Frans Van Houten was always considered a “company man.” After all, he started working at Philips, the giant Dutch conglomerate, right out of college. His father also had a long history working at the company, including a stint on the board of directors. So it was no surprise when Van Houten was tapped to be CEO of Philips in 2010. But once he took charge, many people were stunned that he completely restructured the 126-year-old company, selling off its legacy television, appliance, semi-conductor, and lighting businesses. His goal was turning Philips into a pure play healthcare enterprise.
“For me it was a deep-felt conviction that we needed to get ahead of the game,” he tells Fortune, “because an innovation company only is in demand if you bring something meaningful. And so that was so much ingrained on my mind that from the get-go that was the number one mantra. And the first decision I took was to get out of televisions.”
Today, Philips’ $18 billion in revenues come from everything from consumer products like toothbrushes and bathroom scales to healthcare software and MRI scanners. Van Houten says it was a challenge making the pivot and leading Philips’ 114,000 employees to embrace all the changes.
“That was not easy. It takes a lot of dialogue and sometimes also some friction, and not to be afraid of having a fight because in the end progress only comes through friction,” Van Houten explains. “And for the people who don’t want to be part of it, that’s okay. Let them go elsewhere. For the people that want to be a part of it, let’s promote them into that team that is at the top of the company and start plotting this course towards a great future.”
Watch the video above for more of our conversation with Van Houten.