Truly leading a transformation
FEATURE – Philips has embarked in an ambitious development program for lean executives, which is helping the organization make substantial progress in their transformation.
Words: Carolyn Lum, Senior Vice President, Head of Continuous Improvement and Philips Excellence, and Jakob Brix Danielsen, Senior Director, Group Continuous Improvement, Philips.
Last year, 60 top executives from Philips participated in a week-long off-site in Arizona and Utah. Led by our CEO, Frans van Houten, we left the comforts of every-day life behind, from running water to smart phones and laptops, to reflect on how we should behave as leaders in our transformation journey into a health-tech solutions company. (“Culture eats strategy for breakfast” is a common saying in our company.) The off-site was focused on how we hold each other accountable for the change in behaviors required to make our transition successful.
Philips has been on the lean journey for decades. To support our strategy, the Business Transformation (BT) organization was created to work hand in hand with Philips Leadership. The momentum we are currently enjoying in our lean journey is guided by BT, which is 200+ team members strong globally. Our Business Transformation Leaders play an active role in the management teams and strive to make them self-sufficient with lean tools to drive our transformation agenda and achieve our goals in the progression and advancement of healthcare.
It is with this mindset that we have decided to pair every business partner up with someone from the BT. Business Transformation people are there to coach partners and share with them the responsibility for the improvement of the department. Co-responsibility is key and BT Leaders’ bonuses are impacted by the successes and struggles of the businesses they serve. BT is successful when the business that they are a member of achieves their annual targets.
We spend a lot of time looking for the best lean people to join our team. When we hire and make staffing decisions (both internal and external hires), we look for good problem-solving skills, the ability to pick the right tool for the right situation and the ability to be a real business partner. Our people need to be comfortable with the fact that things in a lean transformation are rarely black or white, employees need to be comfortable in the gray, understanding that there is always a certain degree of problem solving required in choosing one countermeasure over another.
At Philips, we have done much more than just establishing a lean department and asking them to “do lean”. There is an expectation that leaders drive the lean transformation and be the change we want to see in the business. We understand it starts with us. Hence, we embarked on a lean executive training program of immense size, speed and scope.
The off-site experience in the Southwest of the US is just one example of the activities that we have to transform the way our senior leaders think and behave. Another important step in that direction was training more than 1,000 of our top managers for five intense days in an Executive Lean Leadership session. These senior leaders represent our highest-ranking executives. The session teaches lean concepts. Some of the key cornerstones of the training are Daily Management (DM), Problem Solving (PS), Kaizen Events (KE), Standard Work (SW) and other lean tools. Most important, besides training to use lean tools, is how to coach others to use the tools and apply them to business issues to drive positive impact. Bringing people from an awareness level to learners to coaches at the executive level is one of the biggest challenges we face, but today we are proud to have our top management team highly involved in our lean transformation. There is a strong drive coming from them, and this is critical as lean thinking and practice continues to spread across Philips.
LEARNING TO PRIORITIZE
There is no wrong thing to do lean on, but there is definitely the right thing to do lean on right now. Setting priorities and articulating the rationale why to work on a certain business topic over another is the key to success. It is essential not to be too prescriptive when it comes to a lean transformation because every situation is different, and one must learn what to focus on and when – using thorough analytics, data and facts to guide the decisions.
Over the years, we have learned to focus on our people development activities. We taught our employees more than 150 Japanese words, whereas now we teach them the essential techniques, behaviors and problem solving skills they will need to do their job well. For example, our unique Problem Solving model is used from lower-level operations teams to our executive level performance reviews – and leaders challenge each other not to jump to solutions before a solid root cause analysis is done.
When Carolyn became Head of Continuous Improvement in 2015, the decision was made to focus on three elements in our lean transformation: daily management, problem solving and kaizen events. This approach is paying off: not only is our culture becoming leaner by the day, but our performance as a business has also seen a marked improvement. We are not saying that lean is the only reason behind Philips’ success, but also believe it is hard to deny its contribution: transparency and accountability in daily management and timely course correction (both courtesy of our lean culture) make our results predictable, which has a direct impact on our stock price.
In the opening pages of the 2018 Philips Annual Report, our CEO mentioned “continuous improvement” three times, yet another example of just how engaged he and senior leadership are in the transformation of Philips. It is exciting to observe our performance becoming more stable and improving, the language in our company changing at every level, and the high speed at which the transformation is progressing. Years ago, we knew it was important to become lean. Now lean is no longer optional. There is no doubt that none of this would have been achievable without the commitment and involvement of our top management team across the whole enterprise.
PHILIPS AT A GLANCE
Philips has moved from a 400,000-headcount box product manufacturer in the late 1970s, doing almost everything and mainly known for their consumer products, to become a focused 75,000 headcount strong health-tech solutions provider that partners with their customers and strives to be at the front edge of innovation and digital transformation.
Philips is among the most innovative companies on the planet and is right at the top of several recognized sustainability indexes. Since 2015, Philips has added many acquisitions to further sharpen their profile as a leader in health-tech. The company strives to make the world healthier and more sustainable through innovation and aims to improve the lives of 3 billion people a year by 2030. These are the vision and mission statements, and the approach is to look holistically at any health aspect of a human beings’ life journey from (and before) cradle to grave and see what products and services can accommodate for enhancing health on the way. It is called the Health Care Continuum, and this is integral in the strategy to pursue the vision and meet the 3 billion goal. Within this strategy, they focus on our quadruple aim: better care, better patient outcome, better staff experience and improved productivity.