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Putting Poland On The Innovation Map

Raffaele Buompane shows us the innovation landscape of a country that is emerging as a leading player in the entrepreneurial arena

Over the last 20 years, Poland has experienced a remarkable transformation to become one of the wealthiest economies in the EU. The country’s financial accounts are expected to recover from the contraction experienced in 2016 and to bring the national GDP growth from 2.7 percent to 3.2 percent, which is closer to the 4.5 percent average level since 1995. All this owes much to the level of investments, which are steadily increasing, and to the private consumption, which remains one of its internal key drivers.

The political situation of Poland, (a member of the EU since 2004, but not the Eurozone) has partly protected this nation from recent economic turbulences at the continental level leaving the country free from using adjustments on interest rates in order to increase exports and improve its financial growth. Furthermore, over the period 2007-2013 a funding of approximately €87 billion (€67 billion Structural Funds and the Cohesion Fund, and €20 billion for agriculture and fishing) have been injected into the Polish economic landscape. Together with the national contribution, which amounted to approximately €18 billion, the country’s total budget reached €108 billion; in infrastructure networks (transport and energy), SME competitiveness (research and innovation), environmental protection and low carbon economy, social inclusion and labour market participation.

However, recent political decisions on social and labour themes (like the lowering of retirement age, the free tax allowances and free medicines for elderly people or the monthly child benefit of 500 zlotys (approx. €119) are expected to create an increase in the deficit of the national budget. \

This favourable economic situation is reflected at the entrepreneurial level by the number of new companies and startups, created over the last decade in the country. The number of IPOs registered at the Warsaw Stock Exchange is higher than any other market in Europe. The country’s high engineering and IT intellectual capacity, a result of its excellent academic institutions, played an important role in shaping this landscape.

The indomitable spirit

Poland is a good example of a dynamic economic ecosystem which presently needs to organise and interconnect all innovation stakeholders to more proficiently face all the challenges and opportunities that may arise in the future.

Certainly, historically it has not always experienced the same levels of prosperity and societal welfare, but the national spirit always survived - it was divided seven times among neighbours. Poland suffered tremendous damages during World War II, especially at the social level, losing not only one-sixth of its total population, but also its most young, active and educated citizens.

During the post-war years, the communist-oriented governments nationalised all remaining business activities forcing the population to improvise and be creative in establishing small commercial activities. This was probably the period in which networking became a common practise among the people and a new entrepreneurial spirit, based on private initiative, took root.

This attitude, forged over years of financial difficulties, saw society flourish during democratic transition of the nineties. Newly accessible foreign markets opened to the expanding economy and small businesses played the major role in the import of goods into Poland. Differently to other ex-communist countries, state assets were not involved in the creation of wealth, and a more typical western business class composed by small entrepreneurs later created small financial empires, especially in the services sector (telecom, insurance, pension funds).

Entrepreneurs certainly took advantage of the initial period in which state regulations were not as quickly written and applied to growing businesses. At the beginning of the new millennium, bureaucracy fought back and as the Polish market became more mature, most of the previous favourable business opportunities were no longer available. With the injection of about €10 billion from the moment of accession to the EU, Polish governments certainly planned to not only promote entrepreneurship, but also to better mandate and administer the market. The consequence of this was a quick, but perhaps unbalanced, creation of a competitive startup industry in a fraction of the time it took other western countries to build similar ecosystems.

The innovation way

From the moment of its accession to the EU, Poland has been continuously implementing a series of economic and social reforms which, over the period of a decade, transformed its economic landscape and put the country’s index on par with EU standards, making Poland one of the most advanced states in the continent.

Despite this rapid and successful progression, however, it still faces some specific challenges in terms of improvement of innovation and an increase of R&D public spending. Until recently, the government showed a high level of interest in this arena, taking measures to rectify previous incongruences. Several financial tools have been deployed by the state to upgrade academic infrastructure and to encourage research with the aim of creating new bursts of innovation all over the territory and to facilitate new entrepreneurs to create international connections, beneficial to the entire national innovation ecosystem. New strategies, fine-tuned to present international conditions, have been discussed and, in some cases, adopted, aiming specifically at ensuring an overall efficacy of new and existing initiatives that foster innovation.

Geographical dispersion and innovation

Despite the fact that the innovation ecosystem in Poland is quite varied across its different cities (the two leading centres in the country are Krakow and Warsaw), one finds that smaller cities like Pozna?, Wroc?aw or Gda?sk play an important role.

