Speech by Frans van Houten, CEO Royal Philips, at Bilderberg Conference in The Netherlands


Bilderberg Conference, Oosterbeek, The Netherlands,
6 February 2015

February 6, 2015

Spoken word counts


Ladies and Gentlemen,

 

Imagine that somewhere in the Netherlands a girl is born today. Let us call her Nova. In the next 18 years Nova will grow up in a fast-changing country. A country that is undergoing far-reaching social, economic and technological change. A country that has to redefine its identity and direction. And a country that has to find ways of maintaining and increasing its welfare and prosperity.

 

What will things be like for Nova and her family in 2033, when she is 18 years old? How will they work, learn and do business? What will be the essential features of our economy and society? And what choices will we have made in the preceding 18 years?

 

Before answering these questions, I would like to provide a sketch of the world in 2033. It will be a completely different world from today, as the global economy is going through the greatest and fastest transformation in its history. Emerging economies will play a more prominent role and will account for 60% of the growth of the global GDP. Countries such as China and India will double their GDP in 12 and 16 years, respectively. And of the 7,000 new large companies that will be established between 2010 and 2025, nearly 70% will be from emerging markets.

 

The center of gravity will also shift demographically to the emerging economies. By 2033 the world’s population will have grown to 8.3 billion, with 730 million in Europe and 1.4 billion in China as well as in India. The population of Africa will double to 1.6 billion and 30% of all children will live in Africa.

 

The expected economic and demographic growth will put more pressure on the environment and on our natural resources. Energy needs will increase between 2010 and 2030 by 33%, while demand for steel will grow by 80%, for food by 27%, and for drinking water by 41%.

 

What does this mean for the Netherlands? By 2033 our population will have grown by half a million to 17.5 million. However, whereas the proportion of young people will remain the same as today, the proportion of seniors will have gone up from 30% to 48%, with those aged 80-plus showing the biggest increase. The average life expectancy will have risen from 81.6 years in 2015 to about 84 in 2033.

 

The question, therefore, is how we will be able, with more senior citizens and a smaller working population, to pay for our infrastructure, pension system and social security system. We have already reached the limits of the distribution of prosperity and I foresee that by 2033 we will have called on the help of 1 million so-called knowledge migrants.

 

In addition to these demographic trends, I see a number of other changes. Technological developments will bring about a seismic shift in our society and economy. Current trends such as big data, driverless cars, virtual reality, connected devices and the internet of things will fundamentally alter our world.

 

How? In 2033, billions of devices will be permanently connected to one another. Personalization, for example with the aid of 3D printers, will be commonplace. Data connections will be free of charge, data will be the new black gold, and you will have to pay for privacy.

 

Furthermore, the power of hardware and software will be given a new dimension by big data and artificial intelligence. To give you an idea, this year computers will have more computing power than the brain of a mouse. In another seven years, it is expected that computers will outstrip the capacity of the human brain, and according to some forecasts in 2045 they will have more computing power than all people put together.

 

All of this will have a huge impact on all aspects of our existence. Think of research, health care, commerce and the arts. But also think of our own image of the human being, our relation with computers, and the way in which people interact with one another. This influence is already being felt and we should really come to a consensus on the possibilities, the limitations and the ethical implications.

 

Following on from this, I see robotics becoming an important pillar of our economy and society. Robots are currently restricted to production and logistics. But they are rapidly acquiring human skills and attributes, such as creativity, social interaction and empathy. In Japan, for example, robots are already being used to provide company to lonely senior citizens.

 

It is only a matter of time before robots are able to perform the work of a cashier, a truck driver, an accountant and a warehouse worker better, faster and cheaper. But doctors, bankers, pilots and managers will also be affected.

 

In other words, the middle class faces difficult times and a lot of people will have to undergo retraining in the next 18 years. It is difficult to say how, especially if you consider that 10% of the type of jobs that exist today did not exist 10 years ago. That raises questions about the nature of our education. In 2015 children are still learning mainly reading, writing and arithmetic, but in 2033 the emphasis may be on programming, artificial intelligence, robotics and data ethics.

 

You will understand that our economy will also be different in 2033. The dividing lines between sectors that we see today will have disappeared, there will be different business models and technologies, and the integration of systems and data will spawn innovation. Companies will provide consumers with personalized experiences.

