Stefano Marzano
CEO & Chief Creative Director, Philips Design
How did we get here?
Almost every speech you hear or article you read today starts with the magic words "As we enter the new millennium" or "Moving into the twenty-first century"...But is the new millennium or the new century really anything so special? After all, the change from 1999 to 2000 is just an arbitrary moment in the vast continuum of time...
Well, certainly, its an important psychological moment: people are in a mood for looking back, looking forward, and generally taking stock. And, beyond that, I think there is also good reason to see this period as a whole as one in which significant changes are taking place a shift of paradigm rather like the Renaissance in Western Europe in the fifteenth and sixteenth centuries, when new worlds, both physical and psychological, were discovered or re-discovered. Today, I believe we are also at a crucial point, not because of anything the calendar tells us, but because we are leaving the Industrial Age and entering into something new.
The fact that we are where we are today in terms of the environment is largely because of our industrial past. The industrial age was characterized by a philosophy of unlimited growth. In itself, a great vision of an increasingly better quality of life for everyone. (Well, at least for everyone in western and western-oriented countries.) But we can now see, in retrospect, that despite all the benefits and comforts that that vision of progress produced, it was fatally flawed. It took no account of the environment and it took no account of fundamental human values. Though it looked ahead to future benefits, it did so without casting a glance to left or right and certainly not behind to see what a mess it was creating as it pushed ever onwards. We can see now that this can't go on. If we continue along the same path in the same way, it will all end in tears.
Instead, we are beginning to appreciate that we need to take a more holistic, more global view of progress. We need somehow to achieve a sustainable society, one in which we can develop new, renewable sources of energy, minimizing the use of non-renewable resources, and respecting both the natural environment and our social environment.
Green advances
The first push to counter the old ways came from environmental pressure groups in the seventies and eighties. The world oil crisis in 1973 was the perhaps the first time that most people were confronted with their dependence on energy resources. And later, oil spills and catastrophes like Chernobyl brought home the full consequences of what we, as a global community, were up to. The appearance of holes in the ozone layer only served to confirm on an even larger scale that something had gone radically wrong.
In our own context, this all led to greater efforts to produce products that were more environmentally friendly: using less energy, fewer hazardous materials and capable of recycling. And we have been highly successful in doing this: witness the award of the World Environmental Center Gold Medal last year. We have lots of products now to justify our growing record as a green company. But we cannot afford to rest on our laurels, fresh though they are.
Mature quality
As I pointed out, people have started to take a more holistic view of progress, and indeed, a more holistic view of the quality of life. The increasing complexity and sheer speed of life in the industrialized world is giving rise to the same sort of stress and tension that weve seen in the environment. People are beginning to react against it. Although they often find it exhilarating and exciting, they are also feeling a need to escape from it from time to time. They are bringing things back to basics, as it were. You see this reflected in all sorts of things. A minimalist trend in interior decorating, for instance. The attempt by working parents to find quality time to spend with their children. An interest in a whole range of esoteric philosophies and religions, alternative medicines and therapies. A rise in the number of holidays people take. All ways in which people are trying to redress the balance in their lives: the balance they feel they have lost.
I believe everyday developments like that are a direct reflection of the general shift from the industrial to the post-industrial era. They indicate a move away from the idea that more is always better, which was the underlying philosophy behind the industrial age. It is a shift from quantity to quality. And not just the quantifiable sort of quality were used to thinking about in industry these days, but a more mature, a more grown-up type of quality.
Relevant functionalities
Let us consider what this new type of quality might mean for consumer products. If we look at what people seem to be looking for, we see it is the more abstract, more psychological qualities, not physical ones. It would seem as though people are seeking those qualities which lie relatively high on the Maslow scale: those that move us closer to the highest state, what Maslow called “self-actualization”.
That means we should be producing products that take people in that direction. Not overwhelming them with lots of features, for instance, but simplifying things for them, making life easier, more straightforward, only providing features that they need. For instance, many phones incorporate all sorts of functions that most people never use. The same goes for washing machines. People have paid for them, valuable resources have been spent on them, and they make operating the device more complicated. So for those who really don't want these functions, they are counter-productive.Wouldn't it be better to allow people to basically customize their own products by selecting the functionalities they require when they buy the product? Ideally, of course, they'd be able to add them later when the need arose. For some people, a monofunctional product would be enough; others might want to incorporate all available functions. The more this functionality is contained in the software rather than the hardware, the easier this customization will be.
Of course, what people want, and why, may vary greatly from person to person and community to community. For some people, lots of features may have a secondary benefit conveying status, for instance which outweighs the disadvantage of the added complexity. It's a question of what I call relevant functionalities: we should examine what functionalities people find relevant to their lives and only provide them with those, rather than simply assume that because a function is possible people will automatically want it. This not only simplifies people's lives but also saves resources - a good example of the new type of quality I’m talking about.