Depending on the location where an entrepreneur is operating, different approaches are possible. Networking and a close level of interaction is registered in more compact geographical realities like Krakow or smaller centres, where leaders in these communities effectively support each other. Thanks to this, innovation communities in these areas are passing from an initial stage of ‘ideas generation’ to a following stage, where several companies profitably project themselves into the market. In Warsaw, the size of the city and the dispersion of its innovation kernels over a larger area makes contacts and interactions relatively more difficult. The opening of a Google Campus in the Praga district of the city in 2015, with a coworking space, various event areas (campus café, main space, etc.), and even residency, seems to have partially solved this uneven distribution, creating an aggregation centre for all entrepreneurs, especially young ones.

Eventually, and in a more simplified way, it is possible to categorise Krakow as more technology centred (EBN’s member Kraków Technology Park is a good example) and Warsaw, as more business oriented.

Innovation and human capital

Without doubt, human resources represent an essential component of an innovation ecosystem and a clear driving factor for innovation. In Poland, as in many other countries, the success of startups is clearly connected to the level of technical academic institutions preparing future entrepreneurs for their access to the business world. To this aim, Poland may well be considered as one of the best examples in developing engineers and PhDs on a mass scale when compared to the EU average.

Additionally, what appears immediately clear is that human capital, on a whole, is quite well used in Poland. Furthermore, it is often the case that other European countries pick skilled workers from this country whenever possible to outsource jobs. In contrast to the rest of the continent, Poland enjoys a majority of young, dynamic potential entrepreneurs with no fear of falling and, on the contrary, ready and prepared to stand up again. The mediocre attractiveness of a secure monthly paycheck is not that important among the younger set in Poland, and this sets a good tone for entrepreneurship to succeed.

A brand new innovation vision

With the realisation that past public subvention of the private sector for improving innovation did not work as efficiently as expected, recent Polish governments have been exploring new opportunities to better utilise these funds. Transforming the country’s vision of innovation while scaling up in global ranking is a serious and engaging task, which includes a general re-shifting of the internal economy towards an unedited nnovative conception of creation, production and commercialisation of products, processes and services. None of which can replicate or mimic the ones already present in international markets but represent new and original offers and opportunities. 

What should we expect for the future of the Polish innovation ecosystem?

All scenario analysis by economic institutions and organisations at the continental level show a possible future progression of the Polish start-up ecosystem, but critical points need to be addressed in the short term. As the evolution of an existing innovation ecosystem depends on a combination of factors connected to local capacity and international connections, it is vital for Poland not to concentrate on differentiation of its entrepreneurial offer, but to focus on industrial complementarity to other important global innovation hubs. Outward-looking Polish companies, which have been operating in a safe internal environment, must be aware that they will face fierce competition and that their weapons to win would be original innovation and brilliant entrepreneurship capabilities. 

On the other hand, the evident potential of the innovation ecosystem in the country is clearly an expression of an entrepreneurial class with stimulating ideas and a strong innovative mindset. Yet an improved level of communication and cooperation among innovation stakeholders in the various regions (voivodships) seems to be necessary for them to more efficiently access foreign markets, to benefit from improved industrial practises and more updated innovation models. Central and local governments, as well as corporations and ocal entrepreneurs have to play an essential role in this evolution in order to make Poland ready for future economic challenges. To this aim, a more effective inclusion of them into an EU system facilitating innovation stakeholders, like the EU|BIC EBN ecosystem, are a vital and beneficial step towards a better organisation of all internal innovation structures, as well as representative of a clear element of progress towards more factual integration at the continental level. With these measures, Poland will continue to grow… 

Strengths 

  • Highly educated workforce
  • Technical education (engineering) •
  • Life sciences
  •  Cost of education not so expensive compared to other leading economies
  •  Workforce conversant in English 
  • Low cost of living
  •  Lower cost of doing business
  •  Favourable political support
  •  Psychological aversion against communist models gears towards a more modern entrepreneurial culture 
  • Need for progress is clear from its leadership and younger generation 

