Innovation Talk by Diplomacy&Commerce magazine

INNOVATION TALK SPEC I A L SU PPL E M E N T

2018

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THE BASIS FOR FURTHER DEVELOPMENT Accelerated technological advancement has inevitably caused the emergence of global digital transformation that is reflected in the improvement of business processes through the use of necessary digital tools and technologies t is very important to put emphasis on attracting FDI in establishment of SME in the ICT sector (hardware and software production), as well as to invest in research and development as one of the main goals of the EU 2020 Strategy in the segment of smart growth. Also, other forms of regional cross-border cooperation will help overcome the shortcomings of the small domestic market. All these activities lead to improvement of the business environment and bolstering human capacities.

How did digital technologies change the way public sector communicates and did they expedite business operations? — In order to use digital technologies in an adequate way, it is also necessary to increase the knowledge base of people in the public administration who use these technologies, as well as to increase their IT literacy. In Bosnia and Herzegovina, civil servants have access to free training sessions and seminars that fully complement their basic knowledge base which is sufficient to perform their work tasks and to communicate with the help of all digital technologies available today. I think that civil servants in Bosnia and Herzegovina possess a good information and communication competence, and that most of them use the latest technology in their mutual communication, as well as in communication with citizens and the business sector, which ultimately represents the basis for further advancement in increasing their knowledge base in line with technological progress. How do you view the current situation regarding the technological advancement in the region, and how much do we lag behind other Euro-

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ISMIR JUSKO Minister of Communications and Transport of Bosnia and Herzegovina

PROJ EC T S

IMPORTANCE All of the projects are significant and very important for future economic growth and sustainable business.

pean countries? — Based on the statistical chart and the information and communication technology development index in the survey conducted by the International Telecommunication Union (ITU) in 2017, all the countries in the region and the Balkans are ranked in the top half of the 176 United Nations countries. However, at the European level, our countries are at the bottom of the list. Taking into account the fact that the growth of this index is directly caused by the increase in GDP, it is clear that the Balkan countries still have not reached a sufficient level of the overall ICT development, and thus are not adequately competitive in the European market. What are your ministry's plans for the next 5 years in terms of implementing innovative technologies? — In order to provide a favourable and modern business environment, it is necessary to adopt a new and harmonize the existing ICT legislation. In the following period, the Ministry of Communications and Transport plans to draft a new Law on Electronic Communications and Electronic Media, the Law on Electronic Identification and Trust Services for Electronic Transactions, the Law on Postal Services, the Law on Cyber Security, as well as a number of accompanying bylaws, i.e. strategic documents. The adoption of these documents will enable the implementation of many large-scale ICT projects that will ultimately result in technological and economic progress. Could you please cite a few projects that you realized in the previous period, which were significant for economic growth and sustainable business? — The Ministry of Communications and Transport has, in line with its compe-

tencies, determined the legal framework for the further development of ICT, after analyzing the relevant legal system and identifying the regulations that need to be changed, as well as the manner in which these changes should be made. Our aim was to draft the regulation and harmonize it with the EU legislation in the sense of identifying the need for establishing electronic communications between public administration, citizens and the business sector, or the establishment of interoperable ICT systems. In the previous period the Council of Ministers of Bosnia and Herzegovina adopted the Information Society Development Policy in accordance with the recommendations of the EU and their relevant documents - Digital Agenda for Europe, SEE2020 Strategy and Europe 2020 - European Strategy for Smart, Sustainable and Inclusive Growth, which includes: - Information security policy in line with the standards of the ISO / IEC 27000 series which provide the institutions with guidelines for the design, implementation and verification of information system security, in order to ensure confidentiality, integrity and availability of information content, systems and processes; - The policy of the electronic communications sector of Bosnia and Herzegovina for the 2017-2021 period and the Action Plan for the Policy's implementation; - The strategy for switching from analogue to digital signal, with the help of which we create prerequisites for using the DVB-T2 standard for equipment used for the digital network of public broadcasting services in Bosnia and Herzegovina. All of these projects are significant and very important for future economic growth and sustainable business.

