Driving Innovation and Profits: The Philips Octagon Program

The Challenge

How can a well-established global company increase profitable innovation and collaborative leadership when market conditions are uncertain and past success patterns have discouraged leaders from taking risks?

That was the challenge facing Royal Philips Electronics (Philips), a $38 billion global company and pioneer in health care, lifestyle and lighting solutions.

The Goals

Philips envisioned a leadership development program that delivered on three key goals:

• Equip its senior leadership potentials with the most advanced skills in innovation, value creation, and leadership.
• Instill a new leadership mindset that promotes innovation, collaboration and calculated risk taking.
• Create a cohesive pool of strong, like-minded leaders to fill Philips’ succession pipeline.

The Philips Solution

After an extensive search, Philips partnered with Wharton and the Center for Creative Leadership to create a program for its senior leadership potentials. The program included:

• Innovation, Strategy and Business Acumen — A customized set of tools and practices to improve the “innovation DNA” throughout Philips
• Leadership, Team-Building, and Influence — A practical approach for creating teams to establish the new innovation processes and culture
• Three Global Modules — A facilitated immersion experience to prepare leaders for global growth roles
• Six-Month Action Learning Projects — Projects that modeled the actual process of launching successful innovation initiatives within Philips — from start to finish — giving the participants a repeatable process for launching future innovations

The Impact

• More Innovation: The 60+ projects over the past six years have driven innovation across multiple business units, geographies and product lines.
• Successful Innovation: More than 50% of the Octagon Projects are integrated into the Philips Innovation Pipeline.
• Profitable Innovation: Financial returns from the innovation projects have exceeded the costs of the program, increasing its value as a strategic investment.
• Excellent ROI: One project alone contributed more than 25 million euros in profits the first year, and the project model was replicated in several other markets.
• Strong Leadership Pipeline: Many Philips Octagon Program graduates were promoted into Executive Global Leadership roles.