How Philips CEO Roy Jakobs is turning the company around after major recall

Restructuring

Philips is undergoing significant restructuring to enhance its operational efficiency and customer responsiveness. Roy Jakobs emphasizes the shift from a complex matrix model to a divisional structure, aiming to simplify processes and clarify accountability 1. This transformation is designed to improve employee engagement and decision-making speed, ultimately benefiting both the company's margins and its ability to meet customer needs 2. Jakobs highlights the importance of integrating systems to streamline healthcare operations, allowing medical professionals to focus more on patient care rather than managing multiple systems 3.

We need to help them actually to do their job in a simpler way, because they want to spend their time not on five different systems, they want to spend their time on caring for the patient.

--- Roy Jakobs

This restructuring is part of a broader strategy to position Philips as a leader in healthcare innovation.

   

Culture Shift

A key focus for Philips is fostering a culture of accountability and prioritizing patient safety. Jakobs has redefined innovation processes by integrating diverse teams from manufacturing to R&D, ensuring that patient safety remains the top priority 4. He believes that a people-centric approach is crucial, emphasizing that the success of any structural change depends on the people involved 5. Jakobs states that understanding the needs of patients and consumers is essential for delivering impactful healthcare solutions.

It's all about the people. We need to understand the people that we serve better, our patients, our consumers, and we need to have the best people actually to serve them.

--- Roy Jakobs

This cultural shift is aimed at enhancing Philips' ability to innovate and respond to market demands effectively.

   

Engagement

Increasing employee engagement is a crucial aspect of Philips' restructuring efforts. Jakobs has implemented a three-year plan that includes significant layoffs to streamline operations and clarify roles within the company 6. This plan aims to create a leaner, more agile organization capable of adapting to a volatile market environment. Despite the challenges, employee engagement has risen by eight percentage points, indicating a positive response to the changes.

We now have an engagement score of 78% versus a global norm of 80.

--- Roy Jakobs

This improvement in engagement reflects the effectiveness of the new structure in empowering employees and enhancing their ability to contribute to Philips' goals.