A Philips Exec Shares The Keys To An Improbable, Design-Led Turnaround

Sean Carney, the Dutch company’s design chief, arrived when design was being second-guessed. Here’s how he went about re-proving it’s power to transform.

Anyone who blithely believes that the return on investment on design is self-evident needs to explain the decline of Philips. In the mid-Noughties, the electronics company boasted 650 designers on its books, more than Samsung at the time. Yet, since a high point in 2008, its stock value has halved. It was no surprise, then, when last year, on Sean Carney’s first day as Philips’s design chief, the CEO took him to one side and told him straight that he was less than convinced about the value of design.

The Fidelio music dock, which has led an unlikely market turnaround for Philips.

Carney is a no-nonsense Brit, with an international corporate pedigree. Most notably, he served as design director at Electrolux in Sweden and Italy, and was group director of experience design at Hewlett Packard’s Imaging and Printing Group in San Diego before being hired away by Philips. Bringing the entrepreneurial spirit he experienced on the West Coast into the 120-year-old Dutch company is very much part of his mission.

His diagnosis of the situation at Philips was that design could improve the company’s standing if it were better integrated with the business. In his words, design was too far removed from "the heat of the battle." So he gave his design teams the objective of "moving the needle" to help Philips win more business and improve its Net Promoter Score. He set about changing the CEO’s mind by connecting design to different parts of the business.

Carney, who leads 400-plus creatives within Philips, has encouraged his teams to forge new links with departments such as corporate strategy, technology research, new business development, and country sales organizations. As well as breaking out of the bureaucratic structures around design, which were, in his view, the root of the problem, he emphasizes the need for a more networked and expansive view of how design functions. ‘We’re moving from designing individual product experiences to designing wider ecosystems,’ he says. Under his leadership, Philips has gone from designing health-care devices to working alongside its business development teams to devise elements that span a hospital patient’s entire care cycle. His work with corporate strategy often revolves around thinking more widely about new revenue streams.

Another initiative has been to loosen the ties of the design HQ in Eindhoven over the seven regional design studios. Not only are they closer to regional preferences and trends but are also better plugged into specialist technology and industry clusters. Carney is giving them more autonomy and coaxing them to take the lead in more initiatives.

At an executional level, he has also relaxed Philips’s brand guidelines to be more sensitive to regional and category contexts. Effective design languages hit the sweet spot between engaging consumers, expressing brand values, and being aware of category conventions. He gave the example of Philips’s packaging, which was overly consistent across categories as diverse as health care and personal audio, to the extent that it didn’t always sit comfortably or credibly on certain shelves.

Carney now has a story to tell that should soften his CEO’s scepticism. Two years after launch, the Philips Fidelio range of music docks recently displaced Bose from top spot in the European market. This feat was achieved in a category that both Apple and Sony have failed in (remember Apple’s iPod Hi-Fi?). It’s also safe to say that few consumers would have associated the Philips’ brand with audio credentials before the launch of the first model in 2010. However, the docks have picked up hi-fi and design awards, thanks to careful finishes and intuitive UI details. More importantly, it’s selling. And it may not be a one-hit wonder, having been joined recently by the retro L1 headphones, which have garnered good reviews. If Carney moves more needles in this direction, he’ll soon have a much bigger turnaround story to tell.

Sean Carney will give a keynote presentation at the Product Design and Innovation conference in London on May 29-30. For info on attending, click here.

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  • Giulioconta

    @Meeklepeekle Don't think Philips is into silly design statements anymore and though I agree with @mitja that at HP and Electrolux Carney did not get much done, at Philips they just have too many mediocre products to be successful. That seems to be driven by Marketing not Design. From the interview, Carney seems to be more of a manager than the design visionary who relentlessly goes for super design and who has the confidence and a bit of arrogance for that. 
    But would that be what they need at Philips? Being a company so diverse, would anyone like Jony Ive be able to do anything at all? From the article, I just don't understand how Philips has organized their design function. They also have Rogier Van der Heide, the very passionate Chief Design Officer of Philips Lighting who seems to shake up the company quite a lot, and who collects design awards one after another with his team. How does all of that relate to Carney, and what is his real span of control at Philips? The interview really is very generic, Carney does not say anything particularly specific to the challenges Philips is facing.Getting Philips Lighting into design must be a much bigger design transformation than the consumer electronics stuff: going from an industrial, analogue lamps company to a provider of integrated, digital, designed solutions. Kodak did not survive such a transformation, will Philips get it right? It's a very interesting case. Indeed @HM, losing Philips would be a much greater loss than losing Samsung! 

  • Meeklepeekle

    Gak.... another 'executive' design tool that failed everywhere else he's been.  Looks like Philips is still into silly design statements though.

  • Mitja

    But Philips problems are not about design neither about lack of it. Its about too  many products in general and too many shitty ones in particular. That is devaluing the brand. I simply don't know what to expect from that Philips on the self - the great sound quality I have with my PC speakers now, or that stereo system I bought which broke almost instantly?

  • Hm

    From what I've observed and read over the last few years, Philips is a much more innovative and design led company than Samsung. Samsung seem to concentrate most of their power on copying others and twisting just enough to be different (or not in some cases), while Philips have been creating truly innovative and different designs and products. I hope they can start to monetize their efforts better, because the loss of Philips in the market would be a much greater loss than Samsung.

  • gotham

    Maybe the CEO's attitude about design is the primary reason the stock's value is half it once was.