SDG 12.2: A business case about responsible production
Summary
TLDRPhilips envisions a healthier, sustainable world through innovation and circular economy. They aim to decouple economic growth from natural resource use, supported by digital technology and consumer preference for experiences over ownership. Philips commits to UN's sustainable development goals, setting targets for circular products, waste recycling, and medical equipment sustainability. They offer circular models like pay-for-access, refurbished systems, and products with recycled materials, fostering customer loyalty and investor appeal.
Takeaways
- 🌟 Philips envisions a healthier and more sustainable world through innovation and the circular economy.
- 🌱 The circular economy is about decoupling economic growth from the use of natural resources, keeping products and materials valuable for as long as possible.
- 📈 Global trends like digital technology and consumer focus on experiences over ownership support the shift to a circular economy.
- 🎯 Philips has set ambitious targets for 2020, including 15% of sales from circular products and services, 90% operational waste recycling, and zero landfill waste.
- 🔄 Philips aims to close the loop on all large medical systems by 2020 and extend this to all medical equipment by 2025.
- 💼 Philips is driving the transition with innovative business models that maximize the lifetime value of their products and solutions.
- 🏥 Philips offers a subscription service for ultrasound equipment, providing access over ownership and reducing upfront costs.
- 🛠️ The company provides refurbished systems that are thoroughly tested, offering customers high-quality pre-owned options at a lower price.
- ♻️ Philips incorporates recycled materials into product design, with some products featuring a significant proportion of recycled plastics.
- 🤝 Circular propositions help build customer loyalty, brand reputation, and appeal to investors and purpose-driven talent.
- 🛑 Philips emphasizes the importance of scaling up circular initiatives by integrating learnings into innovation and strategy, and embedding circular thinking into company culture.
- 📚 The company focuses on educating employees, developing training, applying reinforcing mechanisms, and promoting role modeling to foster a circular economy mindset.
Q & A
What is Philips' vision regarding the world's health and sustainability?
-Philips' vision is to make the world healthier and more sustainable through innovation and by transitioning to a circular economy.
Why is the transition to a circular economy important according to the script?
-The transition to a circular economy is important because the current global increase in human economic development while expanding our ecological footprint is not sustainable. A circular economy decouples economic growth from the use of natural resources.
What role do digital technology and network connectivity play in the shift to a circular economy?
-Digital technology and network connectivity enable more efficient collaboration across the value chain, making it easier to track and recover end-of-life products and materials.
How do younger consumers' preferences align with the circular economy?
-Younger consumers tend to focus more on the experiences products and services offer rather than ownership, which supports the shift to a circular economy.
What commitments does Philips have to the UN's sustainable development goals?
-Philips is committed to UN's sustainable development goal number 12, which is to ensure sustainable consumption and production patterns.
What targets has Philips set for itself by 2020 in terms of circular economy?
-By 2020, Philips aimed for circular products and services to account for 15% of their total sales, 90% of their operational waste to be recycled, and zero waste to be sent to landfill.
How does Philips plan to close the loop on medical systems by 2025?
-Philips plans to fully close the loop on all large medical systems that become available to them and extend such practices to all medical equipment by 2025.
What is an example of a circular model Philips offers in terms of patient care?
-Philips offers a flexible subscription service called Luma Fire, which provides users with access to portable ultrasound equipment, an app, and an online ecosystem, reducing upfront costs and improving access to innovative care.
How does Philips' refurbished systems business unit contribute to the circular economy?
-The refurbished systems business unit offers pre-owned systems that have been thoroughly refurbished, upgraded, and quality tested, providing customers with products as new but at a more affordable price with a full Philips warranty.
What role does recycled material play in Philips' product design?
-Recycled materials have become an integral part of product design at Philips, with many consumer products featuring an increasing proportion of recycled plastics, such as the Performer Ultimate vacuum cleaner which contains 36% recycled plastics.
How does Philips ensure that circular thinking is embedded in its company culture?
-Philips works on four critical elements: telling a clear story about circular economy to employees, developing dedicated training formats, applying reinforcing mechanisms for corporate targets, and promoting role modeling through dialogue with leaders and encouraging ambassadors.
