GERARD KLEISTERLEE – AMAZING WIZARD WHO REVITALISED PHILIPS IMAGE
Gerard Johannes Kleisterlee (born September 28, 1946) is a Dutch businessman and an engineer. He is the current Chairman of Vodafone and the former President and CEO of Philips.
He was born in Germany to Dutch and German parents and was raised in the Netherlands. After school education, he joined the Eindhoven University of Technology, where he earned a degree in electronic engineering. He received an MBA from the University of Pennsylvania’s Wharton Business School in 1991.
After graduation, he joined Philips and worked there for almost all of his life. Philips & Company was founded in 1891 as a family company manufacturing carbon filament lamps and soon became a leading manufacturer of radios and later, of televisions.
Philips developed a number of innovative consumer devices that became part of the fabric of modern life: the rotary electric shaver, compact audio cassette, home video cassette recorder, compact disc (in partnership with Sony).
From 1981 to 1986, Kleisterlee was General Manager of Philips’ Professional Audio Product Group. He joined Philips Components in 1986 after becoming General Manager of Philips Display Components for Europe.
By the 1990s, Philips had become a sprawling giant. Kleisterlee was appointed Managing Director of Philips Display Components Worldwide in 1994. He became President of Philips Taiwan and Regional Manager for Philips Components in Asia-pacific in 1996.
From September 1997, through June 1998, he was also responsible for all the activities of the Philips group in China. He served on the Hong Kong Chief Executive’s Council of International Advisers from 1998 to 2005.
In 2005, Kleisterlee was appointed as President of the group. On becoming President, his first aim was to simplify Philips – to create an understandable, overarching vision for the company that would give purpose and meaning to all its activities.
His core perceptions were that Philips was still driven by the manufacturing process – marketing what it made, as opposed to focusing on what consumers wanted and that it had developed a serious case of silo mentality.
He was determined not only to transform Philips’ image with consumers but also turn it into a high-growth, high-tech company, something that more than 10 years of restructuring, under two predecessors, failed to do.
He undertook to bring together the company’s fragmented divisions to create ‘One Philips’, introducing a new vision and a new focus on consumers’ experiences of the company’s products and of the Philips brand. Kleisterlee set about creating a more agile, entrepreneurial mindset within the organisation to help the company become ‘the leading company in health and well-being.
“We had become an armada of independent companies that all acted independently,” he told a journalist.
Kleisterlee replaced the company’s previous slogan of ‘We make things better’ with ‘Sense and Simplicity’ and asked the company’s entire 125,000 workforce worldwide to contribute to ‘Simplicity Days’ – stopping work for the day to think of ways in which the company could simplify and improve its operations.
Kleisterlee’s another key mantra was ‘One Philips’. Kleisterlee reduced the company’s previous six divisions to three: consumer technology, lighting and healthcare. He took the major decision to move out of the manufacture of semiconductors, using the proceeds to acquire new lighting and healthcare companies.
The consumer technology division was struggling, contributing onethird of Philips’s sales but no profit. Kleisterlee issued an ultimatum to the division to make money in the key US market or be shut down. His insistence on cross-boundary communication and collaboration led to the development in record time of the first consumer DVD player to use the rewritable DVD+RW standard. The new generation of machines captured 60 percent of the US DVD recorder market.
Kleisterlee wanted his teams to have assignments that they feel excited about, projects with which they can form an emotional bond, so that they will invest everything they’ve got in their work and will do so voluntarily, not because they have a contract.
As he told the European Business Forum, “The only thing I always say is: Don’t make the same mistake twice because then you have obviously not learned.”
Kleisterlee stepped down as CEO of Philips in April 2011. In the same year, he was nominated as Chairman of Vodafone to chairman.
Part 26
What lessons can we learn from Gerard Kleisterlee? Few excerpts from an interview: How do you keep your people motivated in times of crisis?
In difficult times, the leader has to be more visible, whether it’s by communicating via the Internet or via direct employee meetings. It is the intensity more than the style. How do you communicate tough messages?
First, you need to be clear about the position of the company: Is our strategy robust? Can our balance sheet withstand a period of less healthy results? Are our products and services going to remain attractive in the future? If you can say ‘yes’ to all of these questions and communicate that effectively throughout the company, then a crisis can rally people. It can awaken their fighting spirit and draw people closer together. How do you get people to ‘buy in’ your executives so that they really burn for this vision?
It needs to be a vision that captures the hearts and minds of a critical mass of your organisation and then everybody will get on board. Strategy is a journey of discovery, not something that is created by masterminds in ivory towers. It starts with looking at the resources and assets that the company has and goes on to identify and explore the opportunities that you might see. How did you recruit or build up the skills that you needed?
We have made marketing capabilities a necessary part of the qualifications and experience of the business leaders we select. On top of this, we have made it part of our reward policy – and thus clearly visible to the entire organisation – that understanding your customer well and driving the organisation from the perspective of customer needs is not just something we talk about but also something we reward. What other factors influence executive compensation at Philips? We evaluate all our executives in two dimensions – ‘what’ and the ‘how’. Do you as an executive have outstanding, good or unsatisfactory results in terms of outcomes? And are you a role model, a valued player or somebody who needs to improve in terms of how you go about things? The answers to these questions produce a simple three-by-three grid, with which we do a ‘forced calibration’ on our executive population. The outcome determines to what extent people participate in the annual bonus pay-out. On what core values is good business behaviour based at Philips and how do you cascade these values down through the organisation?
We describe them as the four ‘Ds’ – delight our customers, deliver great results, develop our people and depend on each other. Things like business ethics, integrity, honesty and so on are all part of our business principles. The four ‘Ds’ are our transcendent culture, be it in Asia, the United States or Europe. What are your personal core values?
I believe in integrity and walking the talk. In our organisation people knew exactly where I stood and what I expected. There was a clarity of purpose and that doesn’t change. You embrace those values whether you are a factory assistant or the CEO. What changes you need to do over time is the way you put the different aspects into practice. (Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance journalist and could be contacted on lawije@gmail.com)
‘‘and I believe in integrity walking the talk. In our organisation people knew exactly where I stood and what I expected. There was a clarity of purpose and that doesn’t change. You embrace those values whether you are a factory assistant or the CEO. What changes you need to do over time is the way you put the different aspects into practice