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FOUNDATION FOR DEVELOPMENT OF GLOBAL ECONOMY 5G includes technologies such as virtualization, machine learning and artificial intelligence, massive MIMO, active antenna system and beamforming, ultra wide-band radio, IoT platform and many others I N T E RV I E W

MILAN BAŠIĆ

he fifth generation of mobile networks is the leading infrastructure for the future development of the global economy. By integrating new technologies, it will be possible to monitor and better understand businesses operations in order to act strategically; for example, in providing the necessary resources.

What technologies that we have today are considered the technologies of the future and how they can advance and expedite the operations of both state and private sector? — For me, 5G includes technologies such as virtualization, machine learning and artificial intelligence, massive MIMO, active antenna system and beamforming, ultra wide-band radio, IoT platform and many others. Digitization (supported by new technology) is one of the examples how we can advance public sector because it ensures better contact with the citizens, and making decisions based on real data and improved statistical data. Through the IoT platform, the industry will have improved logistics and transport, as well as better delivery of goods and consumables. Automation

and production efficiency through real-time low latency communication and remote management are one of the components for the advancement of the industrial sector. Smart homes, cities and cars will definitely save time for every person when planning and improving the quality of life. How will future technologies change the way of doing business, abolish existing traditional jobs, and alter education? — By integrating new technologies, it will be possible to monitor and better understand businesses operations in order to act strategically; for example, in providing the necessary resources. They will enable better business planning on a weekly, monthly and yearly basis. This also entails a more proactive action that would actually result in smarter way of doing business and better economic results. More people will be able to obtain education through using online applications and other forms of online education. Exchange of ideas and innovations in real time will greatly increase cooperation between people globally, which will create many new values in work

Director and Head of Network & Product Evolution Department at Ericsson Sweden, Chairman of Swedish Information & Technology Standardization ITS SA and delegate in ETSI (European Standards organization) groups for Radio Spectrum matters

By integrating new technologies, it will be possible to monitor and better understand businesses operations in order to act strategically

and business. We will have to invest a lot in changing the mindset of people to switch to the way of doing business through new education and supplementing the existing one. The challenge is always to move from reaction to action. I usually say when it comes to change, do not stand on the platform and watch the train leave. Act instead! And that applies to every person and all segments of the society. Why is often the talk about future technology tied to the topics like protection of privacy? — The fact is that we live in the information age, where the development of new technologies creates open communication through social media and between various organizations and systems of society. This is the time whem the huge amount of information called Big Data is being exchanged and stored. It is understandable that there are new ethical and judicial problems relating to the right to privacy, access to information, and other aspects that could jeopardize privacy. It's rather typical that privacy issues are tied to new technologies, but the technologies themselves can be used to design a privacy system. Everyone, both state authorities and the industry, should take part in that. Ericsson develops and implements the so-called "trust technologies for security assurance” that provide a mechanism for protecting mobile networks and ensuring security for people and devices.

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ADVANCED TECHNOLOGIES THAT CHANGE OUR LIVES New products and services are continuously introduced, in all areas, with advanced technologies that change the way we work and live I N T E RV I E W

ur projects are mainly strategic and as such it takes several years for them to be fully realized. However, I am proud to say that over this period we have already achieved some great improvements for the whole society. In education, we can now say that every fifth grader is learning to code as part of mandatory education – this fact is a real game-changer and puts Serbia high on the European map.

How did digital technologies change and expedite business operations globally, including Serbia? — New business models put to use assets and resources that were unutilized before – think all the cars and apartments that are now used through Uber and Airbnb. The acceleration is huge. Product life cycle is significantly reduced for both physical and digital products thanks to digital technologies such as simulation and 3D printing. New products and services are continuously introduced, in all areas, with advanced technologies that change the way we work and live. Solutions based on artificial intelligence and big data are spreading across traditional sectors pushing the boundaries of what is possible – AgriTech, FinTech, HealthTech, Robotics, Automotive, etc. What is the current situation like with technological progress in Serbia and the region? Do we lag behind other European countries, and if do, how much? — We have great examples of companies in Serbia that are at the leading edge of global technological development. That

