acc malaysian innovation climate report 2010

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In Search of InnovAsianThe Malaysian Innovation Climate Report 2010

Azim Pawanchik & Dr. Suraya SulaimanAlpha Catalyst Consulting

25th January 2010

This report is based on the Malaysian Innovation Climate Survey 2009,which was designed and managed by Alpha Catalyst Consulting incollaboration with Microsoft Innovation Center, Malaysia.

PROJECT

INNOVASIAN


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About Alpha Catalyst ConsultingAlpha Catalyst Consulting (ACC) is an Asian based

Innovation Consulting company. It was founded in theyear 2000. ACCs main focus is on helpingorganizations build the capability and capacity toinnovate and renew itself, to be competitive in themarket place.

Through extensive research and consulting experiencein Asia, Alpha Catalyst has pioneered a simple andpragmatic Innovation Framework to help companiesthat are curious to embrace the innovation agenda.Our insights have helped Asian organizations explorenew approaches and ideas to innovate the way they

innovate, whilst widening perspectives and embracinginnovation without fear of uncertainty.

ACC, has done work in diverse industries ranging frombanking sector, oil and gas right up to the telcoindustry. Apart from Malaysia, the ACC team has alsoworked in Singapore, Indonesia and in the MiddleEast.

Alpha Catalyst Consulting,Level 36, Menara Maxis,

Kuala Lumpur City Centre,Kuala Lumpur, 50088 Malaysia.

Tel: 603 26150133email: [email protected]

www.alphacatalyst.com

Acknowledgments

We would like to thank all the participants of theMalaysian Innovation Climate Survey for investing the

time and mental energy to share their views oninnovation. We would also like to thank other partnersfor helping us design the survey, promote the surveyand in preparing the report. This includes MicrosoftMalaysia, MDEC, Warisan Global Sdn. Bhd. (the hostfor Global Entrepreneurship Week in Malaysia),

Youth Entrepreneur Malaysia, Bugs Tan and manyothers. We would also like to express our gratitude toBank Rakyat, DiGi Berhad, AirAsia X, UEM InnovationCentre, Petronas and many other organizations forallowing us to learn, explore and understand

innovation from a Malaysian/Asian perspective.

3

We believe innovationis a mindset and culture, that iscapable of conceiving the need

for change and developingbreakthrough ideas and

solutions. Its the willingness tochoose and executerisky butpromising ideas. Lastly, it is

about harnessing value whenideas are brought to themarket. Hence, its a

convergence ofneeds, greatideas, execution and value

creation

Copyright Alpha Catalyst Consulting 2010


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Microsoft is committed to helping foster strong localsoftware economies in every country where it does

business. The Microsoft Local Software EconomyInitiative (LSE) takes a leading role in this effort throughinvestments in ICT education and skills development,support of programs that encourages "entrepreneurshipand accelerates local technology commercialization,and initiatives that inspires innovation in the localeconomy."Central to its efforts in developing the local softwareeconomy in Malaysia is its commitment to inspireinnovation by providing access to its software and

technologies to select groups such as startups andstudents via programs such as BizSpark, DreamSparkand WebsiteSpark; building the capability of localcompanies and professionals via training and advisory;and fostering a closer collaboration between industriesand the government."A cornerstone of the LSE is the Microsoft InnovationCenters (MICs) that create an environment to fosterinnovation. A network of 110 Microsoft InnovationCenters across 60 countries provides access to world-class resources for software developers, IT

professionals, university students and faculty, andentrepreneurs. The MICs provide participants withopportunities to exchange ideas, collaborate oninnovative solutions to shared challenges and help localcommunities translate those ideas into business success."In Malaysia, we have established two MICs, theMicrosoft Innovation Center @ Cyberjaya and theMicrosoft Innovation Center"@ MIMOS, collaborationswith MSC Malaysia and MIMOS Berhad respectively.These MICs cater to a wide spectrum of organizations

and audiences, from private to public sector, fromstartups to mature Independent Software Vendors andfrom students to professionals.""About Microsoft MalaysiaMicrosoft (Malaysia) Sdn Bhd (www.microsoft.com/malaysia) is a subsidiary of Microsoft Corporation andwas incorporated on July 8, 1992.Founded in 1975, Microsoft is the worldwide leader insoftware, services and Internet technologies forpersonal and business computing. The company offers

a wide range of products and services designed toempower people through great software any time,any place and on any device.

