Innovation requires not only money but also being ready to learn from mistakes and, above all, try again.
Trying to copy solutions that work well elsewhere is not always the best way to go. WBJ sat down with Filiberto Amati of Amati & Associates to talk about innovation and international expansion
Interview by Beata Socha
WBJ: Poland has not improved its innovation ranking position in years. Yet it is a frontrunner in many up-and-coming industries, like fintech for instance. What do you think the reason is for the continuously low innovation score?
Filiberto Amati: If we measure innovation in R&D spending, China is the biggest innovator in the world. Yet they do not produce a lot of patents. Fintech does not require a lot of R&D spending on the other hand. In order to make a country more innovative, you need to invest not only in R&D. Polish companies are not investing enough. But they are not the only player. Foreign investors are a huge driving force for innovation: in pharma and the tech industry. The government also plays a role. It should ask itself what the important industries and sectors are in the economy. If it’s agriculture, then invest in technology that helps agriculture. If automotive is important, why don’t we have a Polish automotive brand?
Do you think there is still room for a new brand in such an established and competitive business?
With the connected electronic car revolution, the whole market is up for grabs. Cars look the way they look because they are an evolution of horse carriages. The dominant design of a car depends on the internal combustion engine, which needs to be as far away from the tank as possible, as well as the system to transmit power and to cool the system. If you remove the tank and the combustion engine – like in electric cars – you can completely reinvent the way the car looks. This is the time to do that.
Can Poland really find a niche in the automotive market for its own internationally recognizable brand?
What Poland is missing is a clear brand on the international scene. But in terms of capabilities, it has all it needs. About 50 percent of German luxury car components are produced in Poland. The same with electrical appliances: Whirlpool, Miele, Siemens are also made in Poland. Poles know how to do things, they need to learn how to market them internationally: they need a brand message, a brand promise. The state obviously cannot do that, but it can enable entrepreneurs to do it. It could create a climate conducive to such innovation.
Which industries are the most inclined to innovation
Fintech is a no-brainer. The big fintech marketplaces will be Russia, China, Southeast Asia, and the United States. In Italy, when I go to a bank, they still don’t understand why I don’t want checks. People don’t need banks any more. They want all transactions to be done online. If Alibaba, where the Chinese buy most of their things, also offers a payment service and a credit card service, their banking service is right there. There’s a lot of talk about fintech in Poland. It is happening already. Warsaw is being touted as the new hub for fintech: the government supports it, companies are here, international investors are here. And there is proximity to Russia. Yes, there are some political difficulties, but it is also a great opportunity: everybody wants to be in the Russian market, but nobody wants to be in Russia. A two-hour flight from Moscow is actually a great thing for Polish companies.
One sector that surprises me is the food and beverage industry. You come here as a foreigner and you discover the huge range of Polish products that hardly anybody knows about outside of the country. Polish cheeses, Polish vodka, chocolate etc. The Netherlands is a smaller country, with less sunshine and a lot of land reclaimed from the sea, and it is a huge exporter of quality food brands. Why not Poland?
Poland needs better branding, more compelling stories, a more international approach. There is a sense of family in the food industry and Poland could use that to its advantage. There are plenty of brands with family traditions – these are very compelling stories that build brands. Last year, we witnessed a shortage of milk and butter in Western Europe, as well as soaring egg prices. Poland benefited from that. But it sold butter in bulk, unbranded. That is the issue right there.
There is a lot that can be done in the eco, organic segment. You don’t necessarily need to appeal to the mass market but accommodating a niche could be a good idea. Poland has at least 12 different seals of approval certifying a product’s Polish origins. Instead of looking at products in white and red, maybe they could go one step further and assess also how green it is. White and red can build patriotism, but you also need to build trust outside of the country.
So you think that the way to be more innovative is through exports and building stronger brands?
Innovation and exports always work together. If you have one, you’ll have the other. The moment you start producing certain things in a country, you develop know-how, technology, assembly lines. And Poles have been great at learning and assimilating new technologies. In order to become truly innovative, you also need to innovate for innovation’s sake. People leaving universities go to work in fintech, an industry that did not exist when they began their studies. Innovation is always connected with uncertainty. You need to dare, you need to take risks. And one thing that Poles, and Europeans in general, need to learn better is how to fail.
You need to be able to try, fail and move on having learnt your lesson from the experience. A company such as Netflix would never have existed if that motto wasn’t part of their culture. They tried so many other things that didn’t work out before they finally arrived at a concept that is there to stay.
Another thing that requires time and the ability to learn from failure is partnerships. Nike and Apple have been working together on wearables and they’ve become very successful on that front. But before that, Nike had a four-year partnership with Philips that ended in a fiasco. Nike learnt from that and went to Apple and together they did great things. Philips, on the other hand, shut down the initiative. Now, ten years later, they’re trying to get back in that game.
Are Poles more risk averse than other Europeans in your opinion?
No, I wouldn’t say that. There are a lot of microentrepreneurs and small businesses in Poland. They take risks all the time. But the problem they have is that they expect to see results overnight. In France, a new store signs a twoyear lease in a mall and after that period the concept is reevaluated. In Poland, if you don’t start to make a profit within three months, you get replaced with something else. It’s difficult to learn in that environment.
Do you think that the Polish tech industry can flourish without a strong VC market, like the one the
Silicon Valley has?
I think there is one market where the VC ecosystem works, and that’s Silicon Valley. Everybody who has tried to repeat the Silicon Valley model has failed: Barcelona, Lyon, Grenoble. Silicon Valley has been an obsession for entrepreneurs everywhere for 60 years. And not even San Diego, which is 500 km away, could replicate it.
You need to find your own model that works for you. And money is not the problem here: there are a lot of interested investors. Now we can see acceleration and incubation moving outside of the technology sector. Unilever, Procter & Gamble, L’Oréal and Metro Group are starting their own acceleration programs. Non-tech sectors or non-finance-driven sectors are looking to innovate outside-in rather than inside-out and that creates a great opportunity for entrepreneurs. So, if you have a great business idea for the food industry that you want to try, don’t reach out to a VC in New York who will have no idea what you’re talking about. Instead try to get accelerated by people who know the industry.
Filiberto Amati started his career at Procter & Gamble in Belgium in 1998. In 2005 he joined Auberon Growth Consultants and relocated to Amsterdam. He has worked for Gruppo Campari in Monaco, St. Maarten, Mexico and Brussels. In 2012 he created Amati & Associates, based in Warsaw, with offices in Barcelona and Amsterdam. Filiberto has a Master’s in Commercial Engineering from Federico II in Naples (1998), a MBA degree from IESE in Barcelona (2003) and in 2015 he received a DBA from the Institute of Economics at the Polish Academy of Sciences in Warsaw. He has published two books: “Co-creation: mystery solved!” in 2014 and “Understanding Open Innovation – A Primer” in October 2017.