At Royal Philips Electronics, heading a $9 billion market is apparently not quite enough responsibility for one executive. The organization’s matrix management structure gives regional CEOs an additional role in one of its three global sectors: healthcare, lighting and consumer lifestyle. For Scott M. Weisenhoff that translates to wearing two hats at the company: CEO of Philips Electronics North America and executive vice president of Philips Healthcare.
“It’s efficient,” says Weisenhoff of the dual role. “If you’re only on the corporate side or only on a business side you can get aggressively balanced toward one end of the spectrum. Having perspective gives you more credibility when you’re dealing with the business people, and keeps you thinking as you’re making decisions about what you need to share and what you should do separately.”
Weisenhoff would know. He’s been with the Netherlands-based tech giant for 25 years, holding a variety of posts in Europe and Asia before settling in Andover, Mass., home to Philips’s healthcare division.
Shortly after Weisenhoff took the helm of Philips North America in July of 2008 the company relocated its U.S. headquarters from New York to Andover. From there, he is charged with growing three core sectors: healthcare, lighting and lifestyle, in a region struggling against severe economic headwinds. But it’s a challenge that doesn’t faze Weisenhoff. “Even in these difficult times, with the product portfolio we have, the demand will be there,” he says. “We can sell a lot of product and still be profitable.”
In fact, thanks to something of a spending spree – Philips invested $10 billion in more than 15 U.S. acquisitions over the last few years – Weisenhoff argues that Philips currently has more opportunities than challenges.
In healthcare, for example, Philips picked up Lifeline Systems, which makes transmitters that can summon help if a client falls or needs assistance; Respironics, a maker of medical equipment used in the home, and Raytel Cardiac Services, a provider of home cardiac monitoring services. The buys were inspired by both population trends and an interest in rounding out Philips’s healthcare offerings. “The world’s population is aging tremendously,” says Weisenhoff. “By 2050 the World Health Organization says there will be more than 1 billion people over the age of 60. We’re looking at how to take care of a patient throughout the whole cycle of care – and that includes, very heavily, care in the home.”
While healthcare is Philips’s largest business division, the company is more widely known for its lighting products. There, too, Philips pursued growth through acquisitions with the purchase of NA Luminaires manufacturer Genlyte Group, which strengthened its presence in “green” lighting with fluorescent and next-generation light-emitting diode (LED) light bulbs and greater access to U.S. distributors. “We’re now the largest lighting company in North America,” says Weisenhoff. “We’ve got the whole value chain end-to-end.”
Weisenhoff’s biggest challenge may be in “consumer lifestyle,” the division formerly known as consumer electronics – and the weakest link in Philips’ U.S. business. Over the years, the company retained the brand names of businesses it acquired in growing the division – a mistake it is now looking to rectify. “We’ve switched over to Philips now – Norelco is now Philips Norelco, Sonicare Toothbrush is now Philips Sonicare,” says Weisenhoff, who explains that consumer electronics and appliances have been brought together under the consumer lifestyle moniker. “So we’re working to get our brand established with North American consumers.”
In April 2008, the company licensed its brand and technology to Funai Electric Co., which will assume responsibility for sourcing, distribution, marketing and sales of its television products in the U.S. and Canada. The move won criticism from home theater buffs as the reputation of Funai – best known as the manufacturer of the inexpensive televisions Wal-Mart sells – pales in comparison to that of Philips. But it also extricated Philips from what is fast-becoming a market of razor-slim margins.
“It’s great for us,” says Weisenhoff. “We get royalty streams, leave the distribution to Funai and still keep the Philips name out there.”
The deal also sums up Philips’s overarching strategy for the future. “We got rid of things that would be better off elsewhere and we continue to focus on investing in growth – whether that be through the $2 billion we spend annually on global R&D or on external acquisitions,” says Weisenhoff.“We’re not stopping M&A because of the current climate,” he adds. “We continue to look at the pipeline for opportunities that are a good fit for us in the U.S. or elsewhere that will create value for the company.”