What Does It Take to Reinvent a “127-year-old Startup”? | Straighttalk


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The CIO of Philips Lighting describes how he helped make the company future ready

The two years since our spinoff from Royal Philips have been very, very intense for my department. We have been and are still going through a big transition to make ourselves into the future lighting company that we want to be.

Some people who had been here 15-20 years have found this difficult – we like to call ourselves a startup with a 127-year history and working for a startup can be challenging for some. But many of us also found it energizing because the split gave us an opportunity to really focus on things in a way that make sense for a lighting company.

When the split came, we asked, Who are we? What do we need? How do we want to operate?

Normally when you split, you copy what is there and then you optimize. But I had a significant cost cutting target to meet, so we didn’t do it that way. Instead, we moved immediately to our future way of doing things. When the split was announced in Q4 2014, we ran over 4,200 applications. Today we run a few more than 1,300. Every single contract that we have has also been renegotiated.

Leaner, not meaner

But even as we have cut costs by double-digit numbers, we have tried to minimize the impact on our business end users. For example, if the company buys a phone, it’s a simple phone that also does email. However, if employees want to use their own iPhone, they can, because we have put a bring-your-own-device strategy in place.

We have also tried to spend a lot of time communicating with them about what we’re doing and why. Communication is important because we have a big impact on our employees. There’s not a single thing they use that we haven’t changed. Their laptop, their operating systems, their applications, their phone, their data – we have touched it all.

It’s essential to spend a lot of time on this. In any IT project, you find the most challenging part of the task sits 35 centimeters in front of the screen. People don't like to change. That’s why it’s very important to give the upfront visibility on what will happen, to explain to people why you are doing what you’re doing and then to help people throughout the transition.

We have also experimented with how we handle our communications, to make sure our message gets through. For instance, when we have a very important communication to make, we have found that when we send the email from my own account the response rate doubles.

You also need to be really both active and re-active the moment something goes wrong. You don’t react to blame – it's always your fault – but try to focus on helping people as fast and efficiently as possible to make sure they know that you care.

But every company is different. Sometimes I have tried to use a concept that worked for me at Bayer or Huntsman or ICI but failed here. If people act in a different way than you are used to, as CIO, you have to adapt.

The change management here has been different than at the German and American companies I’ve worked for, but I don’t think it’s because of national culture.  Some companies work in a fairly strict hierarchical manner, while others are more consensus driven.

With the new team we made sure all stakeholders were involved and that they could share their view. But once a decision is made, there is strict focus on execution.

New challenges

At the same time, however, we’ve also been very busy working with new technologies.

Cybersecurity has been a big focus. We’ve tried to do a couple things there. To begin with, we decided early on that it was unrealistic to think you could guard your assets so well that you’re able to keep everybody out. I think that’s nonsense. Everybody that has the right capability and skill will get in at some point in time. So, although we have a very high level of protection, we have invested equally in detection: we detect, we isolate, we cure, and we prevent it from happening again. We also try to keep our software versions up to date, to make sure we are always running the software with the latest security patches. With no exceptions.

Getting suppliers to work on this same level has been a challenge. When we work with partners, customers, or universities, we require them to follow a few security rules. Whenever we sign a new contract, we always have certain security and data privacy guarantees that are non-negotiable, particularly with respect to our suppliers. That’s an ongoing challenge, however – we work on that, I would say, every week.

Over the past 10 years we have been moving from a conventional lighting business, going through the transition to LED and other new technologies. Now, we not only sell white light, but also color, and we can do a lot more with it than we could ten years ago. For instance, we have special lights for tomatoes and special lights for roses. We even have a light that helps chickens grow so that the meat actually tastes better.

The IT component of light keeps getting bigger and bigger too, in part because we’re really going into selling light as a service, and we are moving more and more into the systems and services business. These new applications and business models also generate a lot of data, which brings us to the Internet of Things, and new challenges having to do with how you handle the data and how you monetize it. Some of these IoT applications are very exciting: already our data scientists in India have found insights that may have a significant impact on the business.

At some point in time, too, LiFi – WiFi with light – will be big. It has a number of advantages but I think the key will be security: you need to be in the room to have access. 

We’ve also been fairly early adopters of robotics. Around Q1 of next year, we are going to start using robots for some of our customer support. I’m very excited about robots: I think that the extent you can use them is determined by the extent of your imagination. I’m really pushing the team very hard to come up with new projects. The real challenge is deciding what to focus on first because if you let them, people would start 100 things at the same time. I want to have an impact and then move on. Let’s start with this one, then do five, then do 10.

The Takeaways 

To manage change well, it’s important for the CIO to spend a lot of time communicating.

There is no right way to manage change because every company handles change differently. It’s up to the CIO to understand and adapt to the culture.

The opportunities are so vast in robotics that the real challenge is going to be prioritization.