Philips 2005 Annual Report Download - page 12

Philips Annual Report 200512
The next steps towards value creation
As we close in on our mid-term targets for revenue growth
and operating income (EBIT), we must at the same time
lay the foundations to ensure that they are sustained.
We have identifi ed three important themes that we need
to work on together to achieve our ambitions: Growth,
Talent and Simplicity.
Growth
We will continue to pursue growth by optimizing our
portfolio and re-allocating the resources this frees up
towards high-growth opportunities. At the same time, we
will leverage our brand and core competencies to grow in
selected categories and geographies such as Asia Pacifi c,
build partnerships with key customers and suppliers, and
invest in world-class innovation. We will also increase our
focus on marketing planning for mission-critical initiatives
and strengthen our approach to incubate new business in
the healthcare, lifestyle and technology domains. To this
end, we have made ‘contribution to growth’ a key component
of our redesigned incentive plans.
Major new initiatives underpinning our efforts to grow
include the creation of three New Business Development
programs, which have been set up with the sole objective
of exploring new growth opportunities in healthcare,
lifestyle and technology. Emerging markets are another
area of focus, and we are developing dedicated portfolios
specifi cally for these markets.
Key to the achievement of our growth ambitions is that
we, as an organization, truly embrace the One Philips
mindset and way of working, which are focused on
maximizing value creation. One Philips is all about unlocking
synergies by leveraging our competencies and resources
across the areas of healthcare, lifestyle and technology.
Our international key account management approach is
a good example of One Philips in action, and we are now
deploying it down to regional and national level as well.
We will also continue to pursue opportunities to make
acquisitions that can further our growth ambitions, provided
they represent value for money. We will not destroy value
by paying over the odds.
Talent
Only our people can realize our strategy and deliver on
our promises to our stakeholders. Accordingly, we are
further developing our people competencies, e.g. through
career development programs that refl ect our commitment
to diversity and inclusion, and accelerating the development
of our top talent. We are also stimulating a stronger
mindset of entrepreneurship in order to ensure we have
leaders, at every level of the organization, with the right
qualities for the new competitive reality – leaders who
are focused on growth, turn words into actions, leverage
the capabilities of those around them, and dare to take
responsible risks in their drive for results.
Simplicity
At the heart of our brand positioning is the promise
to consumers of a more comfortable, more intuitive and
more straightforward relationship with technology. As part
of our commitment to “sense and simplicity”, we asked
Philips Design to explore how our solutions could simplify
people’s lives in the next three to fi ve years. The resulting
project – Next Simplicity – resulted in 16 design concepts
that demonstrate how our focus on simplicity-led design is
likely to translate into new products across our healthcare,
lifestyle and technology portfolio.
There is, however, another dimension to “sense and simplicity”,
one that promises a more straightforward relationship
with Philips. We will maintain our drive to simplify our
organization, making it easier for our suppliers and customers
to deal with us – and for us to deal with each other. This
includes optimizing our business support functions –
especially the customer-facing parts – to ‘best in class’
level. We are confi dent that the progress we have made,
and continue to make, in this regard will enable us to
surpass our target of additional annual savings of
EUR 500 million within the next two to three years.
Message from the President