NEBOJŠA DJURDJEVIĆ CEO, Digital Serbia Initiative

The Fourth industrial revolution brings cognitive technologies and artificial intelligence to machines making their own decisions

applies to both startup and larger companies. Startup companies are the major contributor to development of innovative solutions so they are strategically important. Number of startup companies relative to the population is low compared to developed startup ecosystems in Europe. This is something that needs to be addressed through focused programs by private and public sectors. I believe Digital Serbia Initiative will be an important player in this field.

ing their own decisions. In some cases, these decisions introduce major legal and even moral questions. For example, autonomous driving cars will inevitably be faced with moral dilemmas, where the machine will need to choose the lesser of two evils, such as injuring two passengers or five pedestrians in a situation where no third option is available. Ethical and legal issues are the biggest challenges globally, and for our country, too.

What are the plans of the Digital Serbia Initiative in terms of digital transformation of Serbia? — One of our main focus areas is development of the startup ecosystem. We will start with a comprehensive assessment of the startup ecosystem to set the baseline and identify the gaps and areas of strengths. Our plans include programs to (a) improve the knowledge in the areas of entrepreneurship, idea generation, product management, as well as sales and marketing, (b) strengthen the early stage funding options for startup companies, and (c) drive changes in the legal/regulatory framework to improve the efficiency and further development of digital economy.

Could you tell us something about the projects that you have implemented in the previous period, which were significant for economic growth and sustainable business? — The initiative exists only for a year and a half. Our projects are mainly strategic and as such it takes several years for them to be fully realized. However, I am proud to say that over this period we have already achieved some great improvements for the whole society. In education, we can now say that every fifth grader is learning to code as part of mandatory education – this fact is a real game-changer and puts Serbia high on the European map. Also, we have thousands of secondary school students in specialized IT education that will help us transform Serbia into a digital society. We have also initiated very wide public dialogue in the society on what kind of education we need to prepare our children for the jobs that don’t even exist today.

What are the biggest challenges for our country regarding the fourth industrial revolution? — The Fourth industrial revolution brings cognitive technologies and artificial intelligence to machines mak-

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INNOVATION THAT CHANGES EVERYTHING After a century and a half of being in a highly successful cigarette business, Philip Morris has entered the world of science, technology and tobacco-smoke-free future by providing its consumers with iQOS, an innovative device that has the potential to reconcile smokers and nonsmokers because it eliminates smoke that is a source of contention between them C O R P O R AT E

ince 2009, Neuchatel, a small industrial town in West Switzerland, known for its beautiful castle, and production of wine and watches, has been home to a contemporary building called The Cube, which houses the research and development centre of the Philip Morris Company. This is the building where the transformation of Philip Morris started – from the company that has been developing a very successful cigarette business for a century and a half to the company that has made a very noticeable and for many, suprising step into the new world; the world of science, technology and tobacco-smoke-free future. Many find this vision totally contradictory. Why would the biggest stakeholder in tobacco industry willingly change its determination? The answer would be „because big companies do this if they want to remain in the lead“. If you compare the Fortune 500 list from 1955 to the latest one, you will notice that only 12% companies that were ranked then are ranked today. Over 400 companies that, 60 or so years ago, were synonymous with success no longer exist

today or are unrecognizable. They are forgotten because they had the so-called „big company syndrome“ and assumed that it was sufficient to continue doing what they had been doing to become successful. No, it wasn't sufficient because the world is changing and so are people's needs. Due to the necessity to adjust, as well as the growing need for smokers to continue enjoying consuming tobacco, but using less harmful products, Philip Morris decided to turn to science some ten years ago. Without science there are no quality innovations, nor the 4th industrial revolution. The company invested $4.5 billion and hired hundreds of top scientists to work in the development centre in Neuchatel on finding a solution that was less harmful and was based on the principle of non-combustible tobacco. They did and we called it iQOS. We are continuing to improve iQOS while listening intently to consumer reactions. This innovative device has the potential to reconcile smokers and non-smokers because it eliminates smoke that is a source of contention between them. This is a device that will simultaneous-