Contact Details:Microsoft (Malaysia) Sdn BhdLevel" 29-30, Tower 2, Petronas Twin Towers,Kuala Lumpur City Center50088, Kuala LumpurMalaysiaTel: +603 2179 6838URL: www.microsoft.com/malaysiaMIC related enquiries: [email protected] "

http://www.microsoft.com/malaysiahttp://www.microsoft.com/malaysiahttp://www.microsoft.com/malaysiahttp://www.microsoft.com/malaysiahttp://www.microsoft.com/malaysiahttp://www.microsoft.com/malaysia


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A company may maintain a healthyprofit margin and enjoy continued success

without innovation, by maintaining statusquo focusing on quality, cutting costs andcustomer relationship. This is especially trueif the company is unexposed or immune tocompetition, and more so if its customersdemand little choice.However, few companies operate in such autopia. For the rest of the corporate andcommercial world, thereare several reasonscompanies shouldembrace innovation.Malaysian basedcompanies need toinnovate as competitionrises globally and ourcustomers become morediscerning. As theconsumers lifestyleevolve to reflect theirlevel of affluence, they

will demand better andmore innovative productsand services.In addition to that, thecurrent global financialcrisis is sign of timeswhen doing more of thesame is not enough togenerate adequate shareholder value.

The Malaysian economy has been slowlyshifting away from agriculture and low-costmanufacturing, as local labour costsskyrocket at a far greater rate than incountries like China, Indonesia, Thailandand Vietnam. But Malaysia has, thankfully,moved up the value chain by investingheavily in the services and knowledge-based sectors such as the ICT industry, bio-technology, engineering and design

services, hospitality, outsourcing andfinancial services. But within this realm,Malaysia has to face even greater

competition against Singapore, India,Philippines, Taiwan and Korea.

Thus, if a companys competitors doesnot drive it to innovate, its shareholdersdemands for greater return oninvestment, certainly would. Andincreasingly, companies will feel thepressure of demands from itsstakeholders from its partners to

suppliers to advanceinto, if not catch up,with innovation.

Many new concepts oninnovation haveemerged in the pastfew years. This listincludes openinnovation, disruptiveinnovation, front-endinnovation, blue oceanstrategy, value

innovation, businessmodel innovation,design thinking, designfor six sigma and manymore.

We believethat innovation is still at

its infancy stage in Malaysia. We arestill lagging behind other Asian countriessuch such as Singapore, Japan, Korea

and Taiwan. Currently our focus hasbeen on productivity and quality of ourservices and products. The time forchange is here. How ready areMalaysian companies to innovate? Doesthe Malaysian/Asian culture support orhinder innovation? Can we adopt adeveloped countries or Western modelsto innovate as how we emulated the

Japanese culture in productivity? This

curiosity lead us to embark on a journeyin search of innovation in Malaysia.


1.0 Introduction

5


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The Survey

We have come across many surveys in the past that looks atinnovation at a country level, industry level and even at acompany level. We are also certain, that there are manyacademic researches conducted, to understand the state of

innovation in Malaysia. However, we wanted something a littledifferent. We wanted to look at the innovation scene from apragmatic bottom-up perspective, to explore innovation at anoperating level. To really bore down to the exact individuals whoare supposed to be practicing innovation or those aspiring to doso, and discover their views of innovation; within their companyand within the country, and what will make them tick orotherwise!

We are fully aware that there are so many approaches in

innovation but with this survey we wanted a utilitarian viewof innovation, not from a macro economic or policy point ofview. Hence we designed a survey to tap on the experienceand reflections of employees from diverse industries andage group.!The survey itself is largely based on our Catalyst forChange Innovation framework along with inputs fromvarious parties.

In March 2009, we launched the Malaysian Innovation

Climate Survey 2009 in collaboration with MicrosoftInnovation Centre, Malaysia. We ended the survey inAugust 2009.



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! A total of 273 individualsparticipated in the survey. On theaverage, each section had between230-250 responses. We had opened thesurvey to the general public and decided

not to define the demographics early on.Thus, we decided to report the surveybased on the profile of people who haveparticipated.

