The path of Philips to customer centricity

Last week I was reading the article of Shah et al. (2006), The Path to Customer Centricity[1]. This article identifies fundamental issues and challenges that typically deter a firm from becoming customer-centric. However, Philips is a well-known company who executes a customer driven strategy already for a while, but is becoming more customer centric at the last decade.
According to Shah et al. the path to customer centricity is driven by a strong leadership commitment, organizational realignment, systems and process support, and revised financial metrics. In this blog post I will briefly discuss how Philips followed this road map to improve their customer centric focus, in such a way that the customer is at the heart of every initiative taken.

Royal Philips of the Netherlands is a diversified technology company with market access all over the world. Headquartered in the Netherlands, the company sales revenue in 2012 was EUR 24.8 billion and with 114,000 employees the company sell their products and services in more than 100 countries.  Philips has become famous with the bulb, and nowadays they serve customers with meaningful innovation in the areas of healthcare, consumer lifestyle and lighting.  The company is market leader in different kinds of healthcare, lighting solutions, as well as male shaving and  grooming[2].

To mid-90s Philips was a product-centric company and the brand positioning and advertising of the company emphasized only the different products and services which were sold to their customers. Philips came up with a new brand line ‘Let’s make things better’ in 1995 to share the philosophy of ‘One Philips’ and to get connected with its customers. Almost 10 years later, Philips introduced in 2004 the new brand line ‘Sense and simplicity’ where the people’s needs formed the starting point and the products and services were user friendly and with advanced capabilities. Last year, in November 2013, Philips shared a new brand positioning and as part of its new positioning the company introduced the new slogan ‘Innovation and you’.

This new brand line is rooted in Philips’ strong belief that innovation is only meaningful if it delivers on people’s unmet needs and desires. “We believe that the new brand positioning much better reflects Philips’ mission to improve people’s lives through meaningful innovation, said Philips Chief Executive Officer Frans van Houten[3]. This simultaneous signal the commitment of senior management to a ‘customer first’ paradigm. On the corporate website of Philips there is an article about the strategy of the firm and this article shows some examples in which they realign the organization around customers[4]. Philips acknowledge that systems and processes are essential for the company to be customer-centric. With many initiatives and programs the company will reach increasingly higher quality levels in all products and services which will affect the entire company and all the processes, in every country, sector or department, encompassing everyone from Board of Management to the shop floor[5]. Realignment of the company has to be supported with customer-centric metrics. The ultimate measure of Philips is their quality level of the products and services. This is measured through the Net Promotor Score, which is one of the most important customer performance indicators.

There is always scope for learning and continuous improvement. Due to different programs, internal competitions and reward programs, Philips wants to sustain the performance excellence and competitive advantage gained by virtue of customer centricity.

Gerson van Stuijvenberg

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