The 8 Modules, 31 Focus Points and 5 Collaboration Phases of the SEIC Methodology provide a path to success

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Our Diagnostic Tool provides a gap analysis of SEI capability to support the strategic planning process

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In-depth explorations of the approaches and techniques used by leading organizations in the field of SEI today

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Thought leadership and insightful articles on the most important issues for companies pursuing an SEI agenda

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Insight calls are available to join for all members of the SEIC and will be addressing a number of topics

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The 11 modules of the SEI methodology focus on the key processes that enable the successful rollout of SEI

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Our Capabilities Assessment tools provide the means for organizations to gain insight into their own SEI approach

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In-depth explorations of the approaches and techniques used by leading organizations in the field of SEI today

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Thought leadership and insightful articles on the most important issues for companies pursuing an SEI agenda

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Useful downloads, from unique research to practical templates, frameworks and tools being used by SEI leaders

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Tapping into external R&D spend with Philips

The amount of products created from external expertise is rising at Philips, underlining the Dutch company’s determination to access the R&D capabilities of suppliers and other third parties

Air purifier

What proportion of its products would you expect a consumer-goods business to launch based on the expertise of outsiders to the company? 20%? Maybe 30?

 

Many companies might estimate such numbers and, indeed, these ballpark figures were offered by several of our members when the question was posed to them at our most recent Accelerator Program in Eindhoven. 10 years ago, the numbers would likely have been even lower.

 

But with a determination to drive knowledge, innovation and intellectual capital from suppliers and other third parties, last year this figure stood at 67% for Philips.

 

It’s a huge number, made more impressive when you consider that, for most of its 125-year existence, Philips has largely focused on developing new products and innovations internally.

 

Not surprisingly, the shift from being a predominantly inwards-focused company to an outwards-looking one has been a long and sometimes difficult journey for Philips, but the fruits of that labor are now clear for anyone to see.

 

“Things have changed gradually over a number of years,” notes Maarten van den Boogaard, Philips’ Open Innovation Leader. “And today, we’re seeing external innovation becoming more and more important.”

 

A simple reason for this rise in importance is offered by Philips’ VP in Procurement, Maurits Smits. “We needed to tap into global R&D spend,” he says. “We might have an annual R&D budget of a billion euros, but externally, the amount being spent is far, far higher.”

 

One of the principle initiatives that Philips uses to tap into this spend is its Supplier Program for Innovation and Creative Entrepreneurship (SPICE). An open innovation platform, SPICE has now been running for over a year, with a great many of the new products that contributed to that figure of 67% resulting from it.

 

Van den Boogaard provides some examples of these results, which range from large innovations that have led to the launch of new products, to small, incremental innovations that have improved an existing one.

 

Philips’ latest toothbrush, for instance, is capable of telling its user how well they’ve cleaned their teeth. “That product wouldn’t exist if we hadn’t worked with our suppliers,” van den Boogaard notes.

 

And then there’s Philips’ air purifier – massively popular in China, and quickly gaining traction in Western markets. Philips understands how the machine works, but the actual filtration technology is developed by its suppliers according to specifications provided by the Dutch company.

 

But perhaps the most successful – and well reported – product within this 67% is Philips’ air fryer – one of the company’s longest-standing examples of supplier innovation. First introduced to its product range several years ago, 2016 saw Philips working with different companies and universities to further improve it, demonstrating that collaboration can and should be a continuous process, and not just a one-stop-shop.

 

Spending time and resources on harnessing external expertise, then, can have a transformative effect on a company’s product range. Philips’ 67% figure would have been unimaginable even five years ago, but today, third-party collaborations are an integral part of its consumer business. Companies in the beginning stages of working with suppliers and third parties can be assured that, with the same level of determination and a focus on change management, similar results can be achieved.

 

Samuel Wrest

 

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