Thursday, March 12, 2009

Systems thinking applied to service-oriented Philips Lifeline - SDM Pulse, Spring 2009

By Joshua A. Hanson, SDM ’08
Joshua A. Hanson
SDM ’08

Technology is just the beginning of the business at Philips Lifeline. Our product, the Personal Help Button, is inextricably linked to our service—a national call center that stands ready 24 hours a day to help more than 700,000 seniors maintain their independence.

Systems thinking is critical to this business model, best described as a product-enabled service (the equipment is leased and a monthly fee is charged for monitoring and support), because the product design and service design are truly interdependent.

As a product designer for Philips Lifeline, my role is as much about facilitating diverse groups of people (seniors, caregivers, call center staff, etc.) to create a network of personal safety as it is about designing a physical item. The goal is not to design products alone but to design meaningful service experiences. SDM’s comprehensive set of tools—involving systems thinking, design optimization, and leadership—are helping me to take on the interconnected and multidisciplinary nature of product development in this company.

Philips Lifeline is focused on health care, which means that compassion is as important as engineering principles in my job. I have visited dozens of homes to expand my field of vision into the everyday lives of the senior population. In the environment of a client’s home, I am able to witness the latent problems that focus groups are unable to uncover. Cognitive decline, macular degeneration, arthritis, and other issues can all affect how seniors interact with the devices that support their independence. I have found that such direct customer interactions are critical to understanding the linkages and dependencies that exist between our customers and the Lifeline product/service system.

Even something as trivial as how easy the packaging is to open ripples across different areas of the business, affecting cost (assembly time and shipping costs), customer satisfaction (arthritic hands hate scissors), and profit (monthly subscription fees don’t start until the product is opened and installed).

Similar interdependencies emerge around more thorny issues, such as liability, regulatory compliance, privacy, usability, etc. In all these cases, small design decisions have big impacts on seemingly unrelated parts of the business. As our offerings grow from single products to an interconnected suite of products and services, it becomes more and more difficult to understand and build the complicated feedback loops that mediate these relationships.

So, is the antidote to systems of growing complexity to strive for simplicity, as Philips’ corporate motto—“Sense and Simplicity”—suggests? That’s not always possible. Fortunately, the SDM course in system architecture, a core requirement, has provided me with mental frameworks to both understand and manage the complexity of home health-care systems. One straightforward example given in class is to imagine a paragraph of text without punctuation or spaces. It’s simpler (fewer characters) than a well-punctuated paragraph, but it is far more difficult to read. The point is not to reduce complexity at all costs but instead to use system architecture principles to reduce “complicatedness” and present an image of the system that reduces ambiguity. As guest lecturer Victor Tang, ESD PhD ’06, former vice president of IBM China, put it, “Complexity is like cholesterol; there is good cholesterol and there is bad cholesterol.”

Innovation in a caring culture
In 2006, Lifeline Systems was acquired by Philips Electronics. This merger prompted a strategic shift in Philips’ focus into the home health-care market and exploded Lifeline’s innovation possibilities with the backing of the entire Philips research organization. Lifeline is now effectively positioned as the future hub of a complex network of interconnected products and services centered on helping seniors and their families to manage their own health and well-being from home.

For the first time, rapid product innovation is part of Lifeline’s strategic mission to increase growth. And yet the old way—a rigid departmental structure, a fixation on incremental improvement, operational excellence, and caring—remains. Quality demands repetition, focus, and repeatable results. Innovation, on the other hand, encourages uncertainty, risk, and a suspension of disbelief. How can we foster innovation while maintaining the culture of caring and quality that our customers have come to trust their lives to?

Luckily, during this transition I was able to take SDM’s class in organizing for innovation. The answer to this
quality/innovation dilemma that emerged during the course lectures (and the last three years of successes
and failures at Philips) is to move away from a rigid department structure and adapt a matrix organization reliant on project teams. Pulling people together from every department forces increased communication
between isolated groups, fosters a shared sense of purpose and allows a well-coordinated plan of product/service development.

Ultimately, I have found that while simultaneously being an MIT student and a Philips employee has its stressful periods, the relationship between the two is very rewarding. The two create a mutually symbiotic relationship; Philips becomes stronger as a result of the broad cross section of SDM tools and approaches that students are exposed to, and the SDM program stays relevant to industry through the real-world problems brought into the program from Philips and other businesses.

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