As expected a large percentageof the respondents, 40%, came from theIT industry, contributed by MicrosoftInnovation Centers involvement. Thedemographics of the data is highly

diverse and we saw many angles ofanalyzing and reporting the results.However, as we wanted this report to bevery general and broad, we shall bereporting the survey based on industry(top five), company size, respondentsage and from an overall perspective.!!


Below 30

40% 31-4047%

41-50

12%

Above 511%

AGE

Non Executive14%

Executive/Senior Executive46%

Project Leader/Manager25%

Senior Manager/Middle Manager

6%

Top Management9%

LEVEL

0 13 25 38 50

40.5

15.5

12.9

11.4

6.1

6.1

3.4

3.4

0.8

IT

Technical/Engineering/Quality

Others

Sales & Marketing

Human Resource, Admin & Corporate CommunicationStrategy

Customer Service

Finance + Accounting

Supply Chain (Procurement, Warehouse, Distribution)

FUNCTION

Others: real estate, teachers/lecturers, lawyer, editor, journalist, doctors etc.


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Below 1018%

11-5015%

51-20021%

201-100024%

>100022%

Below 3 years15%

3-10 years33%

> 10 years52%

Number of employees Company age

0% 15% 30% 45% 60%

51.8%

20.0%

11.0%

5.3%

4.9%

4.9%

2.0%

Local - Private

Multinational Company(MNC)

Local - Public Listed

Foreign - Private

Local - GLC

Government/Semi GovernmentNon Profit/NGO

0% 10% 20% 30% 40%

ICT

Services

Banking/Finance/Insurance

Manufacturing

Oil and Gas

Infrastructure/Construction

Public Sector

Creative/Media/Entertainment

Telecommunication

Retail

Plantation/Agriculture

Agriculture

Social Enterprise

Mining

32%

60%

2%

7%

YesNoPending ApprovalPlanning to apply

MSC Status Company

Company Type

Industry



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The Report

! This report is not a fully scientificendeavor that would meet the vigorousstatistical scrutiny and analysis that is fit for amanagement journal but more of our view of

the innovation climate in Malaysia. It isbased on a combination of the survey data,our interviews and conversations withvarious individuals, consulting experiencewith our clients, our innovation frameworkand philosophy; and finally the currentreports, research and publications oninnovation.

The report has seven main sections. The firstone is on the survey des ign and

demographics. The second part looks at thedefinition of innovation and this is followedby the third section, Innovation in Malaysia,at a broad perspective. The fourth sectionexplores the innovation priority, where weanalyzed the companys desire to innovate.The fifth section looks at the readiness ofMalaysian companies to innovate. Webelieve that there is a big difference betweenhaving the desire and having the capacityand capability to innovate.

! In the subsequent section we go deepand expose the barriers to innovation fromthe various perspectives. The seventh sectionshifts the focus from the company towardsthe individuals and looks at the criticalelements for the individuals to innovate.

! In the final section, we shall besharing our take of the overall results and

the optimum environment for innovation tohappen within Malaysian companies. Webelieve that this report can be used as astarting point for innovation; to build on andexpand on what is already there. We wantthis report to provide a common languagefor innovation so that companies andindividuals alike can start having a deeperand more meaningful conversation with yourteams about innovation.



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Innovation 3.0

The Most Innovative company in Malaysia

One of the questions we asked in our survey was What is the most innovative company that is

operating in Malaysia?. IKEA came out as the top choice and there was a tie between DiGiand AirAsia. The rationale behind the selection included great design, price, understanding ofcustomers needs, branding, creativity and freshness.

! All the three companies are not high technology companies, in the sense that they donot create new technology but instead are focused on design, creativity, business model,branding and customer experience. We are certain that there are other innovative companiesin Malaysia which have not captured the attention of our respondents.

We believe that the practice of innovation isalso changing. The traditional view of innovation or aswe call it, Innovation 1.0 is about invention of newproducts. Something that is tangible, for instance, yetanother mouse trap that people dont need.Innovation 1.0 is normally practiced by an individualor a small team that have really limited resources, justlike the Wright Brother inventing the airplane orLeonardo Da Vinci who designed or conceptualizedmany inventions such as the parachute, tank andvarious weapons. The practice of Innovation 1.0 is stillcritical as this is where an array of new products and

technologies may emerge.

