Interview with Bogdan Kronovšek, Managing Director of KRONOTERM

You have quickly found your footing with technological and developmental aspects. Were there any challenges you faced when transitioning to the role of the director?

Bogdan Kronovšek: I must admit that I wasn't really excited about the position of the director, but I had to step up to it if I wanted to steer the company in the technological and strategic direction I envisioned. One shortcoming of us engineers is that we are used to working in a technical field governed by with very clear physical and mathematical laws. However, if you want to successfully run a company, you need to know how to work with people. At first, this can be difficult for engineers— when it comes to people, one plus one is not always two, people are very rationally irrational and logically illogical.

I believe that working with people is an important skill that needs to be learned. It’s not something we were taught in school. I learned some of it at home, from my father. However, with the rapid growth of the company, when we quickly expanded from 30 to 120 employees, the relationships among colleagues within the company also changed. The way we communicated and managed people had to be adjusted accordingly.

I always say that rapid growth is great, but it comes with a cost, as it has a large effect on the organization of work. If you want to operate on a larger scale but do not have the appropriate structures in place in terms of employees, relationships, processes, and new ways of working, it will hold you back.

Your successes and those of Kronoterm show that you have adapted well to the director's position, even though it wasn't your first choice.

Bogdan Kronovšek: When you find yourself in such position, you have to start actively seeking people skills. Every employee has their own idea of how work should be done. It was important for me to learn how to communicate in such a way that we are all on the same wavelength in the end.

Better understanding of people and the ways they operate, and better understanding and acceptance of differences between people makes it easier for yourself to function. It also helped that I have a good team of people around me whom I can trust and who are very human. I can now honestly say that I enjoy working with people.

What would you highlight as the key competitive advantage of Kronoterm that has enabled your success in the European market?

Bogdan Kronovšek: Our key competitive advantage is that we develop and manufacture our own solutions. We are always looking for ways to improve the user experience based on changing user habits, new technologies, and new ways of living. We produce solutions for several larger partners under their brands. These collaborations account for about 25% of our revenue. In addition, we market products under our Kronoterm brand in 18 European markets.

Our quality is also reflected by the fact that the new generations of our geothermal heat pumps and air-water heat pumps were the most efficient among five to six thousand other heat pumps in their segment when we launched them in European market.

Our heat pumps are at the top of the German BAFA list, which includes all heat pumps on the European market and acts as a database of information for architects and final users. We are also proud that the European Environmental Bureau (EEB) has named Kronoterm as one of the key companies for the European green transition two times, both for what we do and for the way we do it.

What would you highlight as three key advantages of your products for the end user?

Bogdan Kronovšek: First, our heat pumps are extremely quiet. This means that they do not disturb the neighbors or your sleep, which is very important. We set quietness as one of our main goals in pump development years ago.

The second advantage of our heat pumps is that we always strive to ensure maximum efficiency, which translates into the greatest possible savings for the user and the most environmentally friendly heating.

The third thing I want to highlight is that our system can be managed via phone or computer. We also offer remote customer support, which allows us to resolve up to 70% of problems in just a few minutes and without the unnecessary costs of a home visit, as most of the problems are not related to the heat pump itself but to system settings.

How do you comment on the recent progress in the field of artificial intelligence? Are you using AI in the company?

Bogdan Kronovšek: We are using AI in marketing and sales, and we are also implementing it in user support. We are currently testing an AI-assisted customer support system, where AI will help the users solve their problem through conversation, even if they call at three in the morning. However, we are not yet implementing it in our heat pumps and other solutions.

Personally, I am not convinced that AI will be beneficial for humanity in general. We will see. But I do think humanoid robots that can do everything humans do will have a much greater impact on life in general and on business operations than currently used robotic arms in manufacturing, which still need to be operated by people.

In 2022, Kronoterm recorded exceptional growth. What contributed to this, and how is the company performing currently?

Bogdan Kronovšek: It is true that there was a significant increase in demand for heat pumps in Europe in 2022. One factor that greatly contributed to this was the war in Ukraine and the fear that there would be no more gas coming from Russia. Many people who might have planned to buy a heat pump in a few years decided to buy it sooner rather than later. After 2022, the demand stabilized for a while, but now we are once again seeing growth. We are satisfied with our revenue, which allows us to invest into development of new products and growth of our workforce.

There is no doubt that heat pumps are one of the key elements of the green transition. They are a more economical and user-friendly way of heating, cooling, and preparing hot sanitary water. Heat pumps simply extract heat from the environment, the ground, or the water, use it, and then return it into the environment through walls and water. They do not create any additional heat. This is what makes them the cheapest and most environmentally friendly way of heating. I am confident that heat pumps have bright future.

We occasionally hear critical thoughts regarding the rushed implementation of the green transition in Europe. What are your thoughts on this?

Bogdan Kronovšek: Certain things might have been overstated in the starting phases of the green transition, but this does not apply to heat pumps. People decide for heat pumps primarily to save money, not because they are less harmful to the environment. The environmental aspect is just a bonus. I believe that the combination of savings and environmental friendliness is a winning combination. If you buy something that is cheaper but more harmful to the environment, it does not leave you with the best feeling.

In Slovenia, people may also be hesitant to invest in a heat pump right now due to the reform regarding the calulation of power network fees. How do you communicate with your customers in this situation?

Bogdan Kronovšek: People do have misgivings, which can be attributed to the uncertainty of the situation and the way it has been reported in the media. Many of our potential customers say they would rather wait for another year to see how things will go. But still make economic sense. We have already done the simulations and calculations of network fees that prove it.A heat pump does not use as much power as people might think. In new buildings, it consumes about 2 kW of energy. This is less than, for example, an induction stovetop, which consumes about 5 kW, and is comparable to the consumption of a hairdryer. Heat pumps are unjustly highlighted as a problem.
Still, I think the new system is far too complicated and that the highest tariff is far too high.

What are your wishes and plans for the future of Kronoterm?

Bogdan Kronovšek: We are currently developing new generations of all our products using the new refrigerant R290, which will make them even more efficient and environmentally friendly. We are also developing a new control and connectivity system which will be compatible with all smart home systems. On the organizational level, we are expanding our operations into new markets. We are also planning a new storage and manufacturing hall for which we have already purchased additional land. We will continue to innovate and grow, although perhaps a bit more slowly than we had planned two years ago. We are not standing still—we are decisively moving forward.

Finally, tell us how your children, who are still in elementary school, perceive the company. Do they feel a connection to the company, are they interested in it?

Bogdan Kronovšek: Of course, they sometimes come to visit the company, and we also involve them in internal events. On Saturdays, we often walk to the company and pick up litter in the area, which I encourage as it builds good working habits. My oldest daughter occasionally helps in marketing with age-appropriate tasks. I can also see that they are proud when something is published about the company. They find it interesting. Time will tell how things will turn out in the future. It is important to me that they grow with the company while also giving them the freedom to explore other options.