What advice does the CEO give for businesses considering a circular economy journey?
-The CEO advises businesses to assemble a team from marketing, R&D, manufacturing, and sales for a workshop with an open mind to understand what they really offer to customers and to involve customers to understand what they value.
Outlines
🌿 Philips' Vision for a Circular Economy
Philips aims to contribute to a healthier and more sustainable world through innovation and the adoption of a circular economy. The company recognizes the unsustainability of increasing ecological footprints alongside human economic development and sees the circular economy as a solution that decouples growth from the consumption of natural resources. Philips is leveraging digital technology and consumer trends towards experience over ownership to facilitate this shift. The company has committed to the UN's sustainable development goals, particularly focusing on sustainable consumption and production patterns. By 2020, Philips set ambitious targets: 15% of sales from circular products and services, 90% recycling of operational waste, and zero waste to landfill. They also plan to close the loop on medical systems by 2025. Philips exemplifies circular economy models through services like their Summers ultrasound, refurbished systems, and产品设计 that incorporates recycled materials, demonstrating a commitment to building customer loyalty and brand reputation.
🚀 Embracing the Circular Economy for Business Growth
The script discusses the importance of the circular economy not only from an ecological perspective but also as a strategy for predictable business growth and investor appeal. Shareholders appreciate the recurring revenue streams that come from a customer base engaged in product-as-a-service models rather than single transactions. The CEO's interview from 2002 emphasizes the value of circular economy thinking for long-term investors. For businesses considering this journey, the advice is to involve a cross-functional team in a workshop to brainstorm and understand what customers truly value. This approach can unlock energy and inspire innovation. The process is not instantaneous and requires gradual development, as illustrated by Philips' 15-year journey to their current position.
Mindmap
Keywords
💡Circular Economy
💡Sustainable Development Goals (SDGs)
💡Innovation
💡Digital Technology
💡Network Connectivity
💡Consumer Behavior
💡Business Models
💡Refurbished Systems
💡Recycled Materials
💡Corporate Targets
💡Role Modeling
Highlights
Philips' vision is to make the world healthier and more sustainable through innovation and a circular economy.
A circular economy decouples economic growth from the use of natural resources, keeping products and materials at maximum value.
Global trends like digital technology and consumer focus on experiences are supporting the shift to a circular economy.
Philips is adopting innovative business models and maximizing product lifetime value to reflect commitments to the UN's sustainable development goals.
By 2020, Philips aimed for 15% of total sales to come from circular products and services.
Philips set a target for 90% of operational waste to be recycled and zero waste to be sent to landfill.
Philips plans to close the loop on all large medical systems and extend such practices to all medical equipment by 2025.
Progress towards circular economy targets is externally audited for transparency.
Philips offers a subscription service for ultrasound equipment, reducing upfront costs and improving access to care.
Refurbished systems from Philips provide customers with high-quality, affordable options with full warranty.
Recycled materials are integral to Philips' product design, with some products featuring a significant proportion of recycled plastics.
Circular propositions help build customer loyalty, brand reputation, and appeal to investors and purpose-driven talent.
Scaling up circular economy practices requires embedding them in company culture and strategy.
Philips focuses on telling a clear story about circular economy, developing training, applying reinforcing mechanisms, and promoting role modeling.
Shareholders appreciate predictable results from circular economy models, such as recurring revenues from product-as-a-service.
Assembling a multidisciplinary team for a workshop can unlock energy and inspire circular economy strategies.
Involving customers in understanding their true value from products is crucial for circular economy success.
Philips' journey to circular economy took 15 years, emphasizing the importance of gradual growth and learning.
