Management appointments relating to these changes will build a lean and agile leadership team to direct implementation of the Business Renewal plan over the next two years

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Appendix 1: Organization chart of Philips Consumer Electronics (outdated)

BCT Structure:

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The CE Business Renewal Program and its implications for structure

Following is a statement of G. Dutiné on the Business Renewal Program, which has been edited to cut out any irrelevant parts for this report.

It is our intention to make a number of organizational changes, providing the foundation for a fundamental change of our ways of working, and a reduction of complexity and overlap. Management appointments relating to these changes will build a lean and agile leadership team to direct implementation of the Business Renewal plan over the next two years.

Business Groups

Within the above context, it is our intention to reconfigure the business creation organization as follows: The Business Creation Units (currently seven) will be regrouped into three Business Groups - Connected Displays, Home Entertainment Networks and Mobile Infotainment. A fourth pillar in our Business Creation organization will be New Business Projects. The number of Creation Teams (currently twenty one) will be reduced to twelve Business Line Clusters and accommodated within the next six months, inside the three Business Groups. The BG leaders will report to Frans van Houten, CEO Business Groups.

BG Connected Displays (BCU TV and BCU MMD) will be focusing on displays for home entertainment and productivity. Martin McHugh will head up the BG, which will be leading the Business Productivity Experience Council, whilst participating also in the Home Entertainment Experience Council. The BCU MMD led by Cor Saris will become part of the BG.

BG Home Entertainment Networks (BCUs AVE, Peripherals and Accessories, Digital STB, RCS and DECT/Home Telephony) will focus predominantly on home entertainment products, home networks, and new home applications. Leong Yue Wing has been appointed to manage the BG, which will also provide leadership for the Home Entertainment Experience Council, whilst taking part in the Personal Expression Experience Council, where appropriate. Set Top Boxes and Accessories &

Peripherals will become part of the BG, led by Lucas Covers and Philip Doorduyn respectively.

BG Mobile Infotainment focuses on Personal Expression products for the consumer 'on the move'. It will encompass the activities of Portable Audio, and the current BCUs Multimedia and Connectivity, Personal Infotainment and BCU Wireless (GSM).

This realignment of the three Business Groups will be effective immediately, with transition and implementation into a streamlined structure of 12 Creation Teams taking effect over the next six months. Some further small adjustments between BG Home Entertainment Networks and BG Mobile Infotainment may occur during that period.

Global Sales and Services

As a consequence of the Business Renewal Program, the design of the Sales and Services Group and set-up of the regional commercial organizations will also change and evolve towards a more globally aligned footprint.

The structure of the global Sales and Services organization, reporting to Rudy Provoost, will consist of :

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Four regional leadership functions of the European, North America (NA), APMEA and LATAM commercial organizations

A global CRM, e-Business & Services function, headed by Alexander Bakkeren, supporting the commercial organizations in terms of processes, policies, best practices, and project management.

A global Business Development function (vacancy), focusing on new channels, operating models and go-to-market scenarios, as well as providing support to the commercial organizations for trade management processes, in particular for international key account and category management

As far as the set-up of the regional Sales and Services operations is concerned, the intention is to drive for more consistency and focus across the globe, while respecting the different dynamics, challenges and varying degree of market complexity and maturity, in the different geographies.

In order to effectively interface with the newly formed Business Groups, the management structure of the regional commercial organizations foresees in Regional Business Management functions (RBMs) for respectively Connected Displays, Home Entertainment Networks and Mobile Infotainment.

The RBMs will also act as the regional representatives in the relevant global Experience Councils. More details about this realignment and region-specific appointments will be communicated in the next weeks.

To further streamline and strengthen our sales and services activities in the regions, we will continue to drive scale, synergy and efficiency through geographical clusters combined with back office and backstage integration, while pursuing a channel- specific or account-focused, business model-driven design of the commercial organizations.

Way forward

I am happy to report that good progress is being made with the entire Business Renewal Program, with 75% of the targeted annual savings of Euro 400 Million underpinned, with the new ways of working currently being designed.

The next step in the process is for first line managers to further develop their teams, and - within the context of the Business Renewal concepts - start implementation as soon as possible.

It is inevitable that streamlining the organization will lead to a reduction of jobs.

Before the end of the year, the leadership of the BGs, Regions and Functions will work out the details of the foreseen headcount reduction, so that timely consultation with workers' representatives – where necessary - can be started up.

I hope I can count on your continued co-operation and support to drive our Business Renewal Program further towards a successful conclusion.

..

Gottfried Dutiné

Member Board of Management Royal Philips Electronics CEO Philips Consumer Electronics

Source: Philips Intranet site

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Appendix 2: Project Life Cycle

Not all projects conform rigorously to the stages shown and the activities within each may vary somewhat. However, less than satisfactory project performance and lack of control can frequently be traced to significant departures from the division of activities as shown. Nevertheless, for effective control each design package must still follow the phases shown.

(Source: http://www.maxwideman.com/papers/managing/lifecycle.htm)

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Adams, J. R. and Barndt, S. E. "Organizational Life Cycle Implications for Major Projects." Project Management Quarterly, Vol. IX, No. 4, Dec. 1978, p. 32-39.

