Restructuring Philips

Timmer realized that Philips' poor performance could not be blamed on weak markets alone. Competition from aggressive Asian companies like Sony was intensifying especially in Europe. Philips was finding it hard to get its innovations converted into saleable products quickly. The company's manufacturing costs were high, and this put a lot of pressure on its profit margins.

The biggest problem was a highly bureaucratic corporate culture that was very resistant to change. Facing the tough challenge to change the company's culture, Timmer remarked, "You just can't change a deep-rooted corporate culture in one or two years. It takes at least five years or longer."...

By 2001, more than a decade had passed since Philips began restructuring. Timmer's Operation Centurion did not succeed in changing the company's bureaucratic culture. Boonstra's efforts too could not achieve a culture change. Now it was Kleisterlee's turn to fight bureaucracy in the company and bring in a culture that promoted teamwork. Kliesterlee called his initiative 'Towards One Philips' (TOP), and through it, he aimed to make Philips work as a single, unified company. Apart from bringing in a cultural change, the initiative also aimed to cut costs, develop a range of new technologies and products, and improve relationship with customers.