Martin Goetzeler, OSRAM
Release Date: 2009-12-16
As an innovative company, Osram has changed a lot over the past 100 years. What have been the constant factors that were crucial for your success?First of all I think that we have always been driven by our passion for light. It is our core mantra, which in itself has always been motivated by innovation and sustainability. Even looking back at our advertisements of the 1920s, OSRAM’s message was one of energy-saving. Today we are one of the two leading lighting companies in the world and more or less the only pure lighting brand, and this can clearly be attributed to our focus on sustainability and innovation. When you think about OSRAM, you think immediately about lighting; we believe that to be a tremendous asset.
As one of the two industry leaders you have a very important role in not only driving innovation and technology but also in influencing the government policy that defines the framework for the development of your industry. How has OSRAM approached its responsibility for pushing for sustainability in the lighting industry?
What is important is that our whole product policy is driven by energy efficiency. There are two factors: energy efficiency and quality of light. At the moment the focus is on both of them, but over the past 100 years the main factor for us has been to drive energy efficiency. We are pushing very hard to give all customers a choice between a less energy efficient and a more energy efficient product. Having said this, it is clearly easier today for the government to switch towards energy efficient products because, unlike in the past, there are plenty of alternatives. If you look at incandescent there is more than one alternative. For example, we offer 3:03 CFLI which is the classical energy saving lamp, a product OSRAM invented in 1985; it is compact fluorescent with an integrated balance. Then there are the halogen energy-saving products and LED lamps. So there are essentially three alternatives to the traditional light bulb. Since we have this portfolio available are able to help the institutes who were working for the government to find more energy efficient alternatives to the current portfolio and therefore make the switch happen. This is our main support role; the other role is to advise on the right choice for energy efficiency and support it across the range of applications: not only in the consumer area but also in the professional area, that is street lighting, office lighting, etc.
The customer is very used it to the incandescent light bulb. How will such change affect the customer? And do you expect your sales of traditional light bulbs to go up over the next few months as people prepare for this change?
What we have done over the past month is communicate very intensively with the media. I have personally given a lot of interviews and we are communicating through the internet, as well as other media. Clearly after more than 100 years with incandescent, we need to get the information across to the customer that there are enough alternatives, that there will be light in the emotional and cultural factors attached to 100 years of incandescent overnight. We support the customer, showing them what the alternatives are and encouraging them at the point of sale to take a look at all the choices that they have. To be honest in the first half of this year we had a reduction in our sales of incandescent across Europe. In some units right now we have a kind of positive impact because people are buying in volumes. However, we continue to invest heavily in communication on the alternatives so nobody gets nervous.
Do you believe this is the first real shake up of your industry in perhaps 100 years as it redefines the relative strengths of the main players and opens up opportunities for new players?
Our sales of incandescent are less than 5% of total turnover. We believe it has an impact, albeit a limited one, and that we will be able to shift and create additional market share in the new segments.
We see that energy efficiency is the main focus of your R&D activities. What are your R&D priorities to realize your sustainability and energy efficiency ambitions?
With our portfolio we are supplying products across the whole continuum: starting with incandescent, then fluorescent and high-intensity discharge, we also have the largest portfolio of LED products and are starting to sell organic LED products. Currently the focus is on the latest technologies but we believe that we can significantly improve the efficiency of certain technologies like high-intensity discharge or even fluorescent. Therefore, we continue to invest here but the lion’s share of our investment goes into the new technologies: LED and organic LED. Overall we invest over 6% of sales into R&D.
How does that compare with your main competitor?
It is about average.
What is the impact that the change from inefficient to efficient light can have on overall energy consumption?
The total energy electricity consumption coming from lighting is 19%, which is a significant amount. We believe that by just switching from inefficient light to efficient light we can immediately save at least 1/3 of this consumption. That would lead to savings over 900 billion kWh electric power, if we were to switch right now. So we are talking about a significant reduction of global emissions of more than 450 million tons of CO2, which more or less equates to what a forest the size of Sweden (which is significantly bigger than Germany) can absorb. These are major impacts which will reduce the need for power consumption, which is why we definitely support all of the energy efficient programs of the government. For example, using electric balance instead of magnetic balance; or using lamps T-8 or T-5 instead of inefficient T-12 products. The same goes for street lighting and other applications and shifting from incandescent to energy efficient lighting solutions.
What is the role that China plays within your development strategy? And what is the contribution that OSRAM can make to the development of the industry in China?