! The second type of innovation is Innovation 2.0.This is resource heavy, focusing on predominantlydeveloping new technologies as well as exploringbasic sciences. This is mainly practiced by largecompanies, research centers and academic institutions(as they have large budgets and teams). The key focushere is in obtaining patents and publications forresearch. The pressure to commercialize is not veryintense and the time frame for some of these innovations

are more than 5-10 years.

! The third type, an emerging trend in innovation is Innovation 3.0. The key characteristicof Innovation 3.0 is that it is constraint driven, be it cash, technology, time and many others.The time frame from conception of ideas to implementation is normally short. Co-creation andcollaboration with a network of partners and customers forms part of the foundation. Thedriving force of this type of innovation is the right culture and mindset. It is not about creation oftechnology but application of different and new technologies, usage of web 2.0 and opensourcing. The focus is of creating value with fresh services or new management and businessmodels. Examples of companies practicing this type of innovation include AirAsia X, Tune Hotel,

Pulse Group, DiGi and Bank Rakyat.!

11 Copyright Alpha Catalyst Consulting 2010


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3.0! Innovation in Malaysia! Over the past five hundred yearsour country has been a melting pot forculture, trade, technology and

ideology. We were famous as a bustlingtrade hub of the east. It began with theline of Sultanate of Melaka in 1401,then beginning 1511 the Portuguese, theDutch and then the English conqueredwhat was then known as Malaya.

In 1957, we achievedindependence, and then in 1963,Malaysia was formed and we becamea nation full of diversity, talents and

natural resources. Since then we haveseen tremendous changes in oureconomy. In the 50s right up to the 70s,we were strong in the agriculturalsector. By the 80s we shifted to theindustrial age through our look eastpolicy. In the 90s we had a vision ofbeing a developed nation by 2020 andbegan investing in knowledge basedindustry with our K-economy masterplan.

!As globalization descended upon

the world we did not sit still. Theflattening of the world provided us theopportunity to make a shift as well aspressured us to change. Beginning in1990, we saw a sharp rise of theservices sector share of our GDP andby 2020, it is projected that 70% ofour GDP will be from this sector. With

clear competition from China, India,Vietnam and many other countries,Malaysia will need to continue beingresilient as in the past and move into thenext stage of our economy.

! The time has come for us toembrace the Innovation Economy.Agriculture, manufacturing and theother sectors are still relevant; what is

critical is that we need to innovate inthe way we compete and operate ourbusinesses.


Malaysian Economy in Transition

Malaysias % GDP share by sector

Time has come for usto embrace the

innovation economy

?

@A

B?

CA

D?

@ED? @EF? @EG? @EE? H??? H??AI#6('"%&:#6


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The responsibility to innovate lies withmany parties; the government,corporate sector, academic institutionsand of course the society at large.

The burning question lies on how doesthe corporate sector move into this newera as we have prepared our people tooperate in the industrial and knowledgeage?

Do we have the suitable culture andmindset to innovate?

Do we have the appropriate expertiseand knowledge to innovate?

Do we have the necessary technologyand tools to innovate?

Do we have sufficient cash toinnovate?

!Our survey revealed that the top

three driving forces of innovation inMalaysia are the customers,competitors and technology. The survey

outcome got us thinking; if there is littlecompetition and customers dont have achoice would a company ororganization still innovate?

!! Further down the list we see thatonly 29% viewed the suppliers/vendorsas a driver for innovation. Why is thisfigure so low? Are the suppliers notpartnering with these companies to

innovate?. Are they merely traders ofproducts/services with little capabilityto innovate? Finally right at the bottom;27% of the respondents viewed theMalaysian culture as an inhibitor toinnovation while 25% viewed it as adriver.

Why is this so?

Which part of our culture drivesinnovation and which part inhibitsinnovation?


0% 25% 50% 75% 100%

81%

73%

72%

56%

51%

50%

44%

38%

37%

29%

25%

6%

6%

5%

11%

10%

19%

15%

20%

13%

16%

27%

Customers

Technology

Competitors

Current Economic Situation

Business Partners

Infra-structure

Human Capital

Government Policies/Support

Financing

Suppliers/Vendors

Malaysian Culture

Driver Inhibitor

Innovation Drivers and Inhibitors

25% of therespondents viewed theMalaysian Culture as a

driverfor innovation

while another27%viewed it as an inhibitorof Innovation.

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4.0 ! Do we really need to innovate?


