Open Italy shows the way for Italian innovation
Access to the same market as large enterprises, the agility of small companies and the risk capital of a mature venture capital-based initiative. A perfect combination, difficult but not impossible.
Open Italy, organised by the Enel Foundation in collaboration with AIFI (the Italian Private Equity, Venture Capital and Private Debt Association) with the support of the Ministry for Economy and Finance, has opened up the path to Open Innovation in Italy. The Open Innovation concept was first described 15 years ago by the American economist Henry Chesbrough, and since then it has become a model for success in the business world.
On 31 January Open Italy hosted a round table at the Milan Polytechnic with four large Italian companies (Enel, Poste Italiane, Ferrovie dello Stato and Leonardo), a medium-size technical enterprise (gruppo Loccioni), a university incubator of excellence (PoliHub), a successful startup (Athonet), an investment fund (Vertis) and the Italian Private Equity Association. The objective was to identify opportunities and areas for improvement in the way innovation is promoted in Italy. The event was also attended by the Italian Minister of Economy and Finance Pier Carlo Padoan, and took place in a setting – the Milan Polytechnic, an Enel strategic partner – that has created a model for an advanced ecosystem to encourage Made in Italy innovation.
The sustainability factor
“Italy has ridden out the crisis, and now it must equip itself to face the future. Innovation provides a constant support for growth,” said Padoan in his opening address. He went on to explain the different types of financial incentives that are available for those seeking to invest in innovation in Italy, from tax credits for startups to the hyper and super depreciation outlined in the Industry 4.0 package – all instruments for stimulating private equity.
“Open Innovation is a long-term investment and entails transforming management models and corporate culture: opening companies up to the outside world to gain knowledge, but also to share it in a context of cooperation”
– Pier Carlo Padoan, Minister of Economy and Finance
Modern innovation is based on a combination of factors, but “It’s down to the companies themselves, not the state,” said Padoan.
Fair enough, but which companies? Only large enterprises can develop the required critical mass, but they are often not fast enough on their feet to generate innovation. “It’s harder for large enterprises to develop disruptive innovation,” said Renato Mazzoncini, CEO and General Manager of Ferrovie dello Stato (Italy’s state railway network). This is an opinion shared by Matteo Del Fante, CEO and General Manager of Poste Italiane (the Italian postal service), and Alessandro Profumo, CEO of Leonardo.
This is the motivation behind Open Innovation – looking beyond our front porch, in a manner of speaking. And that’s exactly what Enel has done in recent years, with an Open Innovation model described by CEO and General Manager Francesco Starace.
For any company operating in the utilities sector failure to open up to the outside world is a crucial error that acts as a brake on innovation. However, some profound changes to the business model need to be made in order find enduring sustainable solutions.
“For us, sustainability is the driving force for innovation, and we have begun to seek it outside our company, too. Our Innovation Hubs are our windows to the world, helping us redefine the role played by energy in facing the challenges of our time”
– Francesco Starace, CEO Enel and Head of the Enel Foundation
The result is the launch of Enel Innovation Hubs across the world, from Tel Aviv to Moscow, Santiago and Silicon Valley. “They are where we present problems to solve, because seeking solutions to problems is in itself the start of a process of innovation.”
The results offer clear proof of this – the Enel Group has scouted over 2,800 startups, more than 200 ideas have moved on to the screening stage, around 140 initiatives have been implemented and 35 of these are now being scaled up. “But we don’t invest directly in startups, we don’t intend to become owners of the know-how. We want to give startups an amazing opportunity for growth on a global level. At the same time, doing this – opening up and becoming receptive to innovation – has been incredibly stimulating for us.”
Human capital, not just technology
In the words of Ferruccio Resta, Dean of the Polytechnic University of Milan, “We need more than a call for ideas. Enterprises should not only reap the benefits of innovation. They should be part of the process.” He takes pride in the numbers generated by his university – 113 startups promoted in the incubator, 1,500 registered patents, 1,270 ideas assessed in a year and 113 projects developed. This record means the PoliHub, a fully-fledged technological district in the Bovisa area of Milan, “is Europe’s second-largest university-based incubator.”
“The moment has come to invest in human capital – our enterprises must interpret change, and develop innovative technologies and research programmes,” says the Dean. In fact, these words could describe the Gruppo Loccioni, a medium-sized enterprise based in the Marche region. The company has succeeded in combining technology (robotics) and support for the local region through investment in training. “We are a knowledge enterprise,” says founder and chairman Enrico Loccioni, recalling the example of Adriano Olivetti. “The important thing is to remain open to the client or company that presents a problem. We reinvest our profits in development, innovation and integrating human capital. In our group, one person in 10 is involved in innovation.”
Another thoroughly Italian model of Open Innovation is provided by Athonet, a small, innovative telecommunications company that has returned to Italy after 15 years abroad and won the Global Mobile Award 2016. “Our collaboration with Enel has been extremely important for us. Enel saw the value of our idea and helped us find a market,” says CEO Karim El Malki.
Is innovation tiring?
The new frontier is Industry 4.0, the IoT – Internet of things – applied to manufacturing and services, as well as the availability and use of Big Data. This far-reaching digitalisation is also having an effect on public companies like Poste Italiane, Ferrovie dello Stato and of course, Leonardo, the Italian defence and aerospace giant. “We see Open Innovation as the ability to respond to a market experiencing radical changes,” says Profumo. “Big Data can transform the predictive maintenance of our trains,” adds Mazzoncini.
However, Innocenzo Cipolletta, Chairman of AIFI, warns that care must be taken, as innovation can be tiring. “By its very nature innovation disrupts the market and transforms hierarchies – a company that wants to retain the benefits of its position will naturally be against this.”
“The barriers to entry are being lifted and innovation is crucial – companies must adopt an interdisciplinary approach and viewpoint in all sectors, not just within their own field of operation”
– Innocenzo Cipolletta, AIFI Chairman
Looking around to see ahead – that, in essence, is the meaning of Open Innovation.
Nowadays, everything seems to indicate we need to show more determination and confidence. It’s the right time to invest in human capital, advanced training and new industrial models. Italy’s national system has everything it needs to become the world leader.