Philip Morris is working on 3 different platforms in order to meet the unique tastes and wishes of adult smokers

ly contribute to a successful business and reduce the harm that smoking has on public health. iQOS is also revolutionary because it created an opportunity for a tobacco company to offer a complementary measure to regulators in their struggle to reduce the harmful effects of smoking on the population. iQOS is just a first chapter in the leap that the company is taking. We have over 400 scientists and specialists working in our development centres today who, beside working on improving the device, are also developing 3 different platforms in order to meet the unique tastes and wishes of adult smokers. The company's ultimate goal is that, one day, all smokers will find a less damaging substitute for cigarettes in one of these products and thus contribute to their own well-being, the well-being of the people in their environment, and public health in general. By changing themselves, investing in science and applying it, companies have the opportunity to change the world. Going forward in this direction, the Philip Morris Company expects that, in the near future, it will be widely recognized as the producer of iQOS and other smokeless tobacco products and the former cigarette producer.

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AQUA GALA - WATER WITH „BEAUTY MINERAL“ The ideal ratio of calcium and magnesium is another feature that makes the Aqua Gala water stand out from other bottled waters in our market C O R P O R AT E

he main characteristic of Aqua Gala is the presence of silicon dioxide (sillica), otherwise known as the „beauty mineral“. Silica is a mineral that slows down aging and rejuvenates the body. The monicker „beauty mineral“ is given to silica as it participates in the formation of collagen and elastin proteins that give the skin elasticity, fullness and firmness. Silica also gives hair luscious and healthy look, as well as boosts nail growth. Unfortunately, the quanity of this mineral in the body decreases with age: wrinkles become more pronounced, the skin becomes inelastic, and the hair starts to fall out and look lifeless. It is therefore important to increase the silica intake and the easiest and fastest way of doing so is by consuming water. Silica is not a common ingredient in regular water, and its presence in Aqua Gala is what makes this water stand out from the rest. The ideal ratio of calcium and magnesium is another feature that makes the

Aqua Gala water stand out from other bottled waters in our market. This perfectly balanced composition of minerals (64 mg/l of calcium and 29 mg/l of magnesium) is excellent for the proper development of bones in children, which healthy growth is especially important in childhood as it predisposes the bone quality when we are older. It also helps adults, because it substitutes calcium that is lost as a result of aging, smoking and other unhealthy habits. In addition, calcium contributes to reducing the sensitivity to allergies, while magnesium contributes to the healthy functioning of the heart and it reduces the risk of myocardial infarction. These minerals have a beneficial effect on the nervous system and are necessary for all those who experience stressful situations. Sodium is essential for health and proper functioning of the body, but if taken in excess, it has a negative effect. The sodium level in water should not exceed 150 mg/l, while the recommended level is below 50 mg/l, which is rare to find. This is another special

The proper care of our body is of great importance for the beauty that nature has given us

quality of Aqua Gala which sodium level is 18 mg/l. Potassium is another mineral that is needed for the healthy functioning of the body, and which excess also has adverse affects, causing kidney distress. It is advisable not to drink water with more than 12 mg/l of potassium every day. Aqua Gala has a low potassium level, about 2 mg/l, which is extremely beneficial to the human body. An increased level of silicon dioxide, amounting to about 20 mg/l, makes Aqua Gala extremely beneficial for blood vessels. Balanced hydration is one of the key factors in maintaining healthy organs. It is always important to drink sufficient amounts of fluid, regardless of the season. Additional mineral water intake is also required during heightened physical activity. The proper care of our body is of great importance for the beauty that nature has given us. By drinking the Aqua Gala water daily, you will boost your internal bodily functions, stimulate the immune, nervous, digestive and cardiovascular system and further enhance the skin and body regeneration. The quality of the Aqua Gala water is regularly controlled in domestic and foreign laboratories such as: the Dr. Oliver Rodes Laboratory in Barcelona, the Valjevo Public Health Institute, the City Public Health Institute in Belgrade and also in the accredited Knjaz Miloš Laboratory. Natural non-carbonated water Aqua Gala possesses the prestigious international NSF certificate, awarded by the US certification company, NSF, which guarantees its top quality.

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PEOPLE WITH GOOD IDEAS ARE EVERYWHERE AROUND US The Delta Business Incubator gives every startup exactly what they need for further development at any given moment, and not the usual, generic 'package'. All of this sets the Delta Business Incubator apart from other startup support programmes C O R P O R AT E

fter a successful launch in 2018, the Delta Business Incubator will invite talented people to apply to this unique competition with their ideas next year too. We are talking to Monika Pejčić, Director of the Human Resources Department in Delta Holding, about the experiences with the previous competition, what can Delta Holding offer to startups and nurturing the innovation culture at the company itself.

