Philips Research, the Netherlands: Business creation and entrepreneurship
Philips Research is a research organisation whose mission is to invent technologies that will lead to consumer products. With the aid of Royal Philips Electronics, the parent company, it has founded the High Tech Campus Eindhoven in the Netherlands, a technology centre in which a range of high technology companies work together. Innovations form the basis of future products and lead to spin-offs like the establishment of new companies, which are supported by Philips. In fact, employees of Philips help to start up spin-off companies and often stay employed at the new enterprise.
Royal Philips Electronics is one of the world’s biggest electronics companies and Europe’s largest, with sales in 2005 amounting to €30.4 billion. In the Netherlands, Philips employs 25,000 people. The workforce is largely male-dominated, with men representing 80% of personnel. About 25% of the workers are younger than 35 years, and more than 35% of staff are 45 years or older. Trade union density is unknown.
Founded in 1914 in the southern city of Eindhoven in the Netherlands, Philips Research as part of Royal Philips N.V. has expanded the scale and scope of its activities to become one of the world’s major private research organisations. In 1999, Philips decided to concentrate the bulk of its research and development (R&D) activities in the Eindhoven region by creating the Philips High Tech Campus. The campus aims to develop into a centre for leading-edge technology; the clustering of research, development, process and production technology will be unique in Europe. Philips is investing a total of about €600 million in the facility.
In 2006, the campus had 5,300 employees. Exact figures regarding the composition of the workforce are not available, but more men than women are employed and the average age of the personnel is about 38 years. The intention is to employ 8,000 people in the future. Other technology companies have moved into the premises to work alongside Philips. Key technological areas that may be found on the campus include information and communication technologies (ICT), micro electronics, mechatronics, embedded systems, nanotechnology, the automotive industry and medical technology.
Description of the initiative
At Philips High Tech Campus, a diverse range of high tech companies work together to develop new technologies, from the concept through to prototyping stages. Innovations form the basis of future products and lead to spin-offs, such as the establishment of new companies. Philips fosters the so-called ‘incubator process’, during which analyses are made through desk and field research to determine if the incubator technology will be suitable to develop into a spin-off company. Philips encourages the establishment of such enterprises when technology incubators show that the new product can be marketed and will no longer fit the strategic scope of the Philips company.
Within the last two years, two spin-off companies have been founded: IREX Technologies B.V., which specialises in electronic paper applications by providing total solutions for portable electronic reading and writing; and Liquavista B.V., which was created to commercialise the market opportunities of ‘electrowetting’ displays. The latter technology offers mobile displays in vivid colours, with high video speed and exceptional viewing standards. Neither company fits the primary future strategic scope of Philips, as it focuses on developing or renewing electronic consumer products with the Philips brand as its core business. Nevertheless, Philips supports the spin-off companies by offering the intellectual property of the new technology and by giving the companies access to the Philips infrastructure.
Looking at the example of IREX Technologies in more detail, this company was founded in 2005 with backing secured from major independent equity investors. By 2006, the company had 30 employees, of which 11 staff members, including the chief executive officer (CEO), are former Philips employees. Philips continues to be one of the partners in the business of optimal techniques in electronic reading. In the process of setting up the new company, social dialogue took place according to national legislation, with employee representatives being given an advisory role.
Philips fosters a culture of entrepreneurship at the campus and facilitates the process of start-ups. Important preconditions are a sound financial foundation and a good perspective on market opportunities. Philips supports the task of finding investors for the spin-off company. If necessary, a team of experts can be engaged to examine market perspectives and financial requisites. As soon as a solid business plan is in place and financial support is secured, the process of setting up the new company can start.
The establishment of spin-off companies fits well into the concept of the High Tech Campus. The campus offers various facilities, a valuable network and R&D programmes in which knowledge and entrepreneurship can be combined. By supporting the launch of new businesses, Philips creates a win-win situation: new businesses will stimulate and attract other new businesses to the campus; career opportunities increase for Philips employees; and the local, regional and even the European labour market is strengthened.
In most evaluations of the initiative, the emphasis is on the economic value and financial benefits. However, the initiative is also valuable for Philips’ human resource policy as it offers opportunities in career planning and personal development, particularly for employees who are attracted to entrepreneurship and who want to develop their competencies in this direction. Philips’s terms of employment are not necessarily adopted in the new companies.
Exemplary and contextual factors
Since its establishment in 1999, Philips High Tech Campus has proven successful in attracting knowledge and existing and new business, and in becoming a local and regional promoter of employability. The knowledge and research-driven campus acts as a gateway to new and interesting entrepreneurship.
Anja Dijkman, TNO, Hoofdorp