How Philips creates a systemic view to design solutions for tomorrow

Many companies are pressured to focus on quarterly results and reporting and may lose track of the longer-term view. Meet Reon Brand and Simona Rocchi, who are conducting pioneering research at Philips.

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May 12, 2022
Strategy

Few tech companies have such a rich history as Philips, which has been around for more than a century and invented many groundbreaking devices and services. Think of the cassette, the compact disc and various pioneering medical devices. At the same time, the company developed the ability to transform itself and adapt its focus continuously. The cassette and compact disc became irrelevant, and the incandescent light bulb, Philips' iconic product for decades, also disappeared.

In the last decade, Philips has transformed itself again into a purpose-driven company focusing on health technology. A company that can reinvent itself in this way must be able to look ahead and build a company culture that is open to change. Not just one quarter or one year, but way beyond. Philips carries out pioneering research into deeply understanding societal, environmental and technological change and explores how companies can respond to this meaningfully.

We are fortunate that we have the space to think beyond the boundaries of what the company is doing today

Says Reon Brand.

As Principal in Design Research, he is one of those researchers at Philips. In 2010, he and Simona Rocchi, Senior Director - Design for Innovation and Sustainability, published an impactful report that focused on 'rethinking value'. More than ten years ago, Brand, Rocchi and their colleagues already saw that companies should no longer focus on only profit, growth or scalable platforms but that everything would revolve around purpose. 'The report is full of provocative perspectives and insights that can stimulate discussion and help to transform people's views.'

And this is necessary because the publication of such a report is only 1 percent of the work. In the ten years that followed, Philips's principles of this report were explored and demonstrated in many projects on how to translate theory into reality. Brand: 'You can't just dump theoretical information on a company. There is a need to disseminate, discuss, debate, understand and find opportunities to experiment with new ways of thinking, new ways of innovating and new ways of doing business. The report had a wider impact than only Philips. Prof CCM Hummels initiated the department of Transformative Practices (in Design) at the Technical University of Eindhoven, based on the principles outlined for the “Transformation Economy’ in this report. It's important that we make the insights actionable and that universities and other partners contribute to interpreting and demonstrating new principles. You need to have a rich multi-perspective systemic view.'

Improving lives worldwide

The Transformation Economy described in this report outlines an approach to business that is driven by a higher purpose, requires collaboration by multiple stakeholders, and pursues a model of value sharing. The insights also provide a touchstone for new products, services and approaches to innovation and solution creation. For example, how would you develop solutions that contribute to fulfilling the company's purpose in a profitable, sustainable, equitable, and socially inclusive way? 'It is important to understand what kind of innovation is required to sustain short-term profitability while, at the same time, contribute to the overall company’s purpose in the years to come. You need to rethink value and value creation (or you can say 'what' is value and 'how' to create it).

Philips, for example, has always been committed to "improve people's lives," but the interpretation and, therefore, our portfolio of solutions has changed in recent years. To make it very concrete, by 2030, we now aim to improve the ‘health and well-being’ of 2.5 billion people per year, including 400,000 people in medically underserved communities,' says Simona Rocchi, Senior Director of Design for Sustainability & Innovation at Philips.

It is a complex challenge to extend Philips’ business to reach people who do not have access to quality healthcare today. 'It's one thing to put a statement out into the world; it's another thing to turn it into real business action as it can impact your business.” One of the initiatives took place in Kenya where Philips already had a presence, but was mainly focused on tertiary healthcare care solutions. The problem is that in Kenya, as in many Sub Saharan African contexts, more than 70% of people live in rural settings. Primary care on the ground is often inadequate, but it is the most effective option to reach underserved communities with healthcare. Philips has a limited product and solution portfolio in primary care, which is exactly what was needed in this context. That's why we have to create a systemic approach to expand that portfolio', says Brand. Philips initiated a primary care venture to focus on community-centred healthcare solutions.

Rocchi: 'It's not just a challenge of technology and healthcare solution development; you need to create an ecosystem of partners around a common goal, shared responsibilities, individual benefits and a business model that enables fair value sharing. Even then, there are many other systemic challenges to address. For example: if you provide a healthcare solution in a public facility, but there are not enough doctors to operate it, or resources for proper maintenance, your solution will fail to deliver the expected results over time. It is difficult or even impossible for competitors to expand and sustain business in Sub-Saharan Africa without building an effective network to leverage, a joint commitment to tackle systemic challenges, and a strong engagement with local communities. To develop a competitive advantage, you must provide local stakeholders with a sense of ownership, provide content that makes sense in their cultural context and make them an active part of the transformation process.

Co-emerging futures

When Philips unveiled its report on rethinking value in 2010, the world looked very different. The purpose-led Transformation economy that the researchers predicted then is now unfolding in real action on the ground. What's next? Anyone who wants to know would do well to read the latest report that Philips published a decade later.

'When we started in 2010, we looked at the waves of social-economic value creations and how companies deal with them. Now we're facing big issues regarding climate change and imploding ecosystems. If we are honest, most of this is driven by consumerism, and in the past, Design and Marketing played a key role in fueling consumer aspirations. Our challenge is to rethink the role of design in the future. There will be a shift to put the ecosystem in the centre, not human needs. If we try to satisfy every consumer's need and aspiration, we will continue to fuel the planet's destruction', says Brand. This shift has a significant impact on how we will live, design, innovate and do business in the future.

Core to the solution are the co-emerging futures described in the paper. It's a new model for understanding unfolding future streams of change driven by different mindsets and beliefs. The model shows that there is not only one future but four key directions. Two directions (Etherea and Immortalia) are fueled by a belief that with technology, we can overcome all challenges, even when faced with declining natural ecosystems. The other two trajectories (Habitania and Gaia) seek to transform human behaviour to create civilizations in harmony with natural systems.

Brand: The model may seem like an abstract theory, but it is underpinned with compelling insights and evidence. Companies and individuals can relate their own beliefs and actions to the map and use it as a source of inspiration and reflection because it juxtapositions different perspectives of the future. The next question is to explore what these futures mean for how companies have to act. In the coming years, just like with the last report, we'll partner with universities and other collaborators to explore new ways to design, live, and potentially new business models based on this framework. In the meantime, our previous work will keep evolving.'

Spread the word

Brand and Rocchi enjoy talking about their research because it provides new perspectives for internal reflection, discussion, and exploration in the company and engages and inspires many stakeholders outside the company in academia and future and design platforms. Sharing new perspectives and seeds for change with stakeholders outside our company makes the message more compelling, also within the company, as it creates mutually reinforcing waves of momentum that can shape transformation.

References

  1. https://www.researchgate.net/publication/272941478_Rethinking_value_in_a_changing_landscape_A_model_for_strategic_reflection_and_business_transformation
  2. https://www.researchgate.net/publication/333972702_Co-Emerging_Futures_A_model_for_reflecting_on_streams_of_future_change
  3. https://www.researchgate.net/publication/350315121_Public-Private_Partnerships_for_Sustainable_Development_Goal_3_TWO_CASE_STUDIES_IN_INNOVATIVE_HEALTHCARE
  4. https://www.researchgate.net/publication/343851678_Designing_with_Purpose_-_A_practical_guide_to_support_design_innovation_in_addressing_systemic_challenges_around_health_wellbeing_for_all

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May 12, 2022
Strategy