The different project phases form the traject, or project content activities, that have to be performed for the project to be completed. Each phase differs significantly from the other: The controlling activities are more coherent and differ less per phase than the content activities. The controlling activities in a project can be grouped in five aspects: Time, money, quality, information and organization.

Theoretically the end of the project lifecycle is exactly at the beginning of the product lifecycle. In practice this if often not the case, however. The product lifecycle in this case starts when the system is used for the first time to enter product marketing information that is to be used for the European Catalogue. Ideally the latter follows immediately after the other, so no loss of time, money or energy is incurred. (Wijnen, 2001:114)

Evolutionary adaptations (which could have been expected to be necessary) in the system while it already was in use led to confusion and frustration with users. One of the larger adaptations that were made in the system, and subsequently not communicated clearly to the BCT’s, was the addition of the product name to the marketing data. The ‘product name’ field was by many people actually perceived to mean to display the product type number. This name is used in customs for the calculation of taxes, and already appeared in another part of the systems. To the users the addition of the ‘product name’ field appeared to mean that suddenly every Product Manager could decide about the classification under which the product was exported, while the field only served to function as a ‘commercial product name description’, which was to inform the customer better about the product.

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Appendix 3: Questions and Results of the questionnaire.

The letters used in a field correspond to the answer given by an individual and these letters correspond to the PFS2 business unit as displayed below. The letters are assigned on a nominal level.

A: Portable Audio

B: Peripherals & Accessories C: Audio Systems

D: Audio Systems E: Television F: Monitors

G: Peripherals & Accessories H: Creative Display Solutions I: DVD_RW

J: Audio Systems K: Mobile telephony Section A: PFS2 Training

Q. 1. The PFS2 training was useful for getting to know the purpose of data fields.

1 Strongly Agree Agree Neutral Disagree Strongly Disagree

G A, B, D, F, I, J, K

Q.2. The PFS2 training gave a clear idea of the priority of data(fields) (for the European catalogue).

J D, F B, I, K A, G

Q.3. The PFS2 training was useful for being reminded of the limitations of characters in data fields.

B, J, K A, D, F, I G

Q.4. The PFS2 training was useful for getting to know the limitations of the system

A, B, J, K D, F, I G

Q.5. The PFS2 training helped determine which different functionalities people can have in the PFS2 system.

A, F, K D, J B, G, I

Section B: The PFS2 Application

Q.6. The PFS2 Marco Polo Demo application was an useful tool to become familiar with the system.

A, D, E, I, J B, C, G, H, K F

Q.7. It was clear that the information in the PFS2 Marco Polo Demo application could not be input for the actual system.

B A, E, F, G, I, J C, D, H, K

Q.8. The user-interface of the PFS2 system was instinctively clear

C, E A, B, D, H, I, J F, G, K

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Q.9. The purpose of all data fields in PFS2 was immediately clear.

A, D, E, F, G C, J B, H, I, K

Q.10. It was clear that the system was still in development and new additions would be made.

E, F, G, J B, C, D, H A, I K

Q.11 The adaptations of the system while already in use (e.g. the added ‘product name’ field, the possibility to enter © , ® and ™ signs) led to frustrations.

B, C, F D, E, G, I H, K A, J

Q.12 When information was put in the system, fields often did not comply to system limitations (the maximum number of characters allowed)

C, F A, B, H, J D, E, I, K G

Section C: Creation of Data

Q.13. There was no need to coordinate content with other BCT stakeholders for the creation of CTN specific data (product type number, product name, WOW, marketing header).

B C, E, J A, D F, G, H, I, K

Q.14. There was no need to coordinate content with other BCT stakeholders (from other BCT’s)for the creation of Global data (Key Benefit Areas, Features and Commercial Specifications).

B A, D, E, F, H, I, J, K C, G

Q.15. Time pressure did not allow enough opportunity to coordinate CTN specific data.

F, I, J A, B, D, H, K C, E, G

Q.16. Time pressure did not allow enough opportunity to coordinate Global data.

B, C, J, K A, D, G, H E, F I

Q.17. If data overlapped with existing data, an addition was made so the system would accept the addition as new data.

B, G, K F A, C, D, E, H, I, J

Q.18. The limitations of all data fields were clear from the beginning of content creation.

B, D, E, F, J G, I A, C, H

Q.19. The specifications from the PmcRL (UCDM) were held as restrictions from the beginning of content creation.

F, G, J A, B, D, E, H, I, J C

Q.20. The deadlines set were easy to meet:

A, B, C, D, E, F, G, H, I, J, K

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Q.21. Data had to be revised to comply to specifications set in the PmcRL and the PFS2 system.

21 Very often Often Normally Rarely Never

B, G A, E, F, J C, D, H, I, K

Q.22. More clearly communicated limitations would have resulted in less work that had to be re-done.

C, D, E, F, G, H, J, K A, B, I

Q.23. The imposed deadlines did not allow a proper planning of activities.

E, K A, B, C, F, G D, H I, J

Q.24. Less time pressure would have led to a higher quality of (global) data.

