The company is still perceived as a conglomerate: "Can You Tell What It Is Yet?" asked Citigroup's Simon Smith a year ago in a report on Philips that, despite its title, touted the company as "one of the last great misunderstood conglomerates of Europe." A Change towards a less complex business model. "Kleisterlee left the company into four easy-to-understand units: medical, lighting, consumer electronics and domestic appliances" (3).
Before Kleisterlee, the management of Philips had absolutely no credibility... "Not only did Kleisterlee make it clear to the Street what he wanted to do, but he actually did it...
Kleisterlee makes an unlikely revolutionary. The 60-year-old engineer has spent his entire career at Philips... (3). He started with various jobs in the Philips Medical division (74-81), became General Manager Professional Audio Systems (1981-1986), General Manager Display Components Europe (1986-1994), Managing director Display Components Worldwide (1994-1996), President Philips Taiwan (96 -99). From 200 he was COO en member of the Managing Board and since 2001 CEO. (2)
The problem of shareholder focus is also that the shareholders (or the market in general) has only a limited idea - a simple view - about complex companies. So, is the company perceived by the market? "What good is being in lighting and medical if your stock moves with the SOX semiconductor index?" (3).
Cultural background and shift to a more Anglo-saxonian model:
... like many European companies... "the Rhinelandish model," where shareholders' interests were balanced - sometimes outweighed - by the needs of employees and local citizens.
Financial discipline was also an afterthought. "There was always enough money."
Not emotionally attached...In name of the strategy.
Although Kleisterlee had spent years in Asia running Philips's components business, he says he had no special attachment when it came time to spin it off or even shut parts down...Philips is now closing another three lighting factories in Holland, laying off more than 500 workers... "When people ask me what the future of European manufacturing is, I say complex systems," explains Kleisterlee. "We know the future has to be higher added value and services.
How others see him
... describe Kleisterlee as "serious," he is not a micromanager... "If things go well and you keep him updated, he leaves you to be free."
Kleisterlee is trying to broaden the mix of senior executives, "drawing talent from around Europe as well as increasing the number of American and Asian managers." New talent is not necessarily from within Philips anymore: "... is not a Philips lifer."
Although a significant change in business focus and therefore matching changes in organization there is still a way to go. Exercises in cost-cutting is what managers "do it in three minutes," says Ragnetti. "A growth exercise is more of a challenge." (3)
The duality and balance of the original culture (engineer versus marketer) is changing more and more: The engineers (let's make things better) have to give way to the Marketeers (Sense and simplicity): ... Ragnetti replaced Philips's defensive-sounding "Let's make things better" campaign with the "Sense and simplicity" slogan ... Philips wants to emphasize easy-to-understand machines, like a coffeemaker with just two buttons: one cup or two. (3)
In the mean time the market is changing too... "The market is taking a show-me attitude," says Merrill Lynch analyst Jonathan Crossfield. "Neither we nor other analysts are giving them full credit for their growth target." (3)
Today when the stock of Philips have not re-bounced since the credit-crises and with a market that is still waiting (show-me), the CEO can show what has been achieved. We will know it soon.
As far as all these changes are concerned it is fascinating to learn that this is initiated by a manager that has been with the company all his life. That is perhaps the best evidence that this company will survive any new challenge... and that's what makes this profile even more unique.
