Let 10 000 lights shine: how end users are cocreating innovation at Philips



This is part III of our mini-series on intrapreneurship, in which we talk to people who have the words ‘innovation’ or ‘intrapreneur’ on their business card. We are bringing you this series because we partnered with the excellent  Intrapreneurship Conference in Barcelona in December (hurry, only 8 tickets left!)

Rob De Graaf was destined to become an entrepreneur. His grandfather started a company, and was succeeded by Rob’s father and his uncles as the directors of the company. “All my youth, many of the conversations were about The Company,” he says. “In that sense, I took a lot from my upbringing with me in my job.”

Rob’s first chance to entrepreneurship came when he was working at Ericsson, essentially becoming an intraprneur. “I was a product development manager there. But after I had been there three years, there was a company wide bid we could participate in to get more responsibility. I led the bid, we won it and I eventually ended up in Mexico to set up a design divisionto support it. We took it from about 10 people to 80 people.”

“Somewhere along that way, I co-founded the Mobile Internet Institute for Ericsson in Mexico. This was in 1999 – long before smartphones allowed us to do anything with mobile internet (laughs). We were very focused on trying to get the Mexican telco operator to switch to the GSM internet standard. I wanted them to see the opportunities for mobile internet that it would bring them down the road.”

“After about two years I moved back to the Netherlands to become an intrapreneur at Ascom, but I found that I was a bit too pioneering there – I ended up too far ahead of the troops too often, and I decided to leave the company to become a consultant.Three years later I founded my own consultancy firm, to really become an entrepreneur. Good fun, but it seemed the intrapreneurship was still tempting, so in 2013 I joined Philips Innovation Services, bringing part of my portfolio along.”

Whiteboard: Just to be clear – what exactly do you sell at Philips or to Philips. Is it the innovations, or the innovation services?

Rob: “The services. That could be anything that has to do with innovation though. Like if you have a great idea, we can help you make a business out of it. It might be that you want to innovate but you don’t have a good idea – we can help you find that great idea. It might also be that you have a really big idea, we can help you go out and build it (laughs). We built a new hotel that way once, made out of containers and full of Philips stuff and Philippe Starck design. We developed that completely out of Innovation Services. A different building, with a different business model. It was quite successful too – it is now a self-supporting chain, CitizenM with hotels in the Netherlands, UK, France, and the USA.”

Big companies are interesting to do innovation in, says Rob, because they are generally better organised than small companies, and they have access to the right people to sell innovations to. “In a large company like Philips, there are so many opportunities. It’s more a matter of: who takes the lead? There might be emerging business areas where we don’t have a presence yet, but where we want to move. How to get there is the key question. Apart from the internal work, we also work externally. We’re actually working with a big ship builder in the Netherlands on portfolio management.”

Whiteboard: It sounds like Philips has a sizable innovation team?

Rob: “Yes. About a thousand people in Innovation Services – and 14 000 in innovation throughout the company. So it’s a bigpart of Philips, yes. Like the new pay off – Innovation and you – shows, innovation is quite important at Philips”

Whiteboard: From what I hear, innovation management is in large part also about finding ways to manage failure. Can you talk a bit about that?

Rob: “The thing to understand about failure is that you should do it fast and cheap.”

“Looking back, I think that was my mistake at Ascom. I came from this Mobile Internet Institute at Ericsson and I saw All These Possibilities. The thing I forgot was that I had to convince the people working for me that this would actually make their lives easier. It was too much push and not enough pull.”

“We had identified real solutions that customers were asking us for. We were working on a system where we could diagnose the systems before we came to maintenance them. We could interact from a distance, login to systems. It was great. But for the people who had to work with them – our own people: it completely changed the way they had to work. This was track and trace: it felt like we were taking away their freedom, or their control over their own use of time.”

Whiteboard: Is that a typical intrapreneurship mistake, you would say? Does it happen often?

Rob: “It happens from time to time, yes. I see it once or twice a year. You shouldn’t underestimate the impact on an organization of changing the business model. Especially in the days before Alexander Osterwalder and Yves Pigneur’s “Business Model Generator”. I think it’s generally easy when you’re starting from a clean slate. That’s easy. That’s what we did at Ericsson.”

“The hard thing is when customers are clamoring for your solution, and you have to change your old organization to fit with that new way of doing things.”

Whiteboard: Which is, incidentally, why Clay Christensen advises to spin innovation out of the main company.

Rob de Graaf: “Sometimes that’s the ideal situation, but it’s just not always possible. It’s not so accepted to throw everybody out and start from a clean slate. The key is to train your old people to become new people.”

“That’s why change is so hard. When people have done things a certain way for a long time, it becomes part of their nature. Personally, I’ve learned to look very hard at what makes people tick. If you can find the people who have the right kind of drive, they might become the leaders of the pack. If they move, the others will notice the movement, some early adopters will start to move as well, and then the second wave – the people who are neutral might join. Then, eventually, you are left with the typical laggards. Those, you might have to convince in a more radical way: our way or the highway.”

Whiteboard: Do you recognise innovators and intrapreneurs immediately?

Rob de Graaf: “Not immediately maybe. What we do is categorise people by colors, through a test we call “Insights”. The test is made to recognise dominant drives in people. And for intrapreneurship, you’re looking for the combined red (brave daring and bold) and yellow (joyful,enthusiastic) types.”

“You also need to identify the people who are strongly orientated on the group and the team (the green ones). They are usually the gatekeepers. If they start moving, a lot of the other people start moving. And when the initiative grows, the organized blue becomes more important.”

Whiteboard: If you have a classification for people, you must also try to classify innovations? Do you have a taxonomy of innovations?