Can you sum up your experiences after organizing the first Delta Incubator? Are there many fresh business ideas in Serbia? — Organizing and realizing the first Delta Business Incubator was a demanding and challenging process. In cooperation with the Propulsion Fund, we devised a programme which presented the Incubator in 13 towns all over Serbia, so that the interested parties could find out first-hand everything they wanted to know like what the programme offers, who is eligible to apply, the programme duration etc. A total of 163 startups applied for the programme of which we invited 27 to present their ideas in front of a commission. As per commission's decision, 6 teams entered the Incubator. During the three months they spent there, these six teams worked with mentors and external consultants, as well as tested their products and services. Out of the six ideas, one idea was chosen as the best at a pitch – Frigo Gel, an anti-freezing gel used to prevent fruit from freezing. We are continuing to cooperate with this team. Based on our experience, I can say

that ideas are all around us; some are immediately applicable in practice and designed to detail, but most of them need to be developed. Their implementation and success depends on several factors. A growing numbers of incubators, hubs and funds are providing significant support to startups, but they also need more institutional support. We hope that the future support will be even bigger and that more organizations will provide it, so that more ideas will have the opportunity to be applicable in practice. Considering that you have visited the entire Serbia while presenting the possibilities of incubators, can you tell us how much is the idea of startups recognized in Serbia? How many people are contemplating how to create the first Serbian 'unicorn'? — The concept of startups is becoming increasingly present, but there are still doubts as to what startups are and what they are not. You can read an interesting and educational blog called "Everything You Did(not) Know about Startups" on our company blog page (blog.deltaholding.rs). The fact remains that anyone who passionately, sincerely and without reservations believes in their idea and works hard on it for a considerable amount of time, can succeed. If this was not true, we would have only one messaging app out there, in contrast to at least 5 that I can think of at this moment. What sets the Delta Business Incubator apart in comparison to other, similar projects? What do you offer to the applicants?

MONIKA PEJČIĆ Director of Human Resources Department in Delta Holding

We support the ideas that relate to real estate, agriculture, logistics or distribution because our company has the best resources available to support startups in these particular segments

— The Delta Business Incubator supports the ideas that relate to Delta Holding's activities - real estate, agriculture, logistics and distribution. The reason for this is that, in this way, we can give the most to the supported ideas. Expert mentoring in the relevant field is more important for developing a business idea than investing money. Mentors share their practical experience and the knowledge they acquired over a number of years and through numerous trainings with the idea initiators. Our company has all the required resources for testing the idea: the aforementioned mentors, agricultural holdings, hotels, financial resources, etc. What role do corporations play in facilitating innovation? Could you tell us something about the activities of your Innovation and Digital Transformation Committee? — Developing and nurturing the culture of innovation is absolutely necessary in today's day and age of fast and consistent change. Delta's employees are given the opportunity to make suggestions how to improve everyday operations or start a new business. Many of the suggested ideas are in the process of implementation or have already been implemented. The Delta Business Incubator is an initiative of one of our internal teams of young leaders. Delta Holding has formed the Innovation and Digital Transformation Committee in order to pay more attention to the voice of employees. By doing so, we facilitate the development of the culture of innovation and release the creativity of our employees.

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SERBIA IS ON THE ROAD TO CASHLESS REALITY

