HTGF conference scouts innovation, finds cooperation

Speakers gathered at the High-Tech Gründerfonds’ conference to discuss using digitisation to enhance the customer experience, the importance of having a concrete strategic interest and opening up innovation to allow users to contribute their ideas.

Digitisation is transforming how German companies do business, intensifying the need for corporates to work with entrepreneurs to improve business processes, raise productivity and bolster their competitive advantage. For German corporate venturers, whether they are in industries where digitisation is in its early or late stages, the challenge lies in devising innovation strategies that produce results, and finding ways to collaborate effectively with emerging enterprises.

Scouting innovation, finding cooperation was the theme of a timely High-Tech Partnering Conference hosted by German public-private partnership High-Tech Gründerfonds (HTGF) in Bonn on January 31.

Keynote speaker Frank Strauss, CEO of Germany-based retail bank Deutsche Postbank – which is majority-owned by financial services company Deutsche Bank – said the banking business would be “radically different” in just three to four years’ time, due to trends like digitisation and smart data.

Strauss said that contrary to conventional wisdom, which assumes digitisation means closing down bank branches, for Deutsche Postbank human interaction is just as important as ever.

“We want [personal] contact via video link, or in a branch, this will be a differentiating factor,” Strauss said, noting that technology could help enhance the customer experience.

In the past, banks took about 72 hours to activate an account and make it usable, Strauss explained. Thanks to technological changes implemented three months ago, activating an account now took just eight or nine minutes. Deutsche Postbank has 14 million customers, 5 million private client checking accounts and a 5.2% market share, according to its website.

Deutsche Postbank intended to harness digitisation to change its business “process by process”, Strauss said, noting that in the smart data space “we can do much more than we are currently doing”.

But amid this sweeping transformation, the biggest risk for bankers was losing sight of a fundamental value in the financial services sector, which was trust, Strauss warned.

Alex von Frankenberg, a managing director at HTGF, spoke about the magic of innovation, observing that a common stumbling block was simply the force of habit – the attitude in many companies was “we have always done things like this”, which hindered innovation, he said.

Staff tended to think, “I will lose profits from my area” or “my expertise will be eliminated”, von Frankenberg said. He urged the audience to be open to doing business differently. To unleash innovation, corporates needed to work with someone who was akin to a magician or a wizard “who can break the rules”, which was what entrepreneurs did, he said.

Von Frankenberg warned of the costs of failing to innovate by telling the story of how Finland-based mobile phone maker Nokia ultimately ceded its dominant market position to hardware manufacturer Apple, and the mistake Nokia’s strategists made when they assumed that Apple was a “niche manufacturer” of computer products.

In closing, von Frankenberg said: “The biggest competitor is going to be the future”.

At a panel discussing the innovation strategies of corporates, Marion Horstmann, corporate vice-president of industrial conglomerate Siemens’ Vision 2020 Project, an entrepreneurial initiative to position the company for the future, agreed that digitisation was critical.

“All businesses must deal with [digitisation],” Horstmann said. She cited the example of Siemens’ Mindsphere, an open IT ecosystem based on a cloud platform that customers could use to develop, extend and operate applications in the cloud.

“Open innovation is what it is about,” Horstmann said, stressing the importance of encouraging collaboration and keeping an open mind about entrepreneurs.

Dirk Schmachtenberg, head of internet of things (IoT) at reinsurer Munich Re, cited innovations such as Bitcoin and blockchain, and described new technologies that were proving to be cost-saving innovations for insurance companies. These include IoT devices that monitored heating pipes with live sensors so that repairs could be made before they burst, preventing losses in the millions of euros, he said.

Anton Wehrhahn, CEO of conglomerate Wilhelm Wehrhahn, whose businesses include building materials, consumer goods and financial services, said the company was seeking to adapt to digitisation.

“We are carrying out dialogues in our business areas to find out how we can both benefit,” Wehrhahn said. He cited the car financing business, where a collaboration with credit institution Bank11 had created a time-saving platform that reduced the amount of information car dealers had to input to process purchase financing products to just 30 entries.

Felix Thalmann, CEO of chemicals group BÜFA, noted that the chemicals industry was right at the beginning of digitisation.

“Chemical companies are working very hard on digitisation, disruptive models, to avoid missing trends, and failing to recognise disruption until it is too late,” Thalmann said, adding that his intention was to promote dialogue with startups.

Startups typically lacked large R&D departments, so BÜFA worked with universities and research institutions to offer its expertise, Thalmann said. He added that innovation and corporate culture were intertwined – for innovation to work, executives must be open to discussion, he said.

Finally, a panel on cooperating effectively with entrepreneurs offered several key lessons. Jakob Wirbatz, investment director at Evonik Venture Capital, the corporate venturing division of industrial group Evonik, stressed that having a defined budget before embarking on a partnership was critical, while Inken Braunschmidt, chief innovation officer at energy company Innogy, said having a serious strategic interest mattered. “The more concrete [the strategic interest] the better the partnership will be,” Braunschmidt said.

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