Rob De Graaf: “Yes. What I always check is what kind of idea it is. Is it an idea that wants to solve a malfunction? Is it to solve a problem in a new way? Is it providing a product with a service or the other way around, or building a new business model around a product or a service?”

“One of my side projects is a publication that I do about innovations in the Netherlands. And we do always try to classify them.Products, services, systems (or platforms), process, business model, and even social innovation. And what we see are more and more combinations of these.”

“There’s an important difference between going from version 1.1 to 1.2 and going from 1.2 to 2.0. That’s when you’re building a new product, based on a new technology.”

Whiteboard: Curiously, I haven’t heard you say anything about design as an innovation, whereas “design thinking” is hailed today as an important way to create innovation.

Rob de Graaf: “That’s probably because of my background, being an Industrial Engineer, and also because we have a separate design department at Philips. It’s not so much in the realm of my work.”

“The starting point for me is more business driven. I can’t talk about it in much detail, but we’re working on a modern parenting solution where we hope to create additional business worth more than 100 million in turnover per year. That’s interesting to see. As long as those ideas are not materializing in products and services, it’s way too early to start with design.”

“An exception, maybe, is when we do rapid cocreation prototypes. In that case, design is important to get feedback you wouldn’t be able to get otherwise.”

Whiteboard: Have you seen a lot of changes in innovation in the last years?

Rob de Graaf: “Oh, yes. A lot. I’ve been working in innovation since 1992. Back then, it was a very secluded, very research-y and invention oriented. Patents were all important back then. Today the high tech campus of Philips is an open area. Back then it was very secluded. It was mostly about developing technologies back then. You went into product development and then you launched something on the market. That worked well when we were still a society with very specific demands.”

“In the last fifteen years, however we’ve seen a real turnaround. Today, we can’t afford to wait for innovations to happen. The end user is creating the innovation. Look at how LEGO survived with its bots and stuff. They created hackathons for their end users to guide them to new products.”

“It’s clear that today, the end user knows better where you can go. We’re experiencing that ourselves. We made a new lighting system called HUE (meethue.com), and opened the development kit to others. It’s a LED light that is connected to the internet.”

“The result is that we have 10 000 people cocreating with us. That would never have happened when we were developing products on the inside. We create something, and we leave it to the rest of the world to make something out of it. And then we can see: ha, this is successful, we have to implement that. It’s much more end user driven. You can see things like babymonitors that don’t make sounds but change the lighting when your baby cries. Or a geosensor that switches on the porch light when you’re near the front door. Or ambient lighting that has a calming effect on patients.”

Whiteboard: Some of those ideas sound cool, but not exactly life changing. Do you agree with Peter Thiel that the pace of innovation is slowing down?

Rob De Graaf: “Oh, I think that some of the innovations of the next years will take us a lot closer to scifi than Thiel gives credit for. What will happen when we can download designs and print them – it’s not a flying car, but it is a replicator! That will radically change how people perceive companies. If I want something, I can get it, and if I don’t like it anymore, I bring it back and redo it.”

“I also think that we’ll see a big shift in the very concept of ownership. I don’t have a car anymore, for instance. My last car was a VW Beetle, but someone put fire to it, sadly. I didn’t buy a new one yet. There’s so many services that can replace a car. I use a system with electrical Smart cars. And the train. I don’t care that I don’t have a car, because transportation is always available.”

“Maybe soon, we won’t buy light installations or medical machines, but light, or images. We’ll have products that last forever because they won’t break down – because the business model doesn’t rely on them breaking down.”

“In terms of flying cars: that will never take off big according to me. By the way, they do exist, but as long as energy is a problem, a flying car won’t be efficient. I recently had an interesting discussion about this with a guy from Denmark who showed me a book from the sixties with futuristic predictions. It’s funny to see how some innovations are now part of life, but some are conspicuously absent. For instance, robots are everywhere, except in our daily life. A humanoid robot would just be too interfering in our life. We would have to change our life too much. We prefer a robot that does a specific job, e.g. vacuum your house when you’re away.”

Whiteboard: What will you talk about at the Intrapreneurship Conference?

Rob De Graaf: “Mostly about the cultural perspective of intrapreneurship.

“At Philips, we are moving more and more towards hiring more people who want to “win” – the more red, entrepreneurial people. We’re moving away from the typical people manager and more to entrepreneurial people who are willing to take more risk – but who is also willing to guard the risk he or she is taking. That’s important. When you provide people with entrepreneurial challenges in a company setting, they might get the sense that the risk is not that big or important. That can be very harmful to the company, so we try to create a culture that is about winning – although not at all cost.”

“And I’ll also discuss our process to take an idea to the market, how we screen ideas, how we make sure that when we see an opportunity, we are able to respond quickly. Just last year, we developed a new business proposition in eight weeks. That is very quick for companies like Philips. Within more and more parts of the company we don’t have committees anymore that have to decide and convene every quarter – those things are really changing right now. If you have a good idea and you can convince people of it, you will find someone who will give you time and money to develop it. There is definitely more room for intrapreneurs now.”

This year, the Intrapreneurship Conference lands in Barcelona (11-12-13 December). It’s one of the fastest growing niche conferences out there, with an impressive lineup of speakers. You can check for yourself: Vodafone, Philips, IBM, Allianz and Alcatel-Lucent, as well as a number of innovation experts will present their learnings and insights into intrapreneurship. Whiteboard is a media partner for the conference, and we have the pleasure of introducing a few of the speakers here. 

[Photo: Philips lighting systems by Smart Living, Flickr]

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist at Humo whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning post before starting Whiteboard in 2012. He profiles entrepreneurs and businesses and loves to chat on Twitter, Linkedin or Skype (rafweverbergh).

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