MasterIndex Serbia study shows that 4 in 5 Serbs pay with cards instore at least once a week. Mastercard is making sure that they can do so anywhere – in public transportation in Belgrade or London, and at a supermarket in Niš or Moscow. This is what drives a development of cashless society in Serbia here’s no doubt that we have been making steady progress in making Balkans become a modern, cashless market”, says Artur Turemka, Mastercard General Manager for Balkans. Here in Serbia the usage of cashless payments sees annual growth – our traditional MasterIndex Serbia study shows that 4 in 5 Serbs pay with cards instore at least once a week, as well as that card usage at ATMs is dropping by 6% for debit, and 13% for credit cards. “We don’t even have to look at the data to know that cashless future is a cashless reality. The routine until recently was: wallet full of crammed banknotes and receipts which you never sort out and regular weekly visits to the bank or ATM for a new dose of cash to get you through your everyday activities.” says Mastercard manager. “The new normal is: phone and/ or card, because people expect to be able to pay with a single dip, tap or click anytime”, explains Turemka. “Mastercard is making sure that they can do so anywhere easily and safely– in public transportation in Belgrade or London, at a supermarket in Niš or Moscow, or when booking a hotel anywhere in the world. This is one of the biggest achievements we have made – that we have educated people that whenever and wherever they see Mastercard logo, they can rest assured their payments are safe, fast and convenient, so this actual usage of payment cards and mobile payments is

”T

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ARTUR TUREMKA General Manager for Balkans, Mastercard

PRICELESS

FREEDOM OF DECISION By giving the freedom of decision-making to Serbian citizens, we enable them to actually put what they care for first and this sense of togetherness, trust and joint achievements – for us, that’s priceless.

what will really drive development of cashless society in Serbia.” What benefits payment process users have from your technological innovations? What do these new solutions mean for financial inclusion? — Mastercard is a technology company so innovation is at our core and our M.O. is to create innovations to make people’s lives easier, not the other way around. We focus on safety, practicality and multi-functionality of our solutions to ensure that people can use one and the same payment product – Mastercard card or m-payment app – for anything they need. This is how sustainable financial inclusion is actually achieved, by giving people access to the financial products they want to use because they are safe, they are a right fit for their needs and they provide them with real value for money. Of course, inclusion requires united front from institutions and private sector. How did the use of mobile phones affect the changes in card payments? — The biggest change is related to user expectations and habits, because when you use a single connected device for five hours on average every day and rely on it for information, entertainment and interaction, you start replicating those habits onto financial transactions as well. With a mobile phone through a dedicated app, people can create a tokenized card which is accessible to them anytime, with a tap of the phone against any contactless read-

er. The next big mobile-related disruption will come with biometrics – people already use fingerprint or iris scans to unlock their phones, so they are familiar with the concept, which we are implementing in contactless cards and mobile payment solutions around the world. Biometrics will revolutionize the world of payments because the idea of verifying the payment ‘owner’ by who they are and not what they know eliminates the risks of unauthorized transactions. In which way have you been bolstering relations with the business community and governments in Serbia and the region? — Simply – by being there for the community. We are proud of the numerous partnerships with institutions, banks, merchants, telecoms, start-ups, and NGOs which were built on our technological know-how and global experience, but what we are actually looking forward is a new layer to our community relations we are adding for 2018 and 2019, i.e. the "Put what you care for first" initiative which will reward 5 authentic Serbian causes for local communities with funds to resolve local issues for which an average citizen really cares. Mastercard has been a part of the Serbian community for quite some time now and we will be so in the years to come, so this is our way to encourage people to build awareness about issues that are significant for the entire community so that we can together make meaningful changes.

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November 29th, 2018

MINISTERS OF THE REGION UNITED AROUND COMMON DIGITAL FUTURE CON F E R E NC E

he Regional Ministerial Conference on Innovation - Innovation Talk 2018 - was held in Belgrade with the goal of presenting the most important trends in the field. At the conference, the importance of creating a favourable business and innovation environment, especially through connecting innovative stakeholders in the region, was especially underlined. The conference was organized under the auspices of the Cabinet of the Minister for Innovation and Technological Development. Minister Nenad Popović said that today Belgrade was the European centre of ideas, creativity and inspiration for the future innovative development of the Balkans and Europe. "Innovation ecosystems in region-

al countries have become the biggest driving forces behind their economic and social development. We want to base the future development of our economy on new technologies, artificial intelligence, robotics, virtual reality, blockchain technology, the Internet of Things, and big data analytics. We should also not forget the significance of the people who are creating these technologies and whom these technologies serve. The future belongs to these people," said Mr. Popović. He also reminded that Serbia made great progress in the development of innovations and digitization. "We can be proud of the success of our engineers. We have a number of companies that are global champions in their operative fields. They export prod-

