http://www.businessweek.com/stories/2005-10-25/behind-philips-high-design

Behind Philips' "High Design"


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To many locals and visitors alike, the city of Eindhoven, located in the heart of the Netherlands, is better known as Philips Town. Europe's largest consumer-electronics maker was founded there in 1891, when the burg had just 4,000 people. Now a small city of 200,000, Eindhoven owes everything from office blocks to a state-of-the-art football stadium to investments by its largest corporate patron, and it's most recurrent emblem is the blue Philips (PHG) logo.

But while the company's vast R&D center hovers on the city limits, the heart of downtown Eindhoven is home to Philips Design, an autonomous division established in 1925 to improve the company's graphics and image. The unit, which is wholly owned by the Dutch giant, designs both for its parent company and for big names like French car manufacturer Renault.

Today, Philips Design -- celebrating its 80th anniversary this month -- is central to the company's strategy. In a business challenged by rapid commoditization and dirt-cheap Asian competition, Philips relies more than ever on snazzy aesthetics and superior ease-of-use to set its products apart from the pack. Such differentiation is essential to maintaining profit margins, increasing brand affinity, and boosting customer satisfaction.

INDUSTRY FIRSTS. Located on one of Eindhoven's main squares, Philips Design shares some of its space with students from the local Design Academy. Employees rub shoulders with the undergrads in a funky chandelier-meets-street-chic cafeteria nearby, and the youngsters add a breath of life into what could otherwise be just another corporate office block. At the heart of all this sits Stefano Marzano, CEO and chief creative director of Philips Design.

Born in Varese, Italy, in 1950, Marzano was a creative consultant in Milan before he joined Philips Design as CEO in 1991. In this position, Marzano has to live up to the legacy of his four predecessors, who created such icons such as the instantly recognizable Chapel Radio, introduced in 1938 by Philips' first design head, Louis Kalff. Not to mention industry-defining inventions such as the world's first lightbulb, audio cassette, and compact disk.

Harder still, Marzano took tenure at one of the most important design posts in Europe just as the Dutch giant was reeling from financial losses and massive layoffs. Philips' CEO at the time, Jan Timmer, managed to pull the company back from the brink of insolvency, but Philips found itself stuck in a quagmire again in 2001, with net losses of $3.9 billion. Job cuts of 55,000 employees helped set it on an even keel, though business is still tough in the sluggish European consumer-electronics market.

MULTIDISCIPLINARIAN. Philips also still lags behind Japanese rivals in sales and brand image in the crucial U.S. market, where it has sold under names such as Norelco and Magnavox since the World War II. The company has struggled for years to find a means to unify these brands without giving up the strong consumer equity of each. For now, it has settled for mentioning "Philips" in smaller type on all its packaging.

Despite such challenges, Marzano's 14-year tenure has been peppered with design successes. These range from the wildly successful Senseo coffee maker to an award-winning hospital scanner that lets patients choose ambient music and decor to calm their nerves.

The scanner, in particular, illustrates Marzano's holistic approach to design, which incorporates multiple disciplines including aesthetics, medicine, and technology. "Stefano has the best qualities a modern designer could want: He brings a social element to the creative," says Ezio Manzini, engineer, architect, and professor of industrial design at the Milan Polytechnic.

BLENDING IN. Marzano's passion lies in humanizing technology. His goal is to make homes and offices less cluttered with bulky gadgets, while still retaining a sense of logic and order. This tenet forms the basis for an ongoing Philips project called Ambient Intelligence, which sets out to create smart, interactive objects that are sensitive to people's needs and can anticipate their behavior.

The project still has a way to go, but some designs, like the Ambilight TV, are already on the market and improving company sales. The stylish flat-panel TV projects soft light onto the wall behind that matches the colors of the program. It's a design feature that subtly enhances the viewing experience, and at the same time, is medically proven to calm the viewer's eyes.

Marzano's stunning office, likewise, reflects his design philosophy. It's a large, simple square room filled with light. The few techie tools in view -- a stylish laptop and a range of curvy kitchen appliances that Marzano co-designed with Italian design atelier Alessi in 1994 -- share space with tall shelves of neat, colorful books with titles like Think Like a Genius and Cooking, Cuisine & Class. A vast table in the center of the room is covered with more books, miniature chairs from German furniture designer Vitra, and a sculpture in red plastic with a real apple perched on the end.

FINDING A LINE. Under Marzano's direction, Philips Design has grown in a similarly vibrant way. In 1991, the unit had 110 employees. Today, it's one of the world's largest design agencies, counting 450 employees with an average age of just 32. They work in 12 offices around the world, each of which Marzano visits at least twice a year to skim the cream of their ideas.

In a bid to keep them in touch with what consumers want to use, rather than what simply looks cool, Marzano and his designers work closely with market researchers, psychologists, sociologists, philosophers, and anthropologists. It's a concept Marzano has called High Design.

