Hatching innovation

16.01.08 17:01 Filed in: The Prague Post

CKD’s business incubator looks to foster start-ups

The myth goes that start-ups begin inside a garage. But a new business incubator in Prague–Vysocany is putting the lie to the notion that all small businesses start in such humble circumstances.
Right across the street from the incubator, a 19th-century CKD locomotive factory had already made room for Sazka Arena years ago. Now, a 2,000-square-meter production facility has been turned into the CKD Prague Technology and Innovation Center, at a cost of 167 million K? ($9.5 million). The European Union alone contributed 71 million K? to the project.
Although small, innovative companies are granted priority in EU programs, it’s not easy for them to clear all the bureaucratic hurdles they encounter, said Petr Bašík, the head of Aura, an electronics company that just moved into the former manufacturing plant’s second floor.
“It’s quite difficult for a small company to manage the application for a grant, its administration and related processes that guarantee the successful completion of a project,” he said.
Incubators for small businesses, while common in the West, are relatively new to the Czech Republic. In addition to providing office space, incubators specialize in bringing small companies into close contact with one another, fostering innovation. Many also provide access to experts who can help them in developing their ideas.
For example, the ?KD Center gives start-ups direct access to staff of the Academy of Sciences, many of whom are experienced in dealing with EU projects, especially in the area of technology transfer.
“They have experience with research,” Bašík said. “They know how to write expert studies and have the means to predict long-term trends in the industry.”
Having offices in close proximity to scientists and clients — Aura is a long-time supplier of ?KD Nové Energo, which produces machines ranging from wind turbines to electric motors — is a great advantage, Bašík added.
“[Some say that] in the time of the Internet and e-mail you don’t have to communicate with people,” he said. “That’s not true, of course. It’s a huge step forward for us to be able to consult with ?KD, and Nové Energo in particular, immediately and face-to-face on a specific problem.”
After going through an application process that can last for up to two years, true start-ups — say a recent college graduate with a fresh idea — will be able to rent office space in the ?KD Center for a single crown, said Petr Kužel, vice president of the Economic Chamber. Rent obligations will rise as the start-up grows.
Also, the incubator gives start-ups a chance to meet with old “matadors” from the ?KD engineering group and learn from grown-ups, Kužel said.
“We are in an old manufacturing hall right now, founded in the 19th century,” he said. “There’s a symbolic value that it now houses a modern incubator and technology center, because Prague was and will become again a pioneer in mechanical engineering in Europe.”
“Technical engineering has a great future in the Czech Republic, because Czechs are good technicians,” agreed Jaromír Dudek, the center’s director. “They are dexterous, don’t think in stereotypes and are ready to improvise and innovate as needed.”

Consuming capital
Part of ?KD’s reasons for supporting the incubator is that these start-ups will then have direct links to the group’s manufacturing portfolio, Dudek said. It makes perfect sense to test a new technology in one of ?KD’s mechanical engineering labs once a start-up’s brainstorming session has turned into a prototype, he said.
“At a later stage, the company might decide to cooperate with ?KD. We would then implement their new technology in our products,” said Jan Bartošic, the center’s chairman of the board. “This will speed up the innovation cycle. During the past 20 years, mechanical engineering has been eating into its capital. Now we feel it’s a necessity to innovate.”
This innovation imperative could help ?KD compete with engineering rivals like Škoda Holding or Germany’s Siemens.
“What gives [the manufacturer] a competitive edge today, will become standard equipment within the next few years,” Aura’s Bašík said.
Asked whether tight integration with ?KD was not impinging upon the center’s main goal of boosting technological innovation, Kužel replied that “the conditions are chosen wisely and favor innovation and technology that benefit the industries situated in Prague.”
All applications have to pass a step-by-step approval process, Dudek added. “Because Prague has invested a lot of money, it wants to have a say in the matter,” he said.
Aura, an established company that has existed since the 1990s, welcomes the opportunity to work near ?KD Nové Energo, which is located next door.
“The relations between manufacturers and their subcontractors are undergoing changes,” Bašík said. “Joint collaboration is becoming more important. It’s not about choosing the subcontractor that delivers the lowest prices regardless of quality anymore.”
Although this view has made inroads into the industry, “old habits linger, such as the manufacturer looking down on contractors as someone they can treat very roughly,” he said.
Aura specializes in diagnostics that allow remote operators to sense mechanical problems in advance, so that they can have the equipment repaired before a minor hitch turns into a major disruption. The diagnostics use Internet communications to transfer information about the machines’ current state directly to its manufacturer.
This system allows manufacturers like Nové Energo to sell packages that include remote diagnostics and maintenance. In return, the manufacturer saves money traditionally spent on having service technicians travel to remote locations to diagnose problems — trips that often aren’t necessary.
Aura supplies manufacturers of equipment as diverse as air conditioning, water pumps and oil pipelines.