Eric Rondolat, CEO of Signify, made an analysis of the market about six years ago to discover that not just one transition was under way, but five. The common thread in the transitions that are constantly taking place within the company: "With our technology jump, we make a meaningful contribution to a better world."
Eric Rondolat breathes light. He is light. And he sees light - obviously figuratively speaking. For several years now, Rondolat, a Moroccan-born citizen of the world with French and Italian nationality, heads the listed company Signify, the former Philips Lighting. Although Signify doesn’t seem to have its best year, according to the latest figures - profits fell in the third quarter - Rondolat is seen as the man who transformed the more than one century old light bulb factory into a modern 'service provider in lighting solutions'. He now even says his company has developed the successor to WiFi: LiFi, Internet via light waves. Signify is an example for many companies in the area of a successful transition. 'Switching from one technology to another was not the most difficult. What came after was more difficult. "
In 'the lab' of Signify on the High Tech Campus in Eindhoven, Rondolat shows the newest light features. One thing is clear: the time of the bare bulb or the cheerless fluorescent tube is far behind us. With a simple command, Rondolat lets the lighting change colour: from conference white to romantic red. He claims to be able to conjure up 16 million colours; there is no time for a fact check.
With ever changing colour shades, Arthur van Schendel, managing director of IT service provider Schuberg Philis, talks with Rondolat about his company and especially about the transition that the company has undergone in recent years and is still experiencing. In English, with a charming French accent, because despite his many years in the Netherlands Rondolat isn’t proficient in Dutch. 'This is mainly because everyone always instantaneously switches to English.'
In the past, the story was rumored that light bulbs deliberately had a limited life span, because Philips would otherwise earn too little on them. Once and for all: is that story right?
‘No, that story is not true. Philips never made products with the aim that they would break prematurely. Never, believe me.’
When I look around me, it is clear: the era of the incandescent light bulb is definitively behind us. Can you describe the impact of the transition that your company has gone through?
'The landscape of our industry has changed completely through technology, it does not look anything like what we did a century ago. As a company, you can deal with such a transition in two ways: you recognize reality, adapt and look for opportunities. Or you try to slow down evolution. If you opt for that last option, you will lose. The challenge is always to recognize the value of the new technology and not only look at the value of the previous, outdated technology.'
What is an important value to you?
'If we believe in something in this company, it is sustainability. We want to build a better world. For good reason, we have a sustainability program called Brighter Lives, Better World. We want to make a modest but meaningful contribution and we can. Just to mention a simple example: if you replace all traditional lamps with modern LED lighting, then that will result in significant energy savings. They switched to LED in the Empire State Building in New York. They have reduced the energy bill by 93 percent. Ninety-three percent! And it also looks fantastic: they can illuminate or highlight the entire building in millions of colours. It costs a fraction compared to what they paid earlier.'
Is this belief in a better world something that everyone at Signify believes and supports?
'Certainly. At the same time, a third of our staff is still working on traditional lighting. Customers still want that kind of lighting, and we want to serve our customers. That is strongly ingrained here: let's face the market, let's not lose sight of the market.'
Can you indicate what a key moment has been in the transition?
'Six, seven years ago we made an analysis of the market. We tried to estimate how it would develop and what role we as a company could play in this. We then saw that there was not just one transition going on, no, at the time we saw four transitions, and even later five. The first was simple and inescapable: the conventional lamp would slowly but surely disappear. The second was a logical consequence: the unprecedented advance of LED lighting. The third was about the consequences: we would have to switch from one technology to another and we would immediately have to move on by linking the lighting systems and connecting them to the Internet. That required a control system and software. The fourth transition ensued again: now that we all lighting could be connected, we could start to offer services: you do not buy a lamp, you buy lighting. In all fairness, we did not see the fifth and final transition at the time. We only saw this one about three to three and a half years ago and it is truly revolutionary: we have gained the insight that light is a wave and that you can transport data with light waves. Of course! Light as language, light as a means of communication. Light waves could, for example, be an excellent, faster and safer alternative to WiFi. We call that system LiFi. In the future, for example, the street lighting can transport data for much faster mobile connections. Your self-driving car will be controlled via LiFi, while you download a movie via LiFi on the way home. The sky is the limit.’
How difficult was it to get started on all those transitions?
'The first few transitions were relatively simple. Switching from one technology to another is not the most difficult. On the contrary. We have already switched technology so often. In the 127 years that we exist, we have changed technology at least five times. Demanding, but doable. The other part was harder.’
'Because it turned out to be a completely different business. Selling a conventional lamp or a LED lamp does not matter that much. You put a price on it and you sell it. But the other part of our new business model was a part that we had to reinvent all over again. We have equipped The Edge, the hypermodern office building of Deloitte in Amsterdam, with our systems. It is equipped with the latest technological features and connected systems. For example, there was no price list for that yet. You have to think and develop everything again.'
How did you get the staff to make the switch?
'It is quite difficult to change the mindset. Also for our staff. Our sales department suddenly had to sell not only products, but also systems or services. They had to understand that we were going to do something else. They had to explain to customers what our products could bring them. That was new to us.’
Did your customers understand the transitions?
'We have had to explain a lot. And still. We have to educate the customer. Although we have a good and logical story. That story often starts with cost savings. Let me give street lighting as an example. When I talk to a mayor, the first subject is cost savings. I explain that switching to LED will generate a lot of money for such a man or woman. One can save up to 70 percent on the energy bill when switching to LED.