 

And in response to scarce resources and environmental issues, we will have partly replaced the linear economy with a circular economy. Companies will design and produce with multiple use and recycling in mind, the ownership of products will be replaced by temporary hire, and products will increasingly be sold as services.

 

A last change relates to the well-being of humans. In 2033 we will live on average for 84 years, but we will have to increasingly deal with chronic diseases such as certain types of cancer and diabetes. In response to this, the ageing of the population and spiraling cost increases, we will have radically reformed the health care system.

 

Health care will first of all be personalized. In other words, it will be geared as much as possible to our own unique physical and mental condition, and the genetic make-up. Health care will also be provided as a seamless experience that begins with prevention and detection and ends with treatment and home care. By utilizing the possibilities of big data, we will standardize health care provision and contain costs. I also anticipate that by 2033 only a few people will have to be operated, as technologies will be developed that will make scalpels and incisions redundant.

 

It is difficult to say what impact all this will have on the Dutch economy. I believe, however, that in 2033 we will still be a prosperous nation and that in a few sectors we will remain absolute world leaders. I will discuss in a moment what I think is needed for this, but first let me give a more detailed depiction of what life could look like in 2033. How will people work, learn and do business? And what place will technology and health care have in their lives?

 

Let us look, therefore, at the girl that is born about now: Nova. In 2033 she will have just turned 18 and will be studying Robot Psychology, the science of the consciousness and emotions of robots. Nova will be living at home with her father Ben, an independent 3D designer, her mother Marjolijn, who works part-time for a large food producer in Wageningen, and grandmother Maartje, who is 85 and is enjoying retirement.

 

What, then, are the typical features of their life? Nova, for example, wears a Health Monitor that is woven into her clothing and continually monitors her vital functions, hormone balance and metabolism. In the last few days the monitor has seen that Nova’s heart rhythm is showing a slight abnormality and that her blood pressure has risen. These findings are automatically transmitted to her Health Coach, a former family doctor who uses remote patient monitoring to check the health of hundreds of people, thus helping them to prevent health problems.

 

The Health Coach looks at Nova’s recent data, analyzing this in relation to her genetic make-up, which were analyzed in detail a few years earlier. Armed with this information, the coach contacts a heart specialist and dietician and together they come to a reassuring conclusion, namely that gene therapy is not necessary at this moment, though Nova will have to alter her diet.

 

Then the mother, Marjolijn. Ten years earlier Marjolijn had been working as an accountant, but when robots began to be better and cheaper at doing this work, she retrained as a network designer. In her present role she is responsible for optimizing the value chain of one of the world’s largest food producers, based close to Wageningen. It is precisely this ongoing adjustment of the chain that is the strength of this Dutch company, which emerged only 15 years earlier from one of the university’s incubators.

 

While Marjolijn is at work, her husband Ben is busy at home on a 3D project for the open platform that he has joined for problem-solvers. The platform has received a commission from the military for a 3D bone implant that can be adapted to any soldier and that can be made with a bio-printer in case of an emergency. The bio-printer prints stem cells and manipulates them to create bone tissue, so that any fracture can be perfectly healed.

 

Finally, grandmother Maartje. The evening before, she finished third in a swimming competition, even though it is only a year since she was treated for liver cancer in the Antonie van Leeuwenhoek hospital. She received remote treatment from a specialist oncologist in Berlin.

 

The treatment involves treating the tumor with concentrated sound waves, which heat and destroy aggressive cells. So Maartje did not require surgery and was out of hospital again within a day. In the past year the oncologist has monitored her recuperation remotely, using sensors that were attached to her body during the treatment.

 

Ladies and Gentlemen,

 

Some of you will find the picture that I have outlined far-fetched, or it may have made you feel rather uncomfortable. But the mere fact that it seems improbable does not make it impossible. We only have to look back 18 years to discover how much has changed, because in 1997 we did not yet have smartphones, tablets and apps. We did, however, have dial-up internet connections, Google had just registered its domain name, and the Deep Blue supercomputer defeated chess champion Gary Kasparov. Philips was at that time a substantially different company, operating in fields such as televisions and launching the DVD, at that time a ground-breaking technology. Today, we are no longer active in that business. 