WEAKNESSES 

  •  Lack of policy infrastructure
  •  Consistent IP policy at national level missing
  •  Homogeneous use of IP rights at national level missing 
  • Not enough understanding of national and international patent systems 
  • Insufficient technical transfer
  • Technical transfer training in university mostly missing
  • Technical transfer training is needed 
  • More transnational funding needed
  • Professional training for entrepreneurs mostly missing and strongly needed
  •  Governmental seed funding not sufficient to cover the request coming from the entrepreneurial class
  •  Insufficient links between public and private sector in terms of innovative and ‘visionary’ joint initiatives • The support to entrepreneurship is still lacking a common qualitative standard like the EU|BIC certification 

OPPORTUNITIES 

  •  Economic support available
  •  Numerous investors ready to commit capital in the country
  • Government spending also focused on development of economic infrastructures
  •  Entrepreneurial class ready to evolve and step up their activities for financial improvement
  • Local entrepreneurs already operating successfully and globally, starting new businesses in the country, with local workforce and technologies
  • Young population already educated to assume calculated entrepreneurial risks could be better enabled with the creation of more specific certified support structures like EU|BICs 

Threats

  • Focus on entrepreneurial differentiation keeps on being prominent as complementarity can yield higher rewards 
  • The coordination among stakeholders in the various regions of the country remains insufficient
  • Entrepreneurial learning curve still too flat due to insufficiency in technical transfer training
  • The present level of IP use may represent a factor of weaknesses of the Polish ecosystem when facing competitors or creating synergies at continental and global level
  • The links between public and private initiative will maintain their present incoherent relationship
  • The present situation concerning support to entrepreneurship will continue missing a specific standard respecting qualitative criteria like the EU|BIC ones 

The innovation ecosystem

In conversation with Piotr N?dzewicz, Maciej Nowak and Ewa Koci?ska of Poznan Science and Technology Park.

What do you think is driving innovation in Poland?

VC with high risk capital, startup and big companies cooperation programmes, acceleration programmes with involvement of big hi-tech companies, scale-up initiatives are helping change the innovation landscape here. National subsidies as innovation support is one of the key aspects of the current Strategy for the Responsible Development elaborated by the Polish Ministry for Development. Certainly, best European practices serve as inspiration.

How is human capital contributing to the success of Polish startups?

Multidisciplinarity is crucial: a complementary team consisting of people who know the technology and who are able to promote and sell it. We know cases of companies that can build a good product, but to be active on the market they must be able to build good relationships and provide revenues. A good case for hightech startups is the relationship between the researcher and the sales team which is usually quite difficult to achieve.

Give us an idea of the international landscape when focusing on Polish startups and entrepreneurs.

They take advantage of the networks (e.g. Enterprise Europe Network) and successfully apply these to SME instrument (Horizon 2020). They provide a strong technology base (programmers, scientists, engineers) and they cooperate with international companies in this field. Some startups present a global perspective, when modelling and launching their businesses (e.g. targeting international markets or attracting foreign specialists). 

How can Poland benefit from looking at international innovation and processes? 

Poland can provide well-educated researchers and entrepreneurs who are eager to learn how to build successful business models based on international networks and their technology. Our startups want to cooperate with international companies and institutions to develop products and technologies. Startups need knowledge on how to protect their solutions in the global market and how to find European partners. 

What are some of the similarities and differences between the startup ecosystems in Europe and in Poland?

There are no major differences between European and Polish startups, perhaps only in the confidence levels. Some Polish startups, especially those representing Generation X, may put mental limitations on their own businesses, therefore missing major business opportunities. So the only difference is that startups from Western Europe are more open to different business cultures and therefore find it easier to build relationships.

How can Poland leverage its international relationships?

Polish startups have a strong research and scientific background, but to achieve business goals there is a need for a science and business partnership (at least at the European level). Business support institutions should facilitate the establishment of such relationships. Incorporating this process with investors and businesses will enable them to develop solutions they need and deliver on business goals.

What should we expect for the future of the Polish startup ecosystem?

Polish startups should cooperate more frequently and compete more effectively on the European market. Increasingly, there are international consortia consisting of entrepreneurs, universities and business support institutions (including science and technology parks). This builds the base for more efficient technology transfer at the European level, better access to wellqualified professionals (programmers, chemists, engineers) and other technology providers. We shall also expect the startups to cooperate with big, wellestablished and international corporates thanks to numerous acceleration programmes being currently implemented in Poland.

Can you think of some specific advice for improving the evolution of the startup ecosystem in Poland?

