets here:

to increase the number of “green”

productsinourportfolioto30%in

2012(from20%in2007)andtoreduce

averageenergyuseinourofficesby25%

over 5 years.

•Wedriveoperationalexcellenceand

quality to best-in-class levels, allowing

us to maximize the above-mentioned

strategic investments in our businesses.

Our ways of working


9 June 2008

In the following pages, we look more closely at how the three sectors plan

to implement Vision 2010.



The field of healthcare has become very

complex over the years. Our Healthcare

sector is dedicated to improving people’s

lives with solutions designed around

the needs of our customers and patients.

We believe we can make a difference by

removing boundaries in healthcare with

our innovative and affordable technology

solutions throughout the entire cycle

of care.

Our markets and our expertise

With a growing presence in cardiology,

oncology and women’s health, we focus

on the fundamental health problems with

which people are confronted, such as

congestive heart failure, lung and breast

cancers and coronary artery disease.

We are committed to developing

solutions that deliver value throughout

the complete cycle of care: from disease

prevention to screening and diagnosis,

through to treatment, monitoring and

health management. We are dedicated to

making an impact wherever care happens,

not only within the hospital – critical care,

emergency care and surgery – but also,

as importantly, in the home.

At Philips, we try to simplify healthcare.

Our approach is unique, because we start

by looking at the people, patients and care

providers, not the technology. Because of

this, we find ways to apply innovation in

ways that are intuitive for clinicians across

the care cycle and yield the best outcomes

for patients. This results in better diagnosis,

more appropriate treatment planning,

faster patient recovery and improved

long-term health.

Our company’s heritage of understanding

how consumers think about and react to

technology, combined with our deep clinical

knowledge, puts us in a unique position

to address the modern challenges of

healthcare systems in groundbreaking ways.

Market trends in healthcare

Healthcare is one of the largest industries

in the world. For the past three decades

in the most developed markets,

the healthcare market has grown faster

than GDP. It is now growing at high

rates in emerging markets, such as China

and India. This pattern is expected to

continue, given an aging global population,

increasing life spans, as well as growing

Healthcare – Focus on people


11 June 2008

demand for more advanced healthcare in

emerging markets as they develop. People

are living longer, and this provides market

opportunities in disease monitoring and

in the management of chronic disease

(a direct result of increased longevity).

In addition, increasing numbers of

consumers are taking care of their own

health: this will lead to further evolution

of the healthcare market in the home and

other non-hospital settings.

As healthcare continues to take up more

and more of the public budget, there is

a growing fear that the current system will

not be sustainable. Specifically, the concerns

are threefold: that costs will be too high;

that there will be not enough healthcare

workers to meet increasing demand;

and that the diagnosis and treatment of

patients will become more and more

complex. These challenges create a unique

opportunity for an innovative company

like Philips.



Ambition

As part of delivering on Vision 2010,

it is our ambition to demonstrate that

our innovative products and technologies

can contribute to improved healthcare,

at lower cost, around the world.

With better and earlier screening and

diagnosis, more effective patient treatment

and an improved ability to manage chronic

diseases at home, we can shorten hospital

stays, reduce costs and improve the quality

of people’s lives.

Plans for growth

Today, we are one of the biggest global

players in the healthcare industry.

In the future, we will continue to grow

our business organically, focus on margin

expansion and pursue strategic acquisitions.

Our organic growth will be driven by

continued expansion into emerging

markets, more significant development of

mid- and low-end products for customers

around the world, increased awareness of

the uniqueness of our brand within

the industry, ongoing enhancement of our

customer experience, and optimization

of our care cycle approach.

We will seek to improve our margins

through better product reliability,

improved pricing initiatives, optimization

of low-cost country sourcing, and

increases in our service productivity

and operational efficiency.

Lastly, we will continue to pursue

strategically aligned acquisitions to further

strengthen our position in emerging

markets and across the care cycle,

in areas such as home healthcare and

clinical decision support tools. At the same

time, we will accelerate the integration of

recent acquisitions and optimize our ability

to consistently extract value from the

acquisitions we make.


13 June 2008

The Lighting sector is dedicated to

improving people’s lives through the

introduction of innovative end-user-driven

and energy-efficient solutions and

applications for lighting, based on

a thorough understanding of the needs,

wants and aspirations of people in both

a public and a private context.

Our markets and our expertise

We are a leading provider of solutions

and applications for both professional and

consumer markets. We address lighting

needs in a full range of environments:

indoors, in homes, shops, offices, schools,

hotels, factories and hospitals, as well

as outdoors, in public places, residential

areas and sports arenas. We also meet

people’s needs on the road, by providing

Lighting – Shaping the future



safe lighting in traffic (car lights and street

lighting) and elsewhere. In addition, we

address people’s desire for light-inspired

experiences through architectural and city

beautification projects. Our lighting is also

used for specific applications, including

horticulture, refrigeration lighting and

signage, as well as heating, air and water

purification, and healthcare.

As market leaders both in solid-state

lighting and energy-efficient solutions,

we understand people’s wishes and can

therefore provide design-led solutions

to address their needs and aspirations.

The radical changes in the lighting industry

as a result of developments in solid-state

lighting and new green technologies will

give us ample opportunities to shape our

own future by showing leadership.

Market trends in lighting

Rising energy prices and increased

awareness of climate change are creating

greater demand for energy-saving lighting.

As a result, the market for our innovative,

efficient and sustainable lighting solutions

is growing.

Lighting technology is changing from

traditional incandescent lighting to

solid-state lighting. Solid-state lighting

products last longer and are smaller in

size. The new technology makes it possible

to create new, intelligent and dynamic

lighting solutions. This means that the

indoor and outdoor market segments are

likely to expand considerably, as a result

of both innovation and new applications.