Based on the currenteconomic situation, we

should not bequestioning whetherwe should innovate ornot. It is just likeasking the questionwhether your servicesand products needs tobe safe and have ahigh quality. Insteadwe should bequestioning how much

emphasis should beput into innovation.We realize that doingmore of the same isntenough anymore.

Our survey revealsthat more than 90% of the respondents viewed innovation as a key priority for their companyto be successful, especially in the Oil and Gas sector (4.6). This is also reflected across allother industries. Even the traditionally conservative sectors; the Banking/Finance sector,scored a 4.0. When we look at companies of different sizes, there is a very clear messageacross the board, innovation is critical with most of them scoring between 4.0 to 4.4.

How about thecustomers, do they wantinnovation? Looking atthe results, 69% of therespondents viewed thattheir customers demandinnovation from them.How many organizationsare tapping on theircustomers for freshideas ? Where docustomers give feedbackon what they want? Whatseems a little ironic is that thelowest scores are from theservice sector, whichpresumably has one of the

higher customer interactions.

50%

1 2 3 4 5

19%

Our customersdemand innovation

from us.

0.0% 5.5% 25%

Overall 3.8

IT Industry 3.9

Oil & Gas 3.9

Services 3.9

Services 3.7

Banking/Finance 3.8

! ! ! ! ! ! !

Strongly Disagree Neutral Agree StronglyDisagree! ! ! ! ! ! ! Agree

54%

1 2 3 4 5

38%

Innovation is akey priority formy company tobe successful


Banking/Finance 4.0

Oil & Gas 4.6

0.4% 0.8% 6.0%

Overall score 4.3

Services 4.3

IT Industry 4.3

Manufacturing 4.4

51- 200 4.3

< 10 4.4

11- 50 4.0

201- 1000 4.3

> 1000 4.4

90% of the respondents viewed

innovation as a key priority for their

company to be successful

14


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When we launched thesurvey in Q1 2009,Malaysia was still deepin the midst of the globalfinancial crisis. Still, 78%of the respondents felt

that their companyshould intensifyinnovation efforts despitethe hovering economiccrisis (scores rangedbetween 3.9 to 4.3).

Based on these results,we can clearly concludethat employees feel that

innovation is critical evenwith the economic crisis.Scrutinizing the data, thisperception is especially felt by those in the Oil & Gas and Service sectors and also mostsignificantly by those in large organizations (more than 1000 employees).

The innovation priority is clear for many. In fact it may seem to be a paradox, with thefinancial crisis, the natural response is to cut cost, scale down to conserve resources butinstead many felt that their company should be investing into innovation.

48%

1 2 3 4 5

30%

My companyshould intensify

innovation effortsbecause of thecurrent economiccrisis

Overall 4.1

Oil & Gas 4.3

Services 4.3

Manufacturing 4.1

0.4% 1.6% 20%

IT Industry 4.0

Banking/Finance 4.0

< 10 4.0

11- 50 3.9

51- 200 4.0

201- 1000 4.1

> 1000 4.2


! ! ! ! ! ! !

innovation is critical even with the

economic crisis.



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5.0 Innovation: Rhetoric or Reality

16

In the previous section,we concluded that

innovation is critical.The question now ishow innovative are thecompanies in Malaysiaand are theypracticing things thatwill lead to innovation?

Our survey revealsthat only 9.3% of the

respondents stronglybelieve that theirorganization is veryinnovative. The overallscore for this questiondipped to 3.4compared to the scoreof 4.3 for I believe thatinnovation is a key priority for my company to be successful. What this means is that even thoughthe majority (90%) saw the importance of innovation, only 50% believed that their company isinnovative.

Leading the list is the IT and Manufacturing industry, with a score of 3.6. At the other end of thespectrum is the Banking/Finance industry with a score of 3.2. As for company size, those withless than 10 employees scored higher than the rest, at 3.7. Overall, the scores that we obtainedin this research are alarmingly low. Where will Malaysian companies rank in the face of fierceglobal competition?

!

1 2 3 4 5

I believe mycompany isveryinnovative.

Banking/Finance 3.2

ITIndustry 3.6

Oil & Gas 3.4

Manufacturing 3.6

Services 3.3

< 10 3.7

11- 50 3.4

201- 1000 3.2

> 1000 3.4

Overall 3.4

39% 9.3%3.6% 14% 34%

51- 200 3.2




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Catalyst for ChangeInnovation Process


Innovation

cannot be taught,

but it can be

learnt. I can!t

teach you to be

innovative, but

can provide youwith the process

and it is up to you

to discover what!s

your style when

it comes to being

innovative.

