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How Philips is digitally transforming to put the customer first

Philips is a 125-year-old electronics company, known for manufacturing healthcare and lighting products. But over the last three years it has been moving away from its traditional analogue product business to create digital products and solutions.

“Every company will become a hardware and software business,” said Blake Cahill, global head of digital and social marketing at Philips, noting how the company is beginning to become the leader in connected devices from ultrasounds to thermometers.

Speaking at Forrester’s Digital Transformation event in London this week, Cahill described how the company understood how its customers were becoming increasingly digitally connected and decided to undergo a digital transformation to source additional revenue opportunities.

It began by digitising its products and providing associated mobile apps, for instance, an ultrasound machine which is now available in the US is no longer a stationary piece of equipment but mobile and scans are digitised immediately onto apps. The business model has changed along with the equipment, with additional revenue coming from the software’s subscription model, which a traditional hardware-only solution would not be able to accrue.

But this platform approach to its products also moves the business closer to the customer. “We do a host of things around mother and child – pacifiers, thermometers, bottles – and we work with mothers across their entire journey and the platform allows us to interact and engage and be customer-led across a whole suite of products,” explained Cahill.

“It is not a linear [customer] decision journey anymore. You need to be anywhere and everywhere you need to be. In the US most searches are happening on Amazon, not Google. And your customers are telling you what to build and what to do,” he said.

“We’re not just changing our products, but the platforms and who we compete with,” he said, describing how the health care industry has been one of the last to go through the digital transformation journey and the likes of Google and Apple are now moving into the space and driving digital health interactions in a different way.

But in order to fundamentally change the Philips business, Cahill said the company had to look at both its technical landscape, as well as the people and culture.

“We have to transform our marketing organisation, we have to digitise our operation – supply chain and parts of the boiler room including our legacy systems,” he explained.

Cahill said this is the reason his role is not the chief digital officer (CDO), because it would be impossible to oversee all the efforts going on in IT, digital and marketing. Instead, he reports monthly into a digital board.

“It’s not an IT, or business technology or marketing-led transformation – everyone needs to go along on this journey or you’re not going to win.”

From an IT perspective, Cahill explained that the business moved its legacy systems into the cloud and other “21st century” technologies to underpin its transformation programme.

“As the world shifts we need to make investments to underpin everything we’re trying to do,” he added.

But Cahill said the challenge is more around changing people and processes than throwing money at various IT solutions. “I could give out a million licenses and spend $50 million on those wonderful companies and it would change nothing,” he said.

Indeed, he noted how Philips even bought a few solutions in-house over the last three years, including its media and social activities, as well as CRM. “Why would you outsource your customer marketing and all the insight? Why would you give that to someone else to do?”