To capture all this potential, we are

moving away from a focus on products and

components to a focus on applications,

applying our lighting expertise and

innovative strengths to create truly

end-user-driven solutions.


15 June 2008

We are also working to push back

the traditional frontiers of our industry

by working with our partners across the

value chain to create new business models,

while further developing our channels

and customers to effectively deliver the

applications and solutions of the future.

Ambition

Lighting will contribute to the realization

of the Vision 2010 ambition. We are

already a leader in many key market

segments and regions, but we aim to

be recognized everywhere as the true

leader in design-led and end-user-driven

innovation. We want to be recognized

not only as the best applications specialist

and solutions provider, but also as the

most recommended brand and partner

of preference, while contributing to

responsible energy use and sustainability.

Plans for growth

We create value for shareholders and

stakeholders alike by pursuing sustainable

profitable growth and implementing

a market-driven, people-focused strategy,

by which we:

•Shapeandtaketheleadinthenewworld

of solid-state lighting

•Becomethebrandandpartnerof

preference in providing innovative

solutions and applications in our chosen

market segments

•Addresstheincreasingdemandfor

energy-efficient value propositions that

results from rising energy prices and

growing awareness of climate change

•Accelerateoureconomicexpansion

in emerging markets to help deliver

profitable double-digit sales growth for

almost one-third of our global sales

•Makeacquisitionsthatwillenableus

to accelerate our growth and that will

complement our leadership positions.

To grasp all these opportunities, it is

crucial that we fully engage our customers

and our own people. Together, we will

then be able to build the future of the

lighting industry and ensure a sustainable,

leading role for Philips in this field.



Consumer Lifestyle aims to respond

to the aspiration of consumers all over

the world to improve their health and

well-being. In doing this, we focus on four

areas: Body, Mind, Space and Appearance.

Our markets and expertise

The pursuit of health and well-being is a

universal trend. It is creating a market (both

in the developed and emerging economies)

that is more than three times larger than

the market for our existing consumer

businesses. It is also growing faster and more

profitably than the overall consumer goods

market. It therefore represents a formidable

platform for sustainable profitable growth.

Consumers who focus on health and

well-being tend to be more highly educated

and more affluent than other consumers.

They are also increasingly familiar with using

technology in their daily lives. They are

constantly looking for meaningful innovation

and are ready to pay a premium for it.

They exist in both developed and

developing markets.

Consumer Lifestyle – From good to great!


17 June 2008

Investing in product categories relevant to the

health and well-being of consumers makes

sound commercial sense, especially as we

know that the Philips brand and our Brand

Promise are particularly significant in this

market. As a result, we can command higher

prices and claim bigger market shares, while

expanding our current portfolio and creating

exciting new business opportunities.

To maximize our success in the health and

well-being market, we need to understand

consumers’ needs in this area better than

anyone else, and then translate those

consumer insights into relevant and

innovative solutions that deliver on “sense

and simplicity”. Our unique competitive

advantage will continue to be the combination

of our powerful global brand, our insightful

understanding of people, our extraordinary

competence in technology and design,

and the many synergies with our channels,

partners and supply chain.

Ambition

Consumer Lifestyle will contribute to the

realization of the Vision 2010 ambition.

In addition, we will innovate and make

a substantial difference for consumers

in everything we do. In that way, we aim

to make Philips a leading global brand in

consumer lifestyle.

Plans for growth

Today we are already one of the biggest

global players in consumer lifestyle in terms

of turnover. We want to become a key player

in terms of overall profitability as well.

We will therefore:

•Aggressivelyoptimizeourbusinessportfolio

by divesting, downsizing and revitalizing

underperforming units, while at the same

time introducing new categories in the

health and well-being area

•Pursuestrategicacquisitionstoaccelerate

our entry into new value spaces,

complement our leadership positions and

strengthen our presence in developing

markets

•Focusonthosegeographicalregionsthat

offer the highest return on our marketing

investment, based on our very strong brand

equity and the market potential of those

regions, which include the key developing

markets as well as our European stronghold

•Continuetoinvestatcompetitivelevelsin

advertising and R&D, to fuel innovation and

build our brand value

•Maintainrigorousdisciplineregardingcosts

and organizational efficiency, based on

continuous benchmarking with best-in-class

consumer businesses.



This is a booklet in the series of Philips Publications,

published by Philips Corporate Communications.

Previous publications:

•‘ThePhilipsstrategyexplained’,

April 2005

•‘Thedesiredbusinessclimateinarapidly

changing world’, June 2005

•‘111medicaltermstoknow’,

November 2005

•‘Challengesandopportunitiescreated

by China’s economic growth’,

November 2005

•‘Leadershipthroughtransformation’,

November 2005

•‘ThePhilipsstrategy:focusingon

profitable growth’, May 2006

•‘Patient-centricinnovationforbusiness

growth in healthcare’, May 2006

•‘Businessgrowthandvaluecreation

through sustainable solutions’, July 2006

•‘TheCEindustry:aplatformfornew

convergence’, September 2006

•‘Energymanagementasachallengefor

CEOs in the 21st century’, May 2007

•‘Addressinghealthierlifestylestodayand

for tomorrow’, November 2007

•‘Collaborationandinnovationaskey

to improve healthcare access’,

December 2007

•‘TowardsVision2010-Focusingon

people’s needs in Health and Well-being’,

April 2008

These publications can be found at

www.newscenter.philips.com/about/news/

publications/

Hard copies, as long as available,

can be ordered through

Corporate Communications

[email protected]

If you would like to know more about Philips, please visit www.philips.com/about

Published by Philips Corporate Communications, June 2008


19 June 2008


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