Our next endeavor was to explore the innovation climatein the respondents company. Will the practices in therespondents companies lead to innovation or will it hinderinnovation?

!ACCs Catalyst for Change Innovation Process served asguide for the purpose. Each phase needs a unique set ofcompetency and it would be unfitting to expect anindividual to be exceptional at every phase.

The process looks at four key areas:

C1 - CONCEPTION

What are the catalysts for innovation? How docompanies get inspired to innovate? Is there a cleardirection to innovate?

C2: CREATION

What is sparking the generation of new ideas andpossibilities? Is there a system to capture the ideas? Whoare the people involved in idea generation?

C3: CONVERSION

Is there a process for converting the ideas into a tangiblesolution? Are there resources available? Are the leaders

willing to take risk?

C4: CONNECTION

Have the solutions generated value? How do companiesconnect the solutions to their customer?

C2: Creation of Breakthrough Ideas = Creativity

C3: Converting the most promising alternative

into a specific solution = Invention

C4: Connecting the solution with the challenge to

create value = Innovation

C1: Conceiving the need for Change = Insight


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We believe that marketdriven innovation begins

with the needs ofcustomers. One of theindicators of aninnovative organizationis the presence of astrategic direction toinnovate. Without aclear direction toinnovate, employeeswould be lost in terms ofwhat is expected out ofthem. Which market tofocus on and what sortof technology should itfocus on. Theseattributes are apparentin world classinnovators, which are very focused in their industryand market of choice.

Illustration of this is seen in AirAsiaX and Tune Hotel,which is very focused in innovating the way theyreduce their operational cost. Our survey revealsthat the IT industry is slightly ahead when is comesto having a clear direction to innovate. However, onthe whole we see that only 10% of the respondentsstrongly agree that their company has a cleardirection to innovate. Innovating is not about havinggreat ideas alone, without proper focus the greatidea would be lost. !

Conce tion

18

50%

1 2 3 4 5

10%

Banking/Finance 3.4

1.3% 10% 29%

IT Industry 3.9

Strongly Disagree Neutral Agree Strongly

Disagree! ! ! ! ! ! !

Agree

!

!

!

We have acleardirection onthe areas toinnovate.

Oil & Gas 3.6

Manufacturing 3.7

Services 3.4

51- 200 3.6

11- 50 3.6

201- 1000 3.5

> 1000 3.5

< 10 3.9

Overall 3.6



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Strategy/intent andexecution are twoseparate things. Justlike the new yearresolution that isnever executed.

Good intention butpoor follow through!One of the indicatorsof seriousness of aninitiative incompanies is themanagementattention. Ourresearch showed thatthe score forinnovation as being

part of the agenda inmeetings anddiscussions, is a disappointing 3.5 out of 5. Eventhough 48% agreed with the statement, only 9.3%strongly agreed. It is interesting to note that the highestscore (3.8) in this section is from companies with lessthan 10 people. Is the innovation agenda stronger inthese companies? If so, why is that?

Our conversations with various executives alsosubstantiate this data, whereby innovation is notregularly discussed in meetings in contrast to othertopics such as sales figures, safety issues andoperational efficiency.

How much emphasis has your company put intoinnovation in this perspective? Will there come a timewhen innovation is discussed with the same vigor assafety is emphasized in the Oil and Gas sector?

48%

1 2 3 4 5

9.3%

Innovation is partof our agenda inmeetings anddiscussions, justlike any othermatters(e.g. sales,quality etc.)

Banking/Finance 3.4

1.7% 9.3% 32%

IT Industry 3.5

Oil & Gas 3.6

Manufacturing 3.4

Services 3.4

< 10 3.8

11- 50 3.7

201- 1000 3.5

> 1000 3.4

51- 200 3.6

Overall 3.5

"

Strongly Disagree Neutral Agree StronglyDisagree" " " " " " " Agree

Is innovation part of the agenda in

meetings and discussion?