Either we will use the opportunities created by digitization, or we will stand still and watch „the train“ pass

ucts from Serbia to the whole world and thus create added value for our economy and society," the minister added. Martin Kern, director of the European Institute of Innovation and Technology, said that Serbia and the countries of the region have a great potential in the field of innovation and can offer a lot. According to him, the situation would be even better if there were a closer cooperation between the regional countries on innovation and innovative entrepreneurship. "There is huge potential, but not enough is being done on utilizing it, especially in the field of science and research," Mr. Kern said, adding that all countries in the region, in the previous period, implemented reforms that

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gave good results. The most important topics, relating to technological innovation, that were covered included state digital agendas, the fourth industrial revolution (Industry 4.0), future technologies - artificial intelligence, robotics, virtual reality, blockchain, big data, smart cities, cooperation between corporations, startup companies and others. The European Commissioner for Digital Society and Economy, Mariya Gabriel said she was confident that the future of the countries in the region was digital and added: "Today, we have to make a choice: either we will use the opportunities created by digitization, or we will stand still and watch „the train“ pass. I believe the choice to be an easy one. We have to react together." Ms Gabriel underlined that those were actually the ambitions summarized in the Digital Agenda for the Western Balkans, adding that it was crucial to enable the people in the region to fully utilize all advantages of digital transformation.

The conference was also attended by Ismir Jusko, Minister of Communications and Transport of the Government of Bosnia and Herzegovina, Alen Šeranić, Minister of Science and Technology of the Government of the Republic of Srpska, Artur Bobovnicki, Director of the Slovakian Innovation and Energy Agency, Jovan Despotovski, Director of the Innovation Fund of Macedonia, and representatives of institutions and companies from Serbia.

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WE ARE SLOWLY CATCHING UP TO DIGITAL TRANSFORMATION Companies that have recognized the need to focus on customers’ needs and adapt or completely change their business models are among the pioneers of digital transformation in Serbia. These include banks, insurance companies, retail chains and production companies

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ow far ahead is Serbia in implementing digital transformation? Our interlocutor and Head of Software Development at TeleGroup Serbia, Momir Djekic says that the progress made by domestic businesses in digital transformation can be observed in two ways. “First and foremost, it is quite clear that we cannot expect astronomically high figures in this segment in a country that is lagging behind the world which dictates change. Still, in a relatively short amount of time, Serbia has succeeded in recording progress in provision of IT services, primarily software development, for foreign clients,” Djekic says and adds: “This just validates the fact that digital revolution has global character and that opportunities are equally present in Serbia as much as in developed countries. On the other hand, there are a number of domestic companies that are still preoccupied with informatization and digitalization of their business operations which diminishes their available resources (primarily human resources) for digital transformation.”

Which areas do you usually assist companies with? — To begin with, it is important to underline that the processes of digital transformation have the same goals as

other business services, including increasing revenues and profits, reducing costs, increasing customer / partner satisfaction, and boosting operational efficiency. Our role, as a digital transformation consultancy, is to empower companies to carry out processes of establishing and managing innovation, adaptation or change of business models, and the introduction of new products or services, all with the help of technology as a tool. Additionally, our task is to demonstrate to them the changes in the value chain in similar industries, namely pointing to the challenges that they will have to overcome in the very near future. Preparing for these challenges will give them a better starting position for the future. Is it possible to single out economic branches that are leaders in technological change? Who are your key clients? — The leaders in technological change, at this moment, are companies with a big consumer base. In transitioning from the world focused on companies, their products and services, to the world of users, their needs and aspirations, a vacuum was created where smaller, more agile and more flexible organizations are now occupying better market positions. Those who are quickly and more successfully solving the challenges that

MOMIR DJEKIĆ Head of Software Development at TeleGroup Serbia

ROL E

TECHNOLOGY AS A TOOL Our role, as a digital transformation consultancy, is to empower companies to carry out processes of establishing and managing innovation, adaptation of business models, all with the help of technology as a tool.

their users are facing while providing them with an environment in which they feel safe will progress faster. Those who do not, however, will quickly find themselves in a situation where they need help. Our key clients are companies that have recognized the urgency to focus on the needs of their users and adapt or completely change their business models. These include banks, insurance companies, retail chains and production companies. In which way do FinTech companies affect the transformation of financial market? — Objectively speaking, companies operating in the world of financial technologies (FinTech) are probably the best representatives of technological disruptions in traditional industries. Changes in the demographic structure of our planet have established portable device / smartphone users as a pivotal market segment. Their habits and needs require a different approach to financial services compared to that which had been applied in the financial industry for decades. That's why smaller and more agile tech companies, which are focusing on providing advanced and modern financial services adapted to smartphones and PCs, have managed to quickly occupy strong positions for growth.