China is one of our focus countries for several reasons. One reason is clearly the local market which we want to support and develop; the other is that it is our manufacturing and R&D base. We have been in China for many years now and today have five R&D centers and five manufacturing centers in the country. China plays a significant role in our supply chain, and is therefore a central focus of our activities not only for China but also in the Greater China region and partially for the US. These R&D activities will continue to grow and develop since we will need more and more products for the regional and local market which cannot be developed in Europe. We have also built up a small research centre in Shanghai in order to draw from Chinese talent and the universities there. We would like to begin research into the latest trends in other areas, such as metals and metal science for example. We believe that we need further activities in China in order to draw from the talent and benefit from the progress that we seen in the Chinese economy.
What are the main lessons that you have learned as the CEO of OSRAM from the cooperation with your Chinese partner and your activities in the country?
I would like to start by saying that I am very happy with the situation we have today in our Chinese factories. We produce OSRAM world-class quality products at these locations for the world market. We sell the majority of them locally but these products can also be sold around the world. It is through the dedication of the Chinese people that we have established successful factories, which uphold OSRAM quality levels over the last ten years. We are very proud of this and it is credit to the success of the Chinese workforce. Clearly there were professionals from Germany to support our development in China, but what I see today is world-class production, world-class productivity and world-class quality from our Chinese colleagues, who were determined to make it happen. Also on the sales side we have a very dedicated and loyal Chinese team. The best example I can give is that the head of this organisation, which is a major unit within my team, is Yasmine Tang, a Chinese woman who is running the show in China. She comes from the sales side and is a very dedicated and OSRAM-driven person. I am very happy to have her as the head of my organisation there, I am happy with out performance on the sales and production side, and I am thrilled that we are making good progress with R&D.
The Chinese government is committed to promoting energy efficient lighting though initiatives such as the green lighting campaign, which is supported by OSRAM. What is your perspective on China’s ambitions in this field?
The dedication of the government towards energy efficient products supports our own strategy; it is completely in line with what we want to achieve and therefore we are very happy that this program has been put in place. It is not just a one-time action, but a continuous one. Ultimately this is a win-win situation for us, and we will be able to support this initiative in China, and continue our success.
What role do the provincial and municipal governments play in driving this shift towards more energy efficient solutions? How do you work at these different levels?
I would like to say that it is important for us that our value proposition is as attractive and convincing as possible for our customers, even without government support. When you buy our energy efficient solutions as a professional customer – an industrial company or retail store – the savings and quality of light that you get you should offer a better value proposition. In certain instances it clearly helps to have government supports to drive energy efficiency, but clearly our goal must be to make progress regardless. The economic restrictions from various developments highlight the need to have the right products and the right value proposition. If the government supports a particular initiative it can really help to push it along, but it still has to be in line somehow, since without the report the government support will do nothing.
Of course, it’s better to have a business bottom line than to just say that “we’re green.”
That’s the point. At the end of the day it is a triple win situation: it benefits the customer, benefits the environment and at the same time the suppliers.
What can a country like China expect in the future coming from your side, which innovations are in the pipeline?
We were talking about the continuum of products that we have in our portfolio. We have certain technologies in HID which are still in progress but will be an interesting point for the government. Ceramic technology will be a major driver, but right now we are seeing LED technology penetrating lighting. This will continue over the next few years and will be one of the major factors in the advancement of lighting technology. I also know that the Chinese government is pushing to make progress in this field. This will therefore be the next major activity in OSRAM China. Although, as I said before, there are traditional and very efficient technologies which are still justified; for example the T-5 range are very efficient lamps, with electronic balance or ceramic lamps, which bring huge benefits because of their quality of light.
When you talk about China, you are talking about very large numbers – 1.3 billion people who are becoming increasingly educated and affluent. What is the role that China will play within your business in the longer term?
Siemens and OSRAM are committed and trustworthy partners in China and are moving forward. As you say the population growth, the trend towards urbanisation and the electrification of rural areas will all drive the need for lighting. The interesting thing about lighting is that it is a basic need; it is necessary in order to create reasonable levels of education. Normally, higher levels of electricity consumption correlate with higher levels of education. The government is determined to drive this development and this will force the market to grow overall, to the benefit of the Chinese people and the lamp-makers present in China. We are completely committed to this and will support it all the way; one of the reasons the Chinese market is so important to us is because there is still significant potential coming from urbanisation.
Is there anything else you would like to share with your Chinese counterparts, policymakers and business leaders?
I am very satisfied with how we have proceeded and where we stand today in China with our R&D, manufacturing and sales activities. I would like to repeat that we will be there to support the government in their plans for energy efficiency. We will be one of their major partners and together with our Chinese colleagues we will make it happen, simply because we are fully committed
| Company: | OSRAM |
| Position: | CEO |
| Country: | Germany |