Philips 2006 Annual Report Download - page 11

Philips Annual Report 2006 11
our brand value gaining 14% to an estimated USD 6.7
billion, moving us into the top 50 global brands as ranked
by leading brand consultant Interbrand.
Set up a separate legal structure for Semiconductors
and create value by pursuing strategic options
This goal was achieved in full thanks to a tremendous
effort by all concerned – a true case of speed and
teamwork. Not only did we set up a separate legal
structure for Semiconductors in a record nine months,
we also completed an exhaustive review of the strategic
options available. This led to the sale, in September, of
a majority stake in the business to a private equity
consortium. Valuing our Semiconductors division at
EUR 8.3 billion, I believe the deal represents good
business for Philips.
Increase the number of entrepreneurial business leaders
with broad-based experience
It is vital that our future leaders have a broad base of
experience across multiple aspects of Philips’ businesses.
I am glad to say that of all the top potentials who move
to another position, now some two-thirds are moving to
another business or functional area, a signifi cant increase
compared to previous years.
Our acquisitions of relatively young, fast-growing small
and medium-sized enterprises also make an important
contribution in bringing new entrepreneurial business
leaders into the company, with some of them being
promoted to more senior positions within Philips.
Over the past two years we have conducted an objective
assessment and benchmark program among our senior
executives to ensure we have the right people in the
right places and – via our talent pool – effective succession
planning. Our leadership programs place heavy emphasis
on business development, e.g. in emerging markets or our
Incubators, which are an ideal environment for the
development of entrepreneurial talent.
Accelerate movement to become a simpler,
market-oriented organization
During 2006 we took a number of important steps to
further simplify Philips and base our actions on true
customer and market insights.
First of all, we extended our approach to organize
ourselves around our customers in professional
healthcare,
professional lighting and consumer retail.
We expanded our international key account management
in retail from our top 7 accounts to our top 20. This top
20 represents 18% of our total sales, and in 2006 showed
12% sales growth compared to 2005. We also deployed
this successful approach deeper into the organization.
Under the leadership of the International Retail Board,
every country now has a set of key national accounts
on which divisions work together to ensure a simpler
customer experience and higher sales.
Furthermore, we took out a complete regional
management layer, reducing the distance between our
global businesses and their local markets. On a country
level, we integrated country management with local
marketing and sales management.
In 2007 we will see our key account system evolve to its
next stage. In our top 20 national markets the consumer
activities will further align their consumer retail approach
in a collaborative model; in all other, mostly smaller markets,
the consumer activities’ sales forces will be integrated. This
will make our combined Philips footprint in local markets
stronger and more professional, so that we are easier and
more attractive for our customers to deal with.
In 2006 we rolled out the next wave of our “sense and
simplicity” brand campaign, highlighting the benefi ts offered
by simplicity, as well as allowing customers to directly
experience simplicity fi rst hand by means of experiential
marketing. These brand investments are paying off, with
“Going forward, we will build upon the growth and value creation
momentum we have developed over the past few years.”
54 The Philips sectors 86 Risk management 100 Report of the Supervisory Board 110 Financial Statements