We should be aware of the benefits of international cooperation in the ecosystem of startups in Poland and not to limit ourselves to the domestic market. We operate in the European Union, so competition, technology and market needs should be directed to the European market. The need for cooperation between science and business, on a European scale, is one of the main goals in building a more effective ecosystem. 

Can you mention some particular good examples of entrepreneurship.

There are several companies worthy of mention. Brainly: It's a place where students ask questions about specific issues and receive answers from other students or experts in the specific field. Booksy: a tool for service businesses and their customers that allows people to quickly and easily subscribe to the calendar. Livechat: a tool created by the Polish company which is used to communicate between the owner of the website and the people who visit it. Brand24: which is used to monitor the internet and social media. This allows people to react quickly to their business listing, as well as in-depth market research and customer behaviour. Estimate produces beacons, or sensors for precise geolocation, mainly in rooms. Growbots is a tool for automating the sales process, the so-called ‘lead generation’. Dice+ is the producer of an electronic game die that allows the user to play board games on a digital platform. The dice contains software dedicated to iPad devices and works via Bluetooth. There’s Legimi, one of the first internet services in the world offering eBooks on a subscription basis. Jak dojade, a modern urban transport connection browser aims at facilitating travel around the city.

KTP kicks off

A view of the innovation ecosystem in the Krakow Technology Park. In the first two decades following the 1989 collapse of communism in Poland, quick economic development was possible thanks to the exploitation of simple growth factors, including the available resources of cheap labour, a large internal market, and an inflow of external capital (through foreign direct investments). At the time, innovation in the Polish economy was of a derivative nature: new technologies, as well as new ways of organising production, emerged with the arrival of Western capital. The progress observed in the innovation of Polish economy, which was expressed in the high increase of productivity and labour intensity, was therefore a result of the ‘imitative diffusion’. At this time the simple resources used in the past have nearly been depleted: unemployment dropped below the EU average, and the stream of inflowing foreign investment was set at approximately $10 billion a year and ceased to be a key factor in increasing the level of innovation in the whole economy.

What could be done to avoid the socalled middle-income trap, and ensure economic development, relied on creation rather than imitation? A remedy against the threat of stagnation existed in a dynamic development of entrepreneurship based on small and medium-sized innovative businesses whose chief initial resource are exceptionally well-educated young people living in cities. Many startups therefore looked for a reference point in the global market in academic centres such as Warsaw, Kraków, and Wroc?aw.

The Kraków Technology Park (KTP) has supported the development of new technologies for nearly 20 years now. Worth mentioning among the number of initiatives that the KTP has designed with innovative businesses in mind are as follows: Digital Dragons – the annual B2B conference for the video games sector and the KPT Scale-Up – the new enterprise accelerator.

During the Digital Dragons 2017 conference (held annually by KTP), independent game developers will compete for the fourth time for the title of Best Indie Game at the Indie Showcase contest. In 2016, 911 Operator by Jutsu Games impressed the jury of gamedev veterans and industry specialists, and won the main Indie Showcase prize. The victorious project went on to achieve further success globally with more then 50,000 copies sold globally. Notably, the first mention of the game that most of the public came across was either a part of Digital Dragons media coverage, or the conference’s official social media channels. 

Last year the Polish government announced the Start In Poland programme with a budget of approximately €708 million to support startups. The first operational project of this programme is Scale UP – a support mechanism for accelerators that aims to help startups grow and simultaneously invigorate their cooperation with big, experienced companies. Krakow Technology Park is an operator of the KPT ScaleUp accelerator dedicated to startups working on innovations for industry and smart cities. Its primary goal is implementation of innovative products and services in large businesses. For startups it’s a unique opportunity to attract referential clients; for corporations it is early access to innovation and strengthening internal innovation teams. Startups get an equity free €50k grant, comprehensive mentoring and competence training. The aim is to support 24 young companies in a single year.

Written by Krzysztof Krzysztofiak

Raffaele Buompane has been cooperating with EBN since 2007 acting mainly as Senior Advisor and Project Manager and representing the organisation in several events all over Europe and beyond. With more than 20 years of multifaceted experience in particular in the fields of Intellectual Property, Strategic Management and Public Relationships, he has a legal and economic academic background holding a PhD in Economics, a Master in International Political Sciences and a Master in Geopolitics. He also attended an MBA course at Imperial College in London.

 

Published on 18-07-2017 00:00 by Raffaele Buompane. 158 page views

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