How Philips wants to improve lives through innovation | KPMG | NL
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How Philips wants to improve the lives of three billion people through innovation

How Philips wants to improve lives through innovation

Koninklijke Philips N.V. is no longer the television, video & audio equipment and lamp expert. In 2016, the sector mentioned on the Dutch multinational’s LinkedIn page is ‘Hospitals & Healthcare’. What does this change in focus mean?


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Philips’ slogans tell half the story. From ‘Let’s make things better’ (1995-2004) to ‘Innovation and You’ (2013-now). During that same period, the company has sold a number of its traditionally prestigious business units. The audio & video department was sold to Gibson in Hong Kong in 2014 and earlier this year, after 123 years, the lighting department was made independent.

Ground-breaking innovation

The Philips of today focuses on hospitals and healthcare. Internally it has a ‘culture of innovation’. According to Executive Vice President Richard Wergan, ‘passionate people with a common cause’ are vital in this respect. Philips’ common cause is to improve the lives of three billion people in 2025.

Wergan explains the company’s mission: ‘It’s important to ensure that our employees remain connected with the impact their work has on the world.’ Philips’ ‘innovation culture’ is one in which the rapid development of concepts is the norm and in which people are encouraged to try out new ideas. Wergan: ‘This is the only culture in which ground-breaking innovation can flourish.’

Dutch patent leader

Many of Philips’ innovations are from the Philips HealthSuite Lab at the High Tech Campus in Eindhoven, where 8,000 R&D employees focus successfully on open innovation. They share knowledge and facilities with ‘outsiders’, such as promising tech start-ups. This open innovation also characterises Philips’ Innohub, its collaboration with universities in Finland, the Netherlands and Singapore. Innohub is even open to development requests from other companies.

The innovations at the High Tech Campus have made Philips the leading Dutch firm, and indeed an international frontrunner, in patent applications. Of the 160,000 applications submitted to the European Patent Office in 2015 Philips accounted for the most applications by a single body: in fact 2,400. The Dutch company even outflanked Samsung, which had been top of the list since 2012.

To the average Dutch person, Philips is no longer the innovative company it used to be, as it no longer produces brilliant innovations in consumer electronics. But, should you end up in hospital, that’s when you’ll see how many amazing innovations are still coming from Eindhoven. You’ll see Philips’ AlluraClarity, which limits the level of x-rays without compromising image quality. Or the HeartNavigator, which enables heart valves to be replaced with only a small incision rather than requiring open-heart surgery. Or, if you have health problems at home, you can rely on Philips’ GoSafe, a mobile alarm system connecting you to the emergency centre at the touch of a button.

Philips' focus on innovation is not rewarded

The foundations for growth and success seem to have been laid. Although in recent years the stock exchange has not rewarded Philips’ change of direction and focus on innovation, with its share price dropping from 38 euros early in 2014 to 24 euros early this year, with respect to revenue (+13 percent) and profit (+60 percent), Philips is definitely winning. And after these figures were announced in January, the Philips share price increased to over 28 euros in April, its highest in a year.

Year Annual revenues
in millions (euros)
Annual profit in
millions (euros)
2011 22.579 -1.291
2012 24.788 231
2013 23.329 1.172
2014 21.391 411
2015 24.244 659

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