Focus on the benefit
Lets take this principle of focusing on the essentials a few steps further. When people buy one of our products, what is it they really want? The product? No. Not usually. What they're really after is the benefit or service the product provides them with. And they want the latest, the state-of-the-art version of that benefit. The solid object is usually just a tool, not normally an end in itself.That suggests we need to think about ways we can give them that state-of-the-art benefit or service in an affordable and environmentally friendly way. What we are generally doing at the moment is clearly neither. If people want the latest benefit, they have to buy the latest piece of hardware, which involves the use of materials and resources, not all of which will be able to be recovered or renewed. So how can we move away from this situation and focus more on the benefit?
Services?
Another radical solution would be to do without a material product altogether and only offer the service. Several divisions have certainly successfully expanded their offering by providing services related to our products. But these services are provided in addition to rather than instead of products. So for the foreseeable future, at least, this is only a partial solution.
Renting?
Another radical solution is renting or leasing providing the hardware on a temporary basis. That way, people buy the benefit for as long as they want it, and the hardware, rather than being thrown away afterwards, goes on to provide its benefit to a new user, in the same market or in a less mature one elsewhere in the world. Renting products gives people access to all the latest services at minimum cost, and it side-steps customer resistance to making a substantial investment in products that turn out to have only short-term usefulness. However, although renting is environmentally friendly (in that it extends the useful life of the product), operating such a scheme is not easy: it requires a complex infrastructure, and if all products are not leased out, there is the problem (and expense) of storage and of having financial resources lying around unused.
Durability
There are, of course, other ways of extending the lives of products. Using more durable materials is a start, but it is clearly not enough. People often throw a product away long before it is worn out or broken. This is because they no longer feel any emotional bond with it. It is no longer relevant to their lives.
New Heritage
This suggests that we need to understand what it is that makes people develop an emotional bond with a product. I talked earlier about the problem of products that fail to provide relevant functionalities, or that confuse people with their complexity. People don't relate to such products; they never develop any affection for them. Our ancestors, by contrast, often developed special relationships with their objects their trusted tools, their family heirlooms, their totems or magic charms. These not only served a practical function. They were also carriers of memories, of personal or family history; they were magical or ritual objects that protected you or gave you a sense of belonging. So they were kept, and passed from generation to generation, providing a sense of permanence, stability and continuity.
Today, we may still cherish in this way a book that belonged to our grandmother, for example, because it is somehow part of her. But what will our grandchildren cherish of ours? We need to discover what sorts of products will form the heirlooms of future generations - and then make them, and sell them to this one. I like to call these New Heritage products. They benefit customers by meeting their need for carriers of personal history and associations; they benefit the company, because they will be highly valued; and they benefit the environment because they won't end up on the scrap-heap.
Dematerialization
An alternative to improving the value and meaningfulness of the hardware is to do away with the hardware completely or almost completely. To dematerialize it. One way of doing that is to implement more and more functions in the form of software, which can be easily upgraded. That would certainly economize on matter and would focus on the benefit.Dematerialization through increased use of software is certainly something that is affecting our products. But at the same time, of course, we remain deeply committed to producing the hardware. So we also need to go down that other path towards dematerialization, which allows us reduce the size of the hardware as much as possible. Miniaturization. Right to the extent of incorporating our products into other objects.
Let's consider what our homes look like today, for instance, and what they may look like in the near future. Basically, they are full of technology in boxes, most of them black or grey: the television, the VCR, the radio, the CD player, the telephone, and so on. But there are signs that this is changing. Now that these technologies are present in many homes, they are either merging into the background and basically disappearing from view; or, quite the opposite, are taking on striking, non-technical forms. This is a reflection of the mental attitude I mentioned earlier: people are ready to have less clutter around them. Our houses may be full of technology, but we dont want to see it. We want to surround ourselves with objects that are either attractive in their own right or else have personal meaning for us.
Ambient intelligence
Miniaturization has now reached a stage at which it is possible to incorporate intelligent technology into ordinary everyday objects things like chairs, tables and beds, not to mention parts of the buildings we live in, like floors, walls, windows and ceilings. These objects that have been part of our homes for centuries, if not millennia. They have proved their value in enhancing our physical comfort and have more or less crystallized out into their essential form. That means they'll also form part of the home of the future. But the technological boxes that fill our homes at the moment the television, the audio system, the telephone or the computer they haven’t yet found a timeless form. And in fact they don't need to, because they don't relate to physical needs, but to psychological needs. That means they can largely disappear, and provide their benefits through the physical form of those objects that we cant do without. So televisions could be incorporated into walls or pictures, and audio equipment may disappear into chairs, tables or plates. As a result, the home of tomorrow will probably look much more like the home of yesterday than like the home of today.
This ambient intelligence that will then surround us will be clever enough to help us use energy efficiently, of course. But well need to make sure that it doesnt become too clever for us... in other words, we want to make sure we don't end up with a new version of the old problem of having too many features. Invisible or not, the functionalities will still need to be relevant. And not only that, we will need to make sure that the new intelligent objects that try to serve us know how to behave properly. The last thing we want after a hard day at work is to walk into our smart home to be confronted with a whole lot of proactive devices competing for our attention. So we have to make sure integrated ambient systems interact in human-friendly ways.
These are just a few examples of how we might tackle the challenge of developing products that take the necessity for sustainable development seriously. Starting from where we are. And thanks to the many people throughout the company who have done terrific work on developing environmentally friendly technologies and designs, were starting from a very strong position.