Twice a month, Marzano, who's married and has three children, convenes with current Philips CEO Gerard Kleisterlee to discuss new ideas and strategies. One particularly tough challenge they faced together was to whip Philips' brand image into shape.

In 1995, the company adopted its first global-theme line: "Let's Make Things Better." While the campaign made a sleek and appealing lifestyle promise, it failed to convey enough about the products' top-notch design and engineering to consumers. "Philips has never been short on innovation, but it hasn't been good enough at marketing," Kleisterlee told BusinessWeek in August this year (see BW, 8/1/05, "How Philips Found New Spark").

LOOKING BACK. To tackle this head-on, Kleisterlee hired Philips' first chief marketing officer, Andrea Ragnetti, in 2003, and together with Marzano, they devised a campaign to sum up an image of practical yet stylish products. This "Sense and Simplicity" campaign was launched in September, 2004, and has since struck a chord with consumers.

To pay homage to the growth and influence of Philips Design, Marzano and a team of editors have put together a book, Past Tense, Future Sense, that marks the unit's highlights over the past eight decades. Its 773 pages tell the stories of many of the products designed around the 100,000 patents Philips researchers have filed over the past century.

On the day of the Eindhoven book launch, Marzano spoke with BusinessWeek reporter Rachel Tiplady about his design philosophy, and how that translates into living, breathing Philips products. Edited excerpts of their conversation follow:

You have said that the home of the future will look more like the home of the past than that of the present. Tell me about that.

I cannot imagine any sort of quality of life in the future without technology, but that technology must not pollute our lives. I believe the future home of around 2020 will contain objects that have both a cultural and a technological use, embedded into the fabric of our surroundings and helping to reduce today's clutter in our houses. They will be objects that respond to us on an emotional level.

So my vision is that perhaps a vase of flowers, to take a simple example, could also contain family holiday photos. The key is mixing emotions with objects.

How do you define design?

Design is a connector, a synthesizer, and a translator. It's a bridge between changes in the economy, in technology, and in industry. The result of the interaction between all these changes has to be brought to an aesthetic synthesis. The designer is the person who takes that final step towards this synthesis.

You are Philips Design's fifth head in 80 years. What do you think you've brought to the company?

I think I have taken another step toward the professionalization of design. That's to say, all the five heads of Philips Design have been searching for the future. In the 1950s, Louis Kalff commissioned [world-renowned architect] Le Corbusier to paint his vision of that future. Today, I draw a great deal, but I don't just sketch my vision based on my own imagination. I want to ensure that it's based on thorough research and many people's views.

Even during my time as CEO the way we do that has changed: Fourteen years ago, I expressed our vision with some mock-ups that we put in a little movie to explain our direction. Today, we make prototypes from the earliest stages that perform like the finished product. In a sense, it minimizes the company's risk because we have to explore and research more upfront before we move on and spend the money.

What's your favorite iconic Philips design?

It's the Chapel Radio, from 1938. First of all, because the soft, rounded triangular shape was unthinkable at the time. All the other radios were square. Second, the branding was so integrated into the design that the radio wouldn't be what it was without it. [The immediately recognizable sparks and wavy lines of the Philips logo covered the central loudspeaker.] These two elements ensured that the radio was one of a kind -- no one else could copy it. I regret not being born earlier to have designed it myself.

How long does it take to bring a Philips design to market?

There are some products in consumer electronics that might take six to nine months. There are systems in the area of health that take up to five years. So we're confronted by a variety of skills and are constantly juggling them. We deal with about 2,500 to 3,000 projects a year.

In Past Tense, Future Sense, you highlight a few designs that didn't make it to production. Tell me about one of your favorites.

The In2it project [a personal communicator that could send letters and create tunes and drawings. It was designed for girls, because most similar products available in the 1990s were geared towards boys]. It didn't work for a variety of market reasons, but the important thing is that we learned from it.

This project was dear to me because I think it's crucial we work on stimulating and educating people as early as possible. If we look at the way society is evolving, there's an incredible level of inefficiency. We simply don't take advantage of all our accumulated knowledge. Why does it take 20 years for a baby to grow to a responsible adult? And sometimes even then that adult isn't responsible. For me, this is a question of social sustainability, of creating a society that grows wiser as it goes along.

What do you hope people remember of your time at Philips Design?

Philips Design is slowly shifting its focus from just hardware, just objects, towards relationships and dialogue. In the same way, instead of focusing on the individual person, I'm fascinated by the quality of possible dialogues between groups of people and technology.

I hope that my time will be characterized by the dialogue I have helped achieve through products like the Ambilight and the Ambient Experience medical scanner. I think the more we progress, the more the environment around us will be charged with intelligence. So, Philips will make objects that become almost subjects, which exist with us instead of just for us.

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