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Innovation and Creativity Conflict, Power and Politics, Case Study Example

Pages: 2

Words: 536

Case Study

Philips NV faced stark challenges in the late 80s and early 90s. Unfortunately, these challenges presented problems that Philips was unable to negotiate well because of certain organizational factors. Some of the challenges and solutions are investigated here.

The first factor was Philips organizational deficiencies. The other was Philips inability to adapt to a global marketplace. Both of these problems were co-factorial in the failures the company endured. Although a differentiated leadership had always been the status quo at Philips, it was the force of decentralization that contributed most to its decline in the late 80s and early 90s. Furthermore, Philips failed with its videotape brand because of problems with its innovation schema. These are some of the places where organizational deficiency and an inability to adapt to a global economy caused such profound loss to Philips.

Although people like to hear about linear causal relationships, the organic nature of the marketplace makes such explanations insufficient to remedy problems. The solutions that Philips itself had begun are only a starting point for resurrecting the health of the company. Restructuring and cost reduction were a step in the right direction, but they probably did not go far enough. One measure that could have been taken was to reduce the size of the administrative body in the Netherlands. Certainly, steps had been taken to reconsolidate international power within the Dutch division, but even they were not necessarily enough. A fragmented leadership and strategy made for a weak company.

What Philips needed to do was to seal the disparity between administrative and technical branches of its leadership in order to capitalize on the market climate. For example, had there been more cooperation between administrative and technical sectors, the Philips videotape brand may have won out over its competitors’ brands. Many analysts believe it was a case of the market choosing the inferior product. The reason this occurred was because the American division failed to champion their videotape brand to the American public that, for whatever reason, marginalized it into obsolescence. Unlike 3M, a company that had come to nurture an innovation process that became the hallmark of its strength, Philips only carried the ideal part way. They engineered a better technology but did not follow through with a marketing plan that would have helped buoy it against other similar technologies.

The impact of these disparities went a step further yet. Because of fragmented leadership – both ideologically and geographically, the company at large was unable t consolidate the strength necessary to compete in a globally integrated marketplace. In other words, Philips had a great team with great talent, but they could not move forward with any game changing initiative because each player was working from a different game plan. In times of distress, decentralization may become a competitive strength, but when a decentralized leadership is faced with a juggernaut competitor, they become ineffectual at rallying against the competition. It is the difference between a car racing against another car and swarm of butterflies racing against a car.

The challenges that Philips faced in the late 80s and early 90s proved to be profound blows because of certain organizational factors. The factors of two major problems and their solutions have been investigated and presented here.

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