Eco-Charisma
Some people seem to think that to achieve sustainable development, we have to retrace our steps, to surrender many of the comforts and benefits technology has given us. As I hope you'll have gathered, I don't share that rather puritanical view. In fact, I'm convinced that going down that path would quickly turn out to be counter-productive. Because it flies in the face of human nature.People may sometimes adjust their desires to fit in with what they know is right and sensible, but not always. Many of us will only consciously buy an environmentally-friendly product if it doesn't prevent the satisfaction of our short-term desires and needs. Rationally, we all know that sustainable development is of overriding importance for the long-term survival of the human race and, indeed, perhaps of ourselves or our children. But emotionally, when buying a product, most people tend to give priority to the immediate, tangible benefits they stand to gain. Consumers may think long-term, but they often feel short-term. That means our products must, of course, support sustainable development, but they must also be the most attractive and charismatic products on the market. If what people want is also what is good for them, then and only then are we on the right track.
Of course, this does not mean that we should hide the fact that our charismatic products support sustainable development. Quite the opposite. We should make their green character as clear as possible. It’s not a question of Either-Or but of Both. In fact, making their green character clear will often be a challenge, since that’s not always obvious on the outside.
Green brand?
And what goes for individual products also goes for the company and the brand as a whole. We need to make sure people realize where we stand on sustainable development. The public is increasingly looking to companies to behave responsibly, to live up to high moral standard. This is not surprising: after all, powerful companies have global impact, both economically and culturally. In fact, they’re often seen as more powerful than governments. And with this power comes a new responsibility, a new role. They are expected to assume a moral stature that matches their economic stature, to take a stand on social and environmental issues and to have a good track record in that area.
Brands themselves not just the products now need to be seen to be actively involved in improving the quality of peoples lives. Providing customer satisfaction through products is no longer enough. Nike was rapped on the knuckles about the child labour issues. Shell learned a tough lesson on social and environmental issues in Nigeria and in the case of the dumping of the Brent Spar oil rig: and even though it eventually turned out that they were right in the case of the Brent Spar, they suffered because they hadn't been fully open with the public about it. The days when people trusted companies to do the right thing are over. They're demanding openness and accountability. I see that Shell now issues a substantial annual report devoted entirely to environmental and social stewardship issues.
We shouldn't imagine that we at Philips are unaffected by social issues. When setting up new factories around the world, we're increasingly finding that we need to explain that the activities we'll be pursuing at the site are not only safe but also socially and environmentally responsible. It's important to be open not only with the general public but also with employees and the local communities we work in.
And we need to remember that a brand is basically a promise. And as with promises, if you make one, you have to keep it. Breaking a promise is often worse than never making one in the first place. Bodyshop shot itself in the foot recently when, having based its whole brand on being environmentally friendly, animal friendly and socially responsible, it turned out that they found that they weren't being quite as ecological as they thought. They'll certainly recover, but negative publicity about such issues dents their image more seriously than it would affect anyone else’s. So we should be careful not to promise more than we can deliver.
For those who have an eye to shareholder value and the bottom line and that's all of us here, I'm sure it's worth bearing in mind that, in the last ten years, investment in explicitly "green" funds and projects has increased tenfold making it one of today's strongest financial growth areas.
Companies, it seems, are now being expected to move beyond the satisfaction of individual needs, towards the satisfaction of social needs. As they take up that role, their brand identity will develop into a social identity.
Back to basics
It sounds as though all this is new: but is it really so new? Or is it a rediscovery of old values and a reinterpretation of them in modern terms?
One of the prime driving forces behind business has always been the desire of people – the business person and the customer – to improve their quality of life. People buy products because they believe they will improve their quality of life. Business people sell their products to be able to buy other products that will improve the quality of their lives. This basic equation is unlikely to change. Rather, what has changed is our perception of what constitutes quality of life.
The concept of sustainability aimed at creating a better, more sustainable way of life is in this sense, therefore, perfectly coherent with the underlying motivations of business.And the concept of a company with a social conscience is also nothing new. Before the days of the welfare state, many family companies including Philips cared for their employees and their families as if they were members of a large corporate family. And very often, as in the case of Philips in Eindhoven, the employees and their families were the surrounding community as well. In other words, the underlying ideas and motivations haven't really changed. As small companies outgrew their original situation, they were perhaps lost sight of. But now, it might be said that, as multinationals rediscover their role as the new “family firms” in the global village, those old values are being reinterpreted in the light of today's knowledge and in the light of today's needs and concerns.
To align management and business within Philips towards sustainable development, we need to be as consistent as we can, right across the board. We need to continue to increase the environmentally friendly character of our products and services, but we also need to make sure they that they focus directly on basic human values and qualities, advancing self-actualization for the individual and harmonious relationships in society, on both the local and the global level. And we have to achieve that with a high sense of ethical responsibility. All in all, that is no mean task. But if we take this challenge seriously, I believe it will enable us to give a deeper and ultimately more significant meaning to the phrase we have dared to adopt as our own: Let's make things better.
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