 

The question is not so much whether we can forecast the future, but whether we aspire to create a better future for our country. Whether we want to maintain prosperity for our children. Today’s changes are unavoidable and far-reaching and will fundamentally alter the quality of our life. Are we going to resist these changes or are we going to embrace the possibilities that technology offers in order to provide welfare and prosperity also for future generations?

 

If we do not do it, others will overtake us. So to begin with, we must choose to leave behind the safety of the harbor and to set sail to a new future. This requires courage, vision and perseverance. The courage, for instance, to aspire to be absolute world leaders in a number of new sectors.

 

What could this look like?

 

The Netherlands could, for example, be even better at feeding the world. The IJsselmeer has the world’s largest fish farm, Wageningen is the leader in the production of insects, and all our major cities cultivate their own vegetables. They do so in greenhouses, layer upon layer, using LEDs that replicate sunlight. We export these technologies, thus tackling global food scarcity.

 

Another idea. Dutch technology forms the foundation of the future delivery of health care. We enable other countries to provide integrated and personalized health care. Every person on earth – whether they live in a large city or in remote areas – has access to good and affordable health care.

 

Another suggestion: The Netherlands is an international center for virtual and real creativity. We are known for our tolerance, freedom and diversity, which means that we can attract unorthodox thinkers, artists and creative geniuses. Their fruitful cooperation leads to ideas that influence the second half of the 21st century.

 

Finally, another possibility. Dutch engineers monitor the dikes in all major delta areas. While tens of millions of people in Mumbai, Manila, Lagos and Karachi go about their business, we use remote monitoring techniques to check whether the dikes are still strong enough. We provide advice in real time to the local authorities, who can take appropriate measures in time.

 

Is all of this desirable? I’ll leave that up to you. Is it possible? That’s in our own hands. What is certain is that with vision and daring, more is possible than we think. Singapore is a good example. When that country became independent in 1965, unemployment stood at 14%, per capita GDP was only $516 and half of the population was illiterate. Now it is one of the most dynamic and prosperous countries in the world.

 

It is time for the Netherlands to develop the same kind of vision and ambition. An ambition for a new Golden Age, a Golden Age 2.0. An age in which we embrace innovation, technology and digitization faster than any other country. In which we use pension funds to contribute to the funding of start-ups. In which we have an inclusive and tolerant society that attracts highly educated and talented people. And a society that focuses on human welfare, and where people can develop in order to remain relevant in the labor market.

 

This kind of permanent development is necessary, also in industry. Companies like DSM and Unilever have already re-invented themselves several times and Philips too has recently undergone a radical change of course, fully committing ourselves to the HealthTech domain, because we believe that this domain offers so many possibilities.

 

In this way we are responding to a number of significant changes. Our health care system is under pressure from an ageing population and the rise in the number of patients with chronic illnesses such as diabetes and cancer. Healthy people are investing more and more in their health. And in not too many years it will be commonplace to analyze your personal health data. Moreover, developments in connected technology will make it possible to provide health care as a seamless service across the whole health continuum from prevention and diagnosis to treatment and recuperation at home. This makes health care more effective and more efficient. We believe that these changes offer us unprecedented possibilities. And we feel that it is our mission to capture them, and make a vital contribution to society.

 

A second Golden Age will also need a different economy and education system. Our economy should provide scope for entrepreneurship and excellence, while our education system should prepare children for a technological world. There is also an important role for politics to play by adopting laws and regulations and incentives to drive such developments.

 

Much is possible if all these elements come together. And I sense the urgency for our country to act in the short term. Inspired by previous cases, let us, for example, select a number of leading sectors and formulate ambitious targets for each of them. We should then create a co-innovation fund for these ambitions in an order of magnitude of a billion euros to be invested in research & development programs and entrepreneurship. The ultimate goal is to have in each sector an array of new exporting companies of a significant scale, as well as new jobs and new growth in a number of years.

 

Ladies and Gentlemen,

 

Like you, I worry about the state of the world. We face a number of major challenges. But I also see exciting developments which have the potential to increase the welfare and prosperity of our society. I am an optimist and believe in the potential of innovation and technology.

 

I appeal to you, therefore, to help in the building of a second Golden Age. This can, and must, be created. After all, this assembly represents the social, economic and political vanguard of this country. We owe it to our children to create together new perspectives and opportunities for the Netherlands. I hope I have been able today to inspire you to play an active leading role. Thank you.