That is of course a nice story. But there is also a completely different story. Secondly, I say to the mayor: I have research here that shows that 30 percent fewer traffic accidents happen thanks to LED lighting. Another study: a decrease in the number of offenses by 20 percent. Finally, research has shown that inhabitants appreciate the area where they live more because of this new lighting.
These are all collateral benefits, things that go beyond lighting or energy saving. For offices: the same story. I go to companies and say to a CEO: you can not only save on your energy bill, but I can also provide you with data about the use of meeting and work areas. More importantly: I can make your staff more productive with a good lighting plan. We have an attractive story that is not just futuristic, it is the reality of today.'
How did you experience the transitions yourself?
'As particularly difficult. It is difficult because we are a very old, young company. Do you get that? We are old because we have 127 years of experience in the lighting industry. We are young because we have just started on a completely new page. That makes it complex. The transformation we are going through requires a lot. Just, the transition from conventional to LED in itself is complex, and there is also the development of new business models. And at the same time we are still active in our legacy business. We still sell a lot of conventional lamps. So, we actually run two companies: one that slowly but surely becomes smaller and one that grows very fast.'
All staff naturally want to belong to the second part of the company?
‘No, not at all. Make no mistake: we put a lot of energy into the conventional part. The special thing is that we shrink less quickly in that area than the market. We are proud of it. We also want to be the best there, and ultimately the last man standing.'
Where did Signify get all that new technology? Presumably not everything was available within the company.
'We have taken a very organic approach. We have developed a lot ourselves over time and we have certainly also acquired knowledge to enable the technology jump. We have also attracted the right people, for example to build our own Internet or Things platform. We are only one of the few in our sector that have such a platform.'
What were the consequences for the company culture? There must be room during a transition to make mistakes.
‘Oh, yes, certainly. We’ve made a lot of mistakes. We have tried a lot and a lot has failed. But in a changing environment there must be room to try. If there are so many changes, it is almost impossible not to take risks and not to make mistakes.’
What has been your own biggest mistake?
‘My biggest mistake? I think I made two big mistakes. The first big mistake was that I did not always make the best judgement on my staff. I did not immediately realize that adaptability is a very important competence. I have incorrectly put other competences higher - experience, knowledge, education.'
That does not sound like a mistake, that sounds like an insight.
‘No, it was a mistake because I saw it too late. I think I made some wrong choices when it comes to people.’
Do you have peace with mistakes made?
'You only get few opportunities in a rapidly changing market, so you have to act quickly. And believe me: in the end, a decision gives you more information about the consequences than extensive brainstorm sessions without a decision. So, of course you make mistakes. In my opinion, making mistakes is not a problem, as long as you have the energy to think ahead and move forward. You must always be able to adapt to the new reality. If you succeed in that, making mistakes isn’t bad.’
Do you have a tight grip on the organization?
'We have centralized everything for obvious reasons: we not only want to train and educate our customers, we also want to train the people in our own organization with our norms and standards. So, certainly in the beginning there was little room for taking autonomous decisions. I also want a certain standard, in the way we approach things and measure results. The big decisions are therefore taken centrally. But we did create a fairly flat organization with short lines. People can email me directly and have an answer within a few days. Within two days we can decide if we do something or not. If you centralize, you have to watch out for bureaucracy.'
Is there a danger that you will lose your technological lead? You have to make sure that your platform remains top class for example.
'But of course! That speaks for itself. If you don’t, you lose the match.’
How important are data for Signify?
'Data is king. Very important. But even more important is what you do with the data. You have to understand your data. Piles of data are meaningless, it's about what’s behind the data. We believe in use cases, monitoring how people use your systems. The nice thing about data is that you can base yourself on facts. Data ensures that you can make a decision in the most objective way. You come to a level that you can not reach with your brain. Using data is the new normal. We have to accept that.’
What is the nice thing about digitization?
'The most important thing about digitization is that bits do not cost anything in relative terms. Digitization is one of the best recipes for sustainability. We could already do so much more for the planet with all existing technology. Politicians are too slow, good decisions are not made quickly enough. Minimum agreements are made during climate negotiations. We urgently need to take bigger steps. If we really want to tackle climate change, we have to do it differently and faster. I believe in that and that is what this company believes in. We want to be climate neutral in 2020. Or rather: climate negative.'
You sound like an enthusiastic person.
'I believe in matters that go beyond the facts, I believe in emotions. I think we are moving towards a world that, unlike what many people claim, will be much more humane than before. With more attention to feeling. And I am also convinced that we will never be able to stop progress, that we must embrace progress. Every change brings new risks, but also new opportunities. We can not ignore what digitization has brought us: a lot of progress.'
Arthur van Schendel
Arthur van Schendel is a managing direcor at Schuberg Philis. Prior, he worked for different technology companies including Sun Microsystems and KPN.
Arthur holds a degree in Monetary Economy at Erasmus University in Rotterdam.
Signify (Euronext: LIGHT) is the world leader in lighting for professionals and consumers and lighting for the Internet of Things. Our Philips products, Interact connected lighting systems and data-enabled services, deliver business value and transform life in homes, buildings and public spaces. In 2022, we had sales of EUR 7.5 billion, approximately 35,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We achieved carbon neutrality in our operations in 2020, have been in the Dow Jones Sustainability World Index since our IPO for six consecutive years and were named Industry Leader in 2017, 2018 and 2019. News from Signify is located at the Newsroom, Twitter, LinkedIn and Instagram. Information for investors can be found on the Investor Relations page.