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INNOVATIONS ARE NEEDED NOW AND ALWAYS As soon as you have launched one innovation in the market, you immediately have to follow with a plan on how to improve it C O R P O R AT E

proactive attitude in the sense of not waiting for the market to make you change, but to look further into the future and listen to the needs of consumers - this is something that can be applied by all companies. At the moment, over 400 scientists and experts are working on the development of our innovations, their advancement and scientific research.

When is the right time to start thinking about innovations? — For those companies that have not yet begun to think about it, the answer is – now! And always! As soon as you have launched one innovation in the market, you immediately have to follow with a plan on how to improve it. Philip Morris presented the IQOS as a revolutionary product four years ago. But this is neither the beginning nor the end of our work on the transformation of the industry and of our basic product. Over 10 years ago, our scientists realized that heating, not burning tobacco is a way to enjoy less harmful smoking. Back then, we designed a device called the Heat Bar, which unfortunately was not good enough, because smokers found it impractical to use. You can have a product that is completely risk free, but if smokers are not switching over to it, it is completely useless in terms of reducing damage. That's why we continued our research and came up with IQOS, a product that is also less harmful and functional, while being superior design-wise. Of course, we did not stop at that. A few days ago, we introduced the third version of this device, IQOS 3 and IQOS 3 Multy, which means that

we have continued innovating and perfecting the device, but also developing completely new platforms, all in line with what we see, hear and assume that our consumers are expecting. Does your company have an open or closed innovation strategy (R&D conducted inside or outside the company)? — The Philip Morris Company has opted for a closed innovation system. Since the very beginning, we have been aware of the fact that our products are controversial and that engaging scientific institutions to do research for tobacco industry can cause various dilemmas. We also wanted the scientists to be fully committed to working on developing tobacco products in order to resolve the problem of cigarette smoke as soon as possible and in the best way possible. At the moment, over 400 scientists and experts are working on the development of our innovations, their advancement and scientific research. However, regardless of our innovation system being of the closed kind, every evaluation of what we do is completely open. Each scientist or each interested party can examine what we are doing in order to prove or attempt to disprove the accuracy of the results that we have come up with in our research centres. Have scientists not affiliated with Philip Morris also shown interest in your innovation activities? — Of course. There are also studies initiated by governments of various countries such as Germany, the Netherlands or Russia, and implemented by their state-owned institutions to prove our

TAMARA STANKOVIĆ Director of Corporate Affairs for Southeast Europe at Philip Morris

We understand and welcome this cautious and proactive attitude towards innovation

claims that IQOS does not generate tobacco smoke and that using this device emits drastically less harmful substances than when smoking cigarettes. We are proud to say that the results obtained in these studies correspond to those that we publish. We understand and welcome this cautious and proactive attitude towards innovation. Therefore, we would like to invite scientists or physicians to give their judgment on this, but also on other innovations, made on the basis of expert analyses, and not on prejudices, and we hope that many of them respond to our invitation. Can companies in Serbia also apply your innovative practices? — A proactive attitude in the sense of not waiting for the market to make you change, but to look further into the future and listen to the needs of consumers - this is something that can be applied by all companies. It's always better to be the one driving the locomotive than run to jump into the last train car. On the other hand, I believe that many companies in Serbia do not have the financial means to hire scientists and experts who would work on improving their products or services. That's why it they often use an "open" innovation strategy, which is understandable, that involves the implementation of scientific solutions designed outside the company. Generally speaking, it is less important whether the approach is open or closed, but it is more important to understand that the application of sciences is the key to improving business in every way and to find a way to act in that direction.