On 4 December, Your humble editor sat down with Bruno Biasiotta , President & CEO Lighting North America, at Philips Lighting. Below is our discussion.
ER: What keeps you up at night?
Mr. Biasiotta: Thinking about the value we can bring to each customer and their customers along the value chain. Business is all about the value we create. To do that, we need to understand what the customer needs. As someone new to the lighting industry, I am excited about these possibilities and I am constantly thinking of new and innovative ways we can better serve the needs of our customers.
ER: You are from Johnson Controls. Did Philips bring you in because you don’t have the same paradigms as others in Philips and that you could be more objective and not worry about the sacred cows?
Mr. Biasiotta: (laughter) You should ask someone in Eindhoven that question. But I do think my background with Johnson Controls is a key. Johnson Controls is a system integrator. They have been successful in building a service business based on selling a complete solution and have navigated through different technology transitions and business models.
Philips recognizes significant trends are affecting the market and thus the customers. And we focus on the customer. There is a demographic and population shift. 70% of the world’s population will be in major urban areas. What does that mean for lighting? Energy costs will rise by 53% between now and 2035. What does that mean? Buildings account for 40% of energy use and Lighting is 28% to 30% of energy in buildings. This is one of the reasons I came to Philips. Huge opportunities. It is a real privilege for me to lead this company at this particular time of change.
ER: How have you learned the business?
Mr. Biasiotta: The first thing I did was to visit 50 plus customers including lighting designers, end users, distributors, agents, and installers. I asked a lot of questions. My fair share of dumb ones, I might add but essentially I attempted to focus on gaining insight from customers and salespeople. For example I would ask salespeople to flow chart the business. I would ask what happens when we get an order. What happens when the agent or distributor calls and can’t get product? The sales people fight the fight every day, and it was a great experience for me.
ER: I will mention a technology and you state the first thing that comes to mind.
- Incandescent— Thomas Edison
- Master Color Elite—transition
- Light Emitting Plasma—functionality and innovation
- OLED–$52 M investment we made in our Aachen facility
- LED—art of the possible
ER: What are Philips’ strengths and core competencies?
Mr. Biasiotta: We are very well positioned along the value chain primarily because of the vertical integration. We understand the future of where the industry is going and the potential for growth opportunities. But the most important strength we have is the relationship and trust with our customers. We try to understand our customer’s needs, gain insights and then develop innovative products that help meet our customers lighting goals.
ER: Historically there may have been three Philips organizations in a territory such as a Daybrite rep, a Crescent rep, and a direct person from Lightolier. Now with the blue and red team, there are only two, and we hear it is going to one. How will that be good for customers?
Mr. Biasiotta: Structure follows strategy. I don’t want to get into details about what we might or might not do, but business models have expiration dates. A lot of companies have not jumped the ‘S’ curve at the right time and not recognized the trends. Clearly we at Philips are thinking along those lines, more holistically. What are the trends that impact lighting? I am going to share with you portions of our strategy. Think of a Lighting Nexus with the following interdependent factors:
- Energy Efficiency/$
- Technology convergence
- Software/applications intelligence such as the HUE
- Security/safety—as we move to urban areas security and lighting increase in importance
We plan to be at the intersection of the customers’ buying objectives—which are changing–and the exponential gains in lighting performance. Our opportunity is to link how lighting drives facility performance and the impact that has on a company’s business objectives. We will continue to sell hardware, but we will also earn revenue from software, integration services, and solutions. In addition to a single sale, there will be recurring revenue. We will manage systems for ten, twenty, maybe thirty years and thus focus on outcomes.
ER: Will Philips focus more on the component side or the luminaire side of the business?
Mr. Biasiotta: We will focus on the entire Philips portfolio of businesses but luminaires is the largest opportunity and the segment undergoing the most significant change. In 2017, the North American Lighting Market should be about $19B; this beaks down as follows:
Our strategy is to: 1) Protect and grow core business, and we will do this by investing in new platforms and extending our capability. 2) Offer operational excellence. We will have better execution; there is always room to improve our level of service and the customer experience. 3) People. We will continue to have the best people in the industry.
The four pillars of our strategy are:
1). Protect and grow our core business around lamp, drivers luminaires, etc with our current customers.
2) Invest and incubate around new new growth platforms and services directed at the channels and markets
3). Drive operational excellence across the organization that leverages our scale
4). Focus on our people. We will continue to attract, retain, and grow our people so they remain the best in the industry.
ER: What does it mean to Invest and incubate around new new growth platforms?
We are going to broaden our offering, potentially extending to new markets.
Read the complete interview at www.EdisonReport.net
SOMERSET, N.J., Dec. 18, 2012 /PRNewswire-iReach/ — Bruno Biasiotta Interview with Randy Reid