Can Philips Learn to Walk the Talk?

Strategic conversations in the display category have identified a similar technology path. There, the cross-boundary team determined, winning means leading in the flat-screen-TV market. "Through strategic conversation, it became clear that we had too many resources invested in conventional TV development," says Kleisterlee. So at this month's consumer-electronics show in Las Vegas, Philips will unveil a full range of LCD TVs and a projection TV based on liquid crystal on silicon technology.

Backing the Talk
Philips staffers are no strangers to false starts and broken promises. But Kleisterlee appears to have their support. "Before he arrived, we were bitterly divided," says one senior manager who has worked for Philips in the United States and in the Netherlands. "But I know of many people who are sticking with Philips just because they have faith in Kleisterlee."

Kleisterlee -- an electronics engineer who, like his father, has worked for Philips for his entire career -- knows that a lot is riding on what happens in the move from technology to market, including the fate of the entire U.S. operation. Kleisterlee has written off 2002 as a "lost year." That means that the next 12 months will reveal whether his strategic conversations are truly inspired collaboration -- or just a whole lot of talk.

Sidebar: The New AI (Ambient Intelligence)

Philips president Gerard Kleisterlee's strategic conversations go right into the company's R&D labs, changing the practice of innovation. Right now, Philips' 8,000 R&D workers from all six business divisions are dispersed around Eindhoven in the Netherlands. By 2006, Kleisterlee aims to move them all to a single 1,873,900-square-foot high-tech campus in that city. The new buildings will be flexible, making it possible for "theme teams" to assemble and disband as the need arises.

At the same time, Philips is turning to a new source of inspiration: consumers. Eindhoven is also home to HomeLab, an ambitious experiment in developing "ambient intelligence": homes and offices where spoken requests or even facial expressions will trigger music and movies to play, control environments, and respond to owners' particular needs. The lab rats in this modern homemaking experiment are flesh-and-blood humans who volunteer to live in the home 24 hours a day while Philips' researchers observe how they interact with the company's electronic prototypes. It's another part of Philips' attempt to break down boundaries between R&D and the rapid commercialization of innovation.