B, E, G, J, K A, C, D, F, H I

Q.25. The workload needed for filling the PFS2 database was too high.

B, E, F G A, D, H, I, J, K

Q.26. The extra pressure from higher management acted as an incentive to create and sign data.

B, C, D, F, H, I, J A E, K G

Q.27. The lack of a general “Tone of Voice” led to revisions in posted data.

G, K B, D, F, H, I, J A, C, E

Q.28. Which channel was used to coordinate global data with other BCT stakeholders? (more options possible)

1. Face to face with an individual: E, F 2. Face to face in a group: F, G, J 3. Telephone call (individual): A, C, H, K 4. Conference call (group): A, F, I, J

5. E-mail: C, D, E, F

6. PFS2 / CMC Intranetsite:

7. None: B

Q.29. Which channel was used to coordinate CTN specific data with other stakeholders? (more options possible)

1. Face to face with an individual: B, C, E, F 2. Face to face in a group: B, C, F, I, J 3. Telephone call (individual): G, H 4. Conference call (group): F, J

5. E-mail: A, B, C, D, E, F, K

6. PFS2 / CMC Intranetsite:

7. None:

Q.30. How often was contact necessary to reach consent on coordinated data with other BCT stakeholders?

1. (almost) Never: B

2. (generally) One contact session: A, C, E, H, K, I 3. Multiple sessions: D, F, G, J

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Q.31. How did you learn about the limitations to which data must comply? (more options possible) 1. Face to face with an individual: E, G

2. Face to face in a group: B, F, H, I 3. Telephone call (individual): K 4. Conference call (group):

5. E-mail: B, C, D, E, F, J

6. CMC Intranetsite: B, D

7. Other: A

Section D: CMC Change Board

Q.32. The activities imposed by the CMC program management could not be planned properly.

B, E, G A, C, D, F, H, K I, J

Q.33. The activities required for the CMC program were unpredictable

B, D, F A, C, E, G, H, I, K J

Q.34. The interventions made in PFS2 by the CMC Change Board came unexpectedly.

D B, C, E, F, G, H, I, J, K A

Q.35. The changes made to data during interventions made by CMC management made data useless for the use you intended.

B, F, G C, D, E, H, I, J, K A

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Appendix 4: Partly overview of the PFS2 system

• Above: The Feature module: (shared globally) ; Below: Product Specific Marketing Data.

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Appendix 5: Definitions as used in this report (in alphabetical order).

Aspect system

Within an aspect (or partial) system the whole object collection of a system is researched, but only a part of the relations of the whole system are researched.

Black-box

Black-boxes are those (smallest) system parts one does not wish to study in detail.

Only the input, output and the relation between input and output are of interest.

Blueprint thinking

A term used by Léon de Caluwé and Hans Vermaak (1999) to refer to the situation in which people believe things or other people will change when….

Goal

Goals are (partial) arrangements to the (relative) desirability of collections.

Hierarchy: a hierarchic system according to Simon is a system composed of interrelated subsystems, which are in turn also composed of interrelated subsystems.

The coherence within subsystems is stronger than that between the subsystems (near decomposability) (De Leeuw, 1997:135). Mesarovic’s stratified system is a description of the system by a number of models, in which each relates to a different level of aggregation (stratum). Simon’s hierarchic system is also stratified, but it has the additional advantage that for each stratum there are subsystems, which are relatively independent and can be studied and controlled. (De Leeuw 1997; 138)

Level of aggregation

The level of aggregation is the level of detail. The less details, the more global and how higher the level of aggregation is called.

Loose coupling

Relationships that are not tightly specified or frequently monitored, but nevertheless persist, simultaneously characterized by responsiveness and autonomy. Loose coupling is a metaphoric description of association (and can be applied to links between or among individuals, units, hierarchical levels, organization and environment, intention and action, and cause and effect among others) rather than a precisely measured, uni-dimensional variable.

(Blackwell Encyclopedic Dictionary of Organizational Behaviour; 1995:299)

Object

Objects can be both abstract and concrete. They may apply to different levels of aggregation.

Phase system

In a fase system one looks at a system at a part of the timeframes on which the original system was defined.

Resistance

All forces that contribute to the stability of the personality or in social systems.

Sub-system

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Within a sub-system only a part of the object collection of a system is researched, but all relations within this part are researched.

System

A collection of object (or elements) that are related to each other in such a way that no (groups of) elements are isolated from the other elements.

System part

The term system part is used as an overlying term. A system S1 is a system part of S if S1 is either: a sub-system and/or a aspect (partial) system and/or a fase system of S.

Ultra-stable system

A system that in changing conditions can focus on reaching a new equilibrium that is adapted to the changed environment conditions. There exist two feedback loops in such systems. The first loop ensures that the essential variables remain within certain limits as long as the disruptions are not too large to handle. The second loop becomes active when this is the case. (De Leeuw1997; 140)

Virtual Organization

A virtual organization is a collection of geographically distributed, functionally and/or culturally diverse entities that are linked by electronic forms of communication and rely on lateral, dynamic relationships for coordination. managed via teams that are assembled and disassembled according to need

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