5 big questions on innovation

There are two significant trends driving the growth of the lighting industry and new innovations in lighting technology.

The first is increasing demand for more energy-efficient light. According to the US Energy Information Association, lighting accounts for 10% of total electricity consumption in the US. Switching to LED enables light-related energy savings up to 50% - and that number jumps to 80% when paired with smart controls. There is a tremendous retrofit opportunity as a significant portion of light points in the US still need to be converted to LED.

The second is the increasing potential of lighting systems and services that harness the power of digital light. Lighting infrastructure already exists everywhere that people live, work, travel, shop, dine and interact. From cities and stores to offices and homes, lighting systems are being transformed into information pathways with the capacity to collect and share data, and offer new insights that enable, and really drive, the Internet of Things. These lighting systems become a conduit to exciting new services, enabled by data, that make people’s lives more safe, inspired, and comfortable, make businesses more productive and profitable, make cities more efficient and livable, and make the world more sustainable and prosperous.

Connectivity will continue to proliferate as technology evolves and volumes drive costs down. The smart city is a great example of growth potential for connectivity. Globally, just 2 percent of installed street lighting systems are connected today, but this number is set to reach 35 percent by 2025, according to a recent market analysis from Philips Lighting. This represents a huge opportunity to help enable smart cities in order to improve public safety and services.

In retail, our visible light communication technology enables customers to have precise positioning of devices to help them navigate the retails stores and find sales, while at the same time providing the store with detailed analytics on what the shoppers are doing. In commercial buildings, connected lighting systems can collect, share and analyze data that uncover insights into new capabilities such as space optimization and employee experience. With technology that exists today, we can equip every light with a sensor that can collect all kinds of data points about the office environment and its uses. With these insights, there is so much more value that a building can afford its tenants, or companies offer to its employees, beyond illumination.

The Open Innovation team is responsible for the identification of disrupting trends and the selection of the startups and partners that will help us respond to those disruptions. My approach with the open innovation team is to be vocal about what we are trying to do and find the right partners within the greater innovation ecosystem who specialize in areas of technology that are complementary. Our overall innovation strategy is to grow the company in data-enabled services and build partnerships with organizations who we may not otherwise have dealt with – those with higher risk profiles, or larger companies within verticals we would not normally engage.

The benefits of our connected systems go far beyond the lighting itself. When we talk to a city, we talk to the lighting and infrastructure and utility guys. They know all about lighting and energy savings, but when you start talking about acoustic sensing, or lighting that can help improve traffic safety, you need a discussion with additional departments. Those applications will trigger further innovation for both parties. We are starting to see cities hiring Chief Innovation Officers and CTOs, precisely to bridge the gap between technology , city operations and public services.

We have a long history of innovation, and we are well positioned on awareness on the need for innovation. Our 125-year legacy of innovation is core to our business and to meeting our customers’ needs.

We are pioneering breakthrough innovations in products, system architectures and services – making bold investments in sensors, cloud-based controls platforms, connected lighting, indoor positioning technology and consumer-based personal wirelessly controlled home lighting systems.

We invest approximately 5% of sales revenue in R&D to ensure we remain at the forefront of lighting technological developments.

Our culture was formerly structured around large internal R&D teams. Over the past five or six years, we became more structured toward partnerships for external innovation. We recognize that there are partners that have complementary areas of expertise and experience. By sharing, learning and working with one another, we can explore new ideas and open new opportunities.

There is no comparison with the current speed of innovation compared to ten years ago. There is a sense of urgency where a typical innovation project today will take three to six months, while that might have lasted two years prior to the LED revolution.

Internally, we have a number of innovation challenges within and between our R&D teams. For example, every few months, there will be a challenge for sourcing ideas from engineers on how new approaches can be applied elsewhere in the portfolio. We try to bridge this gap by involving additional stakeholders in the organization. One of the things that has been most instrumental is connecting with marketing. Meetings with our marketing teams on what they are seeing outside help us to make more informed decisions about how to improve our products or create new solutions. 

We want to become a data-enabled services company. Technologies like AI and IoT are all critical to delivering services based on data insights, so they are vital for our continued success and innovation.

We need to have connected systems and sensors to extract information from the physical space. We also need to make sense of unstructured data, which is where artificial intelligence comes in. And we need to be able to commercialize and offer services, including exciting new business models.

In the professional space, in some of the smart cities and smart building projects we do, the customers are paying for lighting services, not for the light system itself. This is what we call light-as-a-service. Our revenue depends on the performance of the system, so it is vital to ensure the system is operating as efficiently and effectively as possible.

With IoT, you can optimize maintenance contracts. If I send people to repair three street lights, they will have the right diagnosis and the right parts. If I see there are ten nearby lights that will fail in a month or two, I can make the decision to replace them all now to reduce my overall maintenance costs. The ideal scenario will send someone to fix the problem before the customer notices there is something wrong.

I am a big fan of innovative products like our Philips Hue connected home lighting system. When paired with smart home platforms, particularly voice assistants like Amazon Alexa, Apple HomeKit and Google Assistant, Philips Hue is transforming the way consumers experience and interact with light at home. Finally, I am intrigued by the autonomous driving revolution and the scaling-up of electric vehicles.