Innovation is integral to Philips Sleep and Respiratory Care

— that’s why John Frank is transforming the business

Philips Sleep and Respiratory Care’s strength — innovation — gives it a competitive advantage, but that doesn’t mean the road ahead will be smooth sailing, says John Frank. The business group is undergoing a transformation from a medical device company to a service solutions-oriented business that is more consumer focused.

“The success that this company has had over the years as a medical device manufacturer is well established, but we also recognize that what made us really successful for the last 40 years of making products, great products, that, in itself, is not going to be enough to get to the next level of reaching patient populations,” says Frank, business leader of Sleep and Respiratory Care at Philips, who first joined Respironics Inc. in 1993.

Philips bought Respironics in 2008 as part of the Dutch multinational company’s move to focus on health technology and shift away from industrial areas like lighting and television. Today, Sleep and Respiratory Care at Philips has approximately 1,800 employees in the Pittsburgh area, and the business, part of Philips’ Connected Care reporting segment, has annual sales of more than $2 billion.

In addition to transforming its business operations, Sleep and Respiratory Care is undergoing a physical change, and a large team will be moving into Pittsburgh by early 2020. That is the result of a move two years ago, when the company leased space in Schenley Place for 200 employees with design, marketing, digital software and advanced research expertise.

“We thought those were the four core key elements to put together in that location to see if it does, in fact, spark our innovation, build our network and, frankly equally important, enhance our recruiting ability to get more people engaged in what Philips does,” he says.

The experience was so positive that the company decided to move its entire organization of developers, marketers and business people to the Bakery Square area. Manufacturing and distribution employees will stay in Westmoreland County.

Iterate your way to success

Sleep and Respiratory Care focuses on patients with sleep disorders or those who need better sleep, as well as those with chronic respiratory insufficiency who struggle to breathe and require assistance. Among other innovations,
the company developed and commercialized the continuous positive airway pressure, or CPAP device, for sleep apnea and portable oxygen concentrators, which weigh less than five pounds and generate oxygen within the device itself.

“It’s in our DNA. It’s what we do quite well, and our belief is innovation happens only when you stay deeply connected to your core values, and that is staying very close to the markets that you serve,” Frank says. “It’s easy to say, often difficult to do. But our success is based on having very deep, deep insights — following the patient’s journey, following the pain points that they go through.”

To ensure that innovation continues, the research and development team at Sleep and Respiratory Care is the largest group of associates in the business, says Frank, who played a key role on the development team for many years.

“They’re in the center of what we do,” he says. “And that innovation not only occurs in developing new technologies, it also happens by our development teams who innovate new services.”

But R&D effort alone won’t get you to a final product; you have to iterate your way to success.

Frank says the company breaks it down into two buckets. Quest experiences focus on pilots and early experiences. Once the company knows a product meets a need and that opportunity can be served, the potential product moves into a commercialization process to develop and finalize the technology. And because there are always more opportunities than resources, prioritizing the right innovations is important.

“We have a very rigorous process,” Frank says. “We refer to it as our portfolio management process, where we spend a great deal of time as leaders vetting those opportunities, and understanding where they are in their maturity phase and where the customer or the environment that it will go into is.”

The market must be ready, which means considering the regulatory and compliance landscape, as well as the skill level of the target audience, to assess the timing, Frank says.

Adapt to the market

A key piece of innovation is knowing your market. Health care is changing drastically. The industry is moving patients to lower-cost care settings. The overall population is aging. Digitization, such as wearables that tell you how you slept last night, is increasing. And people want to be more involved in their health care.

All this means that instead of just making devices and therapies that are supplied and supported by physicians, Sleep and Respiratory Care is shifting toward consumer-targeted solutions with digital services that guide them to better care. For example, it debuted a smart sleep snore band at the Las Vegas Consumer Electronics Show in January, which recognizes snoring and gently vibrates to turn that person on their side. But that’s not its first foray into consumer-focused technologies; Philips has previous experience with products such as the Sonicare toothbrush.

Frank says consumers today are quicker to form an opinion, and often success or failure is based on a star rating as opposed to the effectiveness of your therapy.

“It’s the entire experience that matters to that consumer, and they are more than willing to give you feedback, particularly those who are highly motivated to find a better solution to their needs,” he says.

Philips also has stepped up its activities in software and data science worldwide — half of the company’s R&D professionals focus on this field, and Philips is among the world’s top three companies for artificial intelligence-related patent applications in health care.

Sleep and Respiratory Care is taking advantage of this expertise. With more than 6.4 million sleep and respiratory devices, the company has built a cloud-based infrastructure that connects back to insurance companies and physicians to help people stay compliant with their therapies. Philips would like to do this for other diseases in the future, as well, Frank says.

Bring everyone along

Creating digital networks and consumer-focused products requires a different level of expertise and know-how that has to be added to the employee base.

“It takes a lot of work, particularly when you’re healthy and growing,” Frank says. “You need to continue to support your core business and growth, while in parallel make the transformation to these new areas. And to do that in the company is easy to say, not always easy to do. They often require different processes, mindsets and, to some extent, a cultural shift.”

Frank spends a lot of time ensuring the people on his teams understand the direction the company is heading.

“You have to bring your people along. They have to share the same passion about the direction that you’re heading,” he says. “I can tell you that has been one key advantage that this business has had over the years. We have tremendous people who are highly passionate about the work they do. So, you need to paint for them the opportunity that’s in front of us, with the understanding that our success today is based on the history, but our success tomorrow requires a shift.”

Frank has found that people want to do important things, and he doesn’t like breaking up employees so that only part of the team is working on transforming the business.

“When you start to separate teams, you run the risk of alienating people who really want to be engaged,” Frank says. “We try very hard not to do that. In our early work, our pilot work, we may have a dedicated team who can work with agility and move fast, but once we know we want to go in this direction, we bring in the broader team to optimize the opportunity for success.”

While the customer always comes first — the company has customer and patient stories posted in the hallways, and each large team meeting starts with a testimonial — it’s even more true as you work through a transformation, he says. You cannot shape your vision without keeping that in mind at all times. Otherwise, you may veer from the path of what the consumer actually wants.

In a dynamic and shifting marketplace, you have to grind your way to success.

“I don’t know that there are many quick home runs,” Frank says. “So, what we find is that moving fast to iterate quickly to test, learn and adapt is the best way to evolve your way forward.”

 

Takeaways:

  • Stay close to your customer to spark innovation.
  • R&D is more than an idea; it’s a deliberate process.
  • Transformation and engagement go hand in hand.

 

The file:

Name: John Frank
Title: Business leader of Sleep and Respiratory Care
Company: Philips

Born: Washington, Pennsylvania
Education: Bachelor’s degree in clinical science, with a specialty in respiratory care from Wheeling Jesuit University; MBA from the University of Pittsburgh

What was your first job, and what did you learn from it? My first real job, I was an emergency medical technician. I worked many long hours in the back of an ambulance. I learned in a very rapid way about the first entry point of health care and crisis-oriented experiences. It’s probably where I first started to build my passion for helping people.

What’s the best business advice you’ve ever received? Stick to your core — do well what you do well — and try not to deviate.

How are you involved with the community? I’m on the Pittsburgh Technology Council Board. Members of our team here also are big contributors to the American Heart Association and March of Dimes.

Where might someone find you on the weekend? When I’m not working and traveling, I hope you’d find me with family. In this type of business, when you work long hours, the weekend is a time to step back, reflect and ensure you have a good balance. So, I’d be spending time with family, often that’s golfing and other activities — usually not at home.

Is there anything that people might find surprising about you? In my earlier career, before I made the choice to go to health care, I was a firefighter.