8 Lessons on Innovation, Brought to You by Philips and the LED

One of the classic (and most overused) images of innovation is a light bulb:


It’s only fitting, then, to look at 8 lessons in innovation by way of Philips’s 50-year exploration of LEDs – courtesy of the following excerpts from Fast Company’s March 2014 issue, from the article How Philips Altered the Future of Light.


photo by Kelvin Van Aelst

How did Philips take the LED to this point, and where does it go next? Which leads to another question: If the LED happens to be much more than just a better light–that is, if it happens to be an innovation, like the PC or cell phone, that alters the world in a significant way–what can it teach us about how big innovations happen, and why?

Screen Shot 2014-02-17 at 5.27.45 PMTo understand where the LED is going, it helps to understand where it came from. An LED is not a light bulb, really–it’s a light source, tiny and not much larger than a pencil dot, lodged deep within a larger package of plastic, metal, and glass that has been constructed to resemble a light bulb mainly because consumers still prefer a familiar, time-tested shape.

At the start, it is very difficult to predict whether a breakthrough can evolve into something that will actually change the world.

Screen Shot 2014-02-17 at 5.27.57 PMIf the LED wasn’t quite an innovation in the early 1990s, then what made it potentially revolutionary a decade later? Early on, the challenge for the LED, as with any fledgling innovation, was straightforward: It must do something either better, or cheaper, than the existing product it is trying to displace.

To look at the future of light in the mid-1990s was to see that the LED did neither. It was expensive, hard to make, dim. Yet even then, a few people saw the early trends and predicted that the technology might be able to achieve astounding gains, given the right amount of research, funding, and time.

Screen Shot 2014-02-18 at 7.13.00 AMIn the early 2000s, Philips believed that the product could only achieve scale or impact–the very definition of an innovation–if its manufacturing costs could be reduced and its quality greatly improved. The only way to get there was to gain one modest step at a time. Thus, Philips had to improve manufacturing processes, experiment with new materials, and make a host of improvements to help the LED surpass existing lighting technologies. And it had to imagine all the possible applications, no matter how small, because of a strategic reality: A radical new product will need to infiltrate markets at the margins before it can claim the center.

Screen Shot 2014-02-18 at 7.13.12 AMHow to bring the cost down further? How to do it faster? With novel hardware, it often requires the resources of a large company to support a product during the long haul preceding its mass manufacture. At the same time, government policy and funding often help push a breakthrough innovation into the market.

Philips demonstrated their LED bulb could now provide light that was just about as good as an incandescent and measurably better than a typical compact fluorescent. But the “cheaper” aspect was still a problem. Even in 2010, the prices of Philips’s 60-watt LED bulbs, at about $40, were still stratospheric.

Screen Shot 2014-02-18 at 7.13.24 AMHuman beings have a tendency to underestimate how long it takes for a ­scientific breakthrough to become a practical innovation. The LED, with origins in the early 1960s, has progressed only slightly faster. But what likewise seems true is that adoption rates can change quickly, just as they did with smartphones. As costs plummet and quality improves, a new technology can suddenly achieve an accelerating, global popularity.

At this point, Philips estimates that LEDs are improving by 15% annually in terms of light output while decreasing about 10% annually in cost. The main question now is whether consumers will refuse such a deal: a lamp that pays for itself in a few years in energy savings and lasts 15 years beyond the payback.

Screen Shot 2014-02-18 at 7.13.36 AMSo efficiency and economics can explain why LEDs will soon infiltrate our homes and offices–but not how the technology might subsequently evolve. The reasons behind the initial appeal of an innovation don’t predict the range of problems it will someday solve. The “second wave” of lighting will involve harnessing the “intelligence” these devices can contain–software and sensors that can allow LEDs to “understand” where light is needed, and at what intensity and color.

On Philips’s Hue LED concept, some light recipes already offer settings so users can “relax,” “concentrate,” and “energize.” The descriptions arise from Philips’s ­research on how settings in schools can improve student concentration, and how particular wavelengths have a relaxation effect. They’re not the whim of an app designer.

Screen Shot 2014-02-18 at 7.13.50 AMListening to Philips executives map out the future can lead to a realization: Older digital technologies–the Internet, for instance, or smartphones–accentuate the impact of newer digital technologies, such as the LED. Internet connectivity makes the product controllable by smart phone, but also endows it with a vast capacity for improvements.

Big data, the buzziest of recent trends, plays into the LED future, too. Because LEDs are controllable and connectable, they can follow instructions from remote sources. But they can also relay data back.

Screen Shot 2014-02-18 at 7.13.59 AMThere is a downside to every innovation, and LEDs are no different. What if your company’s main product is something that effectively never needs replacing? And what if it will soon become a low-cost commodity? Disruptive innovations don’t just disrupt markets or change the way people live; they disrupt old business models, too.

There seems to be a consensus within Philips that the shape, color, price, and functionality will soon make the LED device as common as the incandescent bulb. Yet there also seems to be a consensus that the market for the devices will rise steadily until about 2019 or 2020 and will then level off or drop from saturation.

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And what if the market isn’t quite ready for this? “You didn’t have an iPhone seven years ago,” Philips’s CEO for Global Lighting Eric Rondolat says. “You didn’t even know you needed one.” Technologies like the Hue LED strike him the same way. Soon everyone will know that a better light has been discovered, and that its benefits are there for the buying. “The world is moving fast,” he says with a shrug. It’s just a matter of time.

inspired by and adapted from How Philips Altered the Future of Light by Jon Gertner

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