Introduction
Philips Electronics is an example of a company that is well aware of the context of the times and is not afraid to change its industrial direction dramatically to pursue success. This business organization has been operating for more than a century in technology (More than a Century, n.d.). They started by providing the first lighting devices, such as light bulbs, which were cutting-edge technology back in the late 19th century (More than a Century, n.d.). In the second decade of the last century, they began to manufacture and sell consumer technology such as home radios and television sets. The organization and its leaders remained in this industrial sector for about 100 years, and only in the last decade decide to choose a new paradigm.
Nowadays, cutting-edge developments for healthcare are the focus of all operations and processes at Philips; it is also their primary source of profits. As the organization state, “its growing portfolio of innovative health technology solutions supports value-based care across the health continuum” (More than a century, n.d., para. 13). One can say the company has completed the age-old ideological cycle and returned to its primary area, which is the creation of scientific solutions necessary for the survival and living of the modern society. Philips Electronics also stands for diversity culture, adheres to sustainability practices, and participates in related global initiatives.
Achievement and Detail Metrics
Philips Electronics is one of the global supply chain companies that has adopted Norton & Kaplan’s Balanced Scoreboard. However, adoption is not the correct term for how this high-tech organization uses this business performance measurement system. As Tudorache (2021) notes, “Although many companies try to adapt their business to a possible one-size-fits-all Balanced Scorecard model, Philips has developed its unique way of using the tool” (para. 2). They took some fundamental perspectives and overall structure from it and added their vision to it. It can be said that the managers noticed and understood the creators’ ideas regarding their model’s flexibility and modifiability and revised it (Bowersox et al., 2020). As a result, Phillips’ redesigned Balanced Scoreboard has been modified so much that it could be considered an alternative to Norton and Kaplan’s original.
One of the significant changes is a shift in the focus of the measurement framework. According to Tudorache (2021), during implementation, they shifted their focus from shareholder value and performance to employees and related concepts, such as their understanding of organizational hierarchy and interpretation of tasks and goals. Another altered element is the original perspective of learning and innovation that covers ideas such as continuous improvement and value creation that were transformed and expanded into competence. At Philips, competence encompasses not only process improvement and human resource management but also knowledge and technology (Tudorache, 2021). The internal operations perspective that focuses on problem-solving and the organization’s internal well-being has also been modified into Processes. For Philips’ employers and employees, Processes are about operational excellence and “drivers for performance” (Dev K & Madhavan, 2020, p. 1621). The financial and customer areas have remained the same, and the only significant change there is the inclusion of the aspect of employee satisfaction in the latter.
Within the original Balanced Scoreboard, detailed metrics are grouped into five categories. These are cost management, customer service, quality, productivity, and asset management (Bowersox et al., 2020). At Philips, performance management specialists see detailed metrics and their classification differently. There are six of them, and these include “profitable revenue growth, customer delight, employee satisfaction, drive to operational excellence, organizational development, IT support” (Dev K & Madhavan, 2020, p. 1622). Only two of the original categories have been incorporated directly into the modified model: customer service and productivity.
Conclusion
To conclude, these have been turned into customer delight and organizational development. However, they were taken mainly conceptually as some minor parameters and indicators were changed or removed, such as cycle time and fill rate. According to Dev K and Madhavan (2020), new ones were added, like the brand index. Other classifications mentioned have been wholly revised or created from scratch. Philips Electronics has succeeded in understanding the central principle of the Balanced Scoreboard, which is flexibility. Because of it, they remain one of the world’s flagships in the health technology industry.
References
Bowersox, D., Closs, D., Bixby, M., & Bowersox, J. (2020). Supply chain logistics management (5th ed.). McGraw-Hill Education.
Dev K, A., & Madhavan, V. (2020). The approaches and uses of the balanced scorecard – A comparative study. Seventeenth AIMS International Conference on Management. Web.
More than a century of innovation and entrepreneurship. (n.d.). Philips. Web.
Tudorache, A. (2021). The balanced scorecard of Philips. The KPI Institute. Web.