There are many challenges and opportunities in the digitalization of the economy and the society
Dr. Roman Kužnar, head of Iskratel’s corporate startup program talks about what it means to have an advantage due to years of innovating on the market today, about where Iskratel sees the biggest potential in collaborating with startups, but also about their expectations for this year’s PODIM.
Finding advanced solutions, connecting with startups, investing in them … It seems that today, innovating is the key element of every established corporation. What is the advantage that Iskratel has due to years of focusing on innovation?
“Innovating in Iskratel has a long tradition and is deeply woven into its business model and operations. In our 70 years of tradition, we co-designed advanced solutions in the field of telecommunications, which were often technological novelties on a global scale. We are also following this mindset today, which enables us not only to exist on an incredibly competitive global market but also to make a breakthrough amongst the leading manufacturers in certain niches related to the digitalization of the economy and society.”
How much does Iskratel invest into innovating?
“Innovating in Iskratel is actualized in several forms: from strategic planning of the product portfolio, annual planning of the development of new products and solutions, to structured idea management and management of the ideas of employees and customers, and collaboration with startups and other companies. For these and similar forms of innovating, Iskratel dedicates about 15 percent of its annual sales revenue.”
“We are open to all startup initiatives“
Connections between corporations and startups, and various forms of collaboration between them are becoming increasingly popular. What forms of collaboration did you pay most attention to in the past, what did you learn from them and what, considering your experience, are you planning for the future?
“The corporate startup programme for collaboration with startups is one of such innovation programmes. We started to work more seriously on and became more structured about entrepreneurship and collaboration with the startup environment by founding the tech park RC IKT, where we offer accommodation for SMEs as well as business consultancy and mentoring for entrepreneurs and startups, from earlier development stages to the first prototype.
Because we are a tech company that primarily offers solutions to bigger providers of infrastructure services, such as telecommunications, traffic, energy, smart cities, the primary focus of collaboration with startups lies in the domain of developing B2B tech solutions for digitalizing such industries. The initial investments for startups, which come in the form of an equity investment, especially in the development stage, from the prototype to the commercial product, are intended to encourage project collaboration between Iskratel and startups, be it in the field of developing new products or developing new business opportunities.
Once the product launches, our collaboration is mostly focused on the industrialization and commercialization of the product, in the form of ensuring manufacture, offering bridging liquid assets or opening new markets.”
How many startups for partnerships are on your radar this year? After all, current activities show that an incredibly lively startup spring is on the horizon … that entrepreneurial activity is better than it has been in a long time?
“Iskratel is open to all business initiatives if we recognize the value added for both sides, the corporation as well as the startup company. We do not have a set limit regarding the number of new startups that we wish to collaborate with.
The limitation is actually the reality of the current startup environment in the broader Alps-Adriatic region, where the startup business mentality is focused more on offering solutions for consumer markets, and less on creating tech solutions for more demanding B2B industrial segments.
Maybe we are too ‘picky’ in Iskratel, which stems from the high criteria that we set in the development of our own solutions for global markets. From the previous experience of collaborating with startups, we have learned that the expectations of startups are often too optimistic when it comes to quickly launching to the market and generating revenue, while their assessment of how much needs to be invested into finishing development, industrialization and commercialization is often underestimated.
That is why we are slightly changing our way of collaborating with startups. Before giving an equity investment to a startup, we first wish to establish project collaboration, be it with a pilot, maybe by jointly addressing a concrete business opportunity on the market or through development collaboration. If we are talking about numbers, this means 2 to 3 new collaborations with startups a year.”
Dr. Roman Kužnar: “The development of a new product needs to be based on the actual need on the market, which means it is necessary to continuously test your assumptions, the starting point with the customers.”
The past few years have brought lean and agile approaches to Iskratel, mostly because of collaboration with startups and, to a certain extent, the introduction of their business culture. Is the company transformation calming down now or is it still happening intensely?
“In the business startup world, there is oftentimes the pervasive mindset that startup companies are quick, agile and lean, while corporations are slow and work according to certain established processes. Such observation is definitely true to a certain extent. But once we come to the development of a new product for the market, the laws are more or less the same for one and the other.
The development of a product needs to be based on an actual need on the market, which means you need to continuously test your assumptions, the starting point with the customers. Once you decide to develop a new product, you need to ensure the effectiveness of the process and costs. When we analyse the differences between how corporations work on the one hand and startups on the other, there is a difference between the wealth of information that a corporation versus a startup can get from the market as well as in how effective is the process of offering high-quality products for the market. Iskratel has comprehensively restructured itself over the past couple of years.
A few years ago, we started introducing lean and agile development methods into the development process, we are now further transforming business processes and the organization. This year, the company has passed from a horizontal functional organization into a vertical business organization across its operating units. The corporate culture is definitely changing in the direction of increasing the startup mentality, where the main player is competitiveness on the market, dictated by the market offer, customer needs and cost effectiveness in developing, industrializing and commercializing products.
Of course, we aren’t turning corporate culture and processes upside down. Since we are still working on the markets of incredibly demanding B2B customers, it is crucial for us to keep the company robust, which is reflected in the effectiveness of our processes and the ability of the company to ensure, in set deadlines, cost-effective industrialization and commercialization of a high-quality product that has come from the development laboratory.
We cannot claim that collaboration with startups has brought about this turn in the company, because the transformation of Iskratel from a traditional producer of telecommunication products into a provider of ICT solutions for digitalization of industries has been happening for more than a decade. But the collaboration has definitely contributed towards a faster and more effective transformation of the business culture, as a whole but also on the level of individuals in the company.”
We wish to address “safe city” challenges
Iskratel is a PODIM partner and the event in May will offer you, corporate partners, an important novelty – PODIM Genesis, which will be a whirlwind of innovation and collaboration between established companies, startups and scaleups. What are the key domains where you want to look for breakthrough innovations?
“We see the biggest potential for collaborating with startup companies in the domain of product design, solutions and business models for industrial verticals in train and road traffic, energy and smart cities. We are facing digitalization challenges, which demand not only a robust, virtual, cloud ICT infrastructure, but also data collection from a variety of devices on the one hand, and apps for the final users on the other, who make sense of the mass of useful data through various services, turning analytics into a useful value offer.
We think that there are many opportunities and challenges in the fields of designing IoT solutions and user apps for final users. We wish to collaborate with startups that recognize such opportunities and challenges, and suitably address them with suggestions for solutions.
If we are a bit more focused on the PODIM Genesis challenge itself, we would like to address ‘safe city’ challenges, that is, how to comprehensively solve the challenge of ensuring a high level of safety in cities, including early recognition and lowering of various safety risks, such as environmental risks, natural disasters, terrorist threats, bigger accidents, the effectiveness of public service announcements regarding the risks and accidents, ensuring bigger safety for citizens, visitors and tourists, ensuring effective ways of accident notifications, ensuring short reaction times and coordinated work of various operational services such as rescue workers, police, firemen, civil protection, civil initiatives …”
And what is your message for startups, scaleups and other business partners in Maribor this year?
“There are many challenges and opportunities for the digitalization of the economy and the society. Iskratel addresses them by ensuring reliable, highly available ICT platforms and solutions. We wish to collaborate with startups that can make sense of such challenges and opportunities, and create useful value added for the final users and a sustainable business model, be it by creating useful data (IoT devices, sensors, attenuators) or through the innovative use of such data (mobile and online business and user applications, business analytics …).”