Transcripts
here at Philips we have a clear vision
to make the world healthier and more
sustainable through innovation and the
transition to a circular economy is
central to the vision the global
increase in human economic development
while expanding our ecological footprint
is simply not sustainable we see growing
traction for a circular economy which
decouples economic growth from the use
of natural resources by keeping products
and materials at a maximum value for as
long as possible I am glad to say that a
number of global trends are supporting
the shift to a circular economy for
example digital technology and network
connectivity enable more efficient
collaboration across the value chain
making it easier to track and recover
end-of-life products and materials
likewise consumers especially younger
ones tend to focus more on the
experienced products and services offer
rather than ownership circular business
models offer new ways to engage with
them at Philips
we are driving the transition to a
circular economy by adopting innovative
business models and maximizing the
lifetime value of our products and
solutions this reflects our commitments
to the UN's sustainable development
goals in this case goal number 12 ensure
sustainable consumption and production
patterns believing that action speaks
louder than words we have set ourselves
a number of challenging targets by 2020
circular products and services should
account for 15% of our total sales also
90 percent of our operational waste
should be recycled and zero waste sent
to landfill lastly we plan to fully
close the loop on all large medical
systems that become available to us and
extend such practices to all medical
equipments by 2025 to ensure maximum
transparency progress towards these
targets is audited externally let me
give you three examples of the circular
models we already offer firstly our
summers and their patients want
first-time rights diagnosis and precise
minimally invasive treatments they are
interested in the quality of service a
product can offer rather than the
product itself so growing numbers of
customers are seeing great value in
paying for access not ownership our luma
fire portable ultrasound service is a
case in point
under this flexible subscription service
users have access to the equipment an
app and an online ecosystem this reduces
upfront costs while improving access to
innovative care secondly through our
refurbished systems business units we
offer a choice of pre-owned systems that
have been thoroughly refurbished
upgraded and quality tested in this way
customers can benefit from products as
new but at a more affordable price
backed with a full Philips
warranty lastly circular economy
thinking has resulted in recycled
materials becoming an integral part of
product design at Philips many of our
consumer products feature an increasing
proportion of recycled plastics our
performer ultimate vacuum cleaner is a
good example with recycled plastics
making up 36% of the total plastics
content
[Music]
we believe that by extending the
technical and economic lifetime of our
products and systems circular
propositions help us to build customer
loyalty and brand reputation as well as
strengthening our appeal and credibility
among investors and among purpose-driven
talent but we also know that to fully
achieve our ambitions we need to scale
up ensuring that learnings from pilots
are fed into our innovation and strategy
processes and that circular thinking is
embedded in our culture the very fabric
of our company
today's end we work on four critical
elements first we tell our employees a
clear consistent story about what
circular economy means for Phillips and
make it specific for the different roles
within the company
designers marketeers business leaders
etc second we developed dedicated
training formats also customized per
group to ensure the organization has the
necessary skills and capabilities to go
circular third we apply reinforcing
mechanisms for instance translating our
corporate targets for specific groups
and regularly reviewing progress towards
these targets but also recognizing good
practices as prizes and awards last but
not least we promote role modeling both
through dialogue with our formal leaders
and by actively encouraging our be the
change Network of ambassadors and
feeding their energy and ideas back to
the top to close I'd like to share with
you two excerpts from an interview given
by a CEO from 2002 the World Economic
Forum in the first he emphasizes the
appeal of circular thinking not just to
be ecologically minded but also to
investors and in a second he shares some
useful learnings for any business
considering embarking on its own
circular journey I often get questions
whether circular economy sinking is
understood by shareholders and I daresay
if we do a good job yes
shareholders understand it and even can
appreciate it and why is that your
shareholders actually like to have
predictable results then if I build up
my business with recurring revenues that
come out of a base of customers that
will take my product as a service rather
than only you know the hit and run of
the linear model I can build a very
profitable and recurring revenue stream
and shareholders like that so initially
the reaction may be you know let's focus
on the quarter let's focus on the next
half year but long-term investors value
investors are interested in
understanding how the company
a recurring revenue stream which fits
perfectly well was the circular economy
thinking
my recommendation for those of you are
considering to embrace the circular
economy is thinking in your business is
to assemble a few people marketing R&D
manufacturer sales and have a workshop
where we clear the plate the open mind
and say you know what is it that we
really offer to our customers I think
you will be surprised on how inspiring
that session is going to be how much
energy will be unlocked through that you
know brainstorm and I would also advise
you to involve your customers what are
they really after from you what do they
value in you is it a product or is it
the benefit of the product
it took Philips 15 years to get where we
are so don't think that you know this is
a solution overnight you will grow into
it I'm sure
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