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A final indicator on theseriousness of innovationof a company its R&Dbudget. Some mayargue that an R&Dbudget does not reflectthe innovativeness of acompany. However ifthere is no investment onexploring newpossibilities anddeveloping newsolutions, it would behighly challenging for acompany to innovate.

Slightly more than 40%of the respondentsindicated that their company invests heavily in innovation. If we were to compare industries,the manufacturing and Oil & Gas sector leads the pack. This is followed by the IT sector andthen Services and Banking/Finance.

When we analyzed based on company size, its companies with more than 1000 employeesthat seem to be investing on R&D. The smaller companies, and this would probably reflect thegroup comprising predominantly SMEs, appear to be venturing an alarmingly low amount into

R&D (scoring 3.1).

20

1 2 3 4 5

My companyinvests heavilyin Research &Development

Banking/Finance 3.0

IT Industry 3.4

Manufacturing 4.1

Services 3.0

< 10 3.4

11- 50 3.2

201- 1000 3.1

> 1000 3.6

Overall 3.3

29% 14%4.4% 20% 32%

51- 200 3.1


Oil & Gas 3.8



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Theres no magic whenits comes to innovation.

You need to spend timeand resources toinnovate. Our surveyreveals that 54% of therespondents are giventhe opportunity togenerate creativesolutions. However, outof the 54%, only 7.6%strongly agrees with the

statement. 3M forinstance, allows theiremployees to spend15% of their time ontheir own projects andinnovation. The scenarioin Malaysia is rather different, where many are too bogged down with routine work and fire-fighting.

One of the emerging trends in innovation is open innovation, whereby companies co-create

innovative solutions with their suppliers, business partners and customers. The survey resultsreveal a score of 3.5 in this area; which is on the lower side of the spectrum. If we look backat the earlier part of the survey, suppliers are not seen as a strong driver of innovation.

Does the challenge liewith the company or is itwith suppliers?

Are these companiesready to co-create with

their partners, or arethey just focused ongetting big discounts orgreat bargains formthem? A McKinseysurvey showed thatcompanies who have embarked on open innovation find an average increase of at least 20%in their level of innovations.

Another challenge that is common in Malaysia, is that smaller companies have difficulty to

penetrate large organizations probably due to their branding and positioning in the market.Therefore, although they may be very innovative, the chances of collaboration with a largeorganization, under the umbrella of open innovation, is slim.

Creation

46%

1 2 3 4 5

7.6%

We are giventhe opportunity(time andresources) togeneratecreativesolutions.


1.3% 14% 31%

IT Industry 3.5

Manufacturing 3.4

Services 3.4

Oil & Gas 3.4

Banking/Finance 3.1

51- 200 3.5

< 10 3.6

11- 50 3.5

201- 1000 3.4

> 1000 3.3

Overall 3.4

21

48%

1 2 3 4 5

4.6%

We constantlycollaborate withour suppliers/business partners

to come up withnew ideas/solutions.

Banking/Finance 3.5

0.4% 11% 36%

Overall 3.5

IT Industry 3.6

Oil & Gas 3.6

Manufacturing 3.5

Services 3.3




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One of the keyingredients for innovationis breakthrough ideasthat can transform abusiness or industry andpropel it to an entirely

new playing field.

In our survey, the overallscore in this section is3.4 only. Oil & Gas, ITsector and the smallercompanies seem to beleading in this area. TheManufacturing, Servicesand Banking/Finance

sectors show aperturbing score of 3.2and 3.1.

Does this truly reflect the capability of our people thatare not able toconsistently generatebreakthrough ideas or isit that they dont havethe courage or channel to

express their ideas or isit that they simply donthave the time to think?

The final part of the C2(Creation) processexplores whether theresa clear channel for ideasto surface within an organization. This may seemtrivial, however we have come across many ideasnipers within organizations, that ideas dont have achance of getting through the gate, to be heard.Channels for ideas can be as simple as web forums orintranet. Some of these are already practiced withinorganizations, with success. The overall score here isagain a low 3.4. Clear leaders in terms ofhaving a proper channel are the Oil & Gasand IT Industry.


43%

1 2 3 4 5

7.2%

People in my

companyfrequently comeup withbreakthrough/exciting ideas.


Banking/Finance 3.1

Oil & Gas 3.6

1.3% 16% 32%

IT Industry 3.6

Overall 3.4

Manufacturing 3.2

Services 3.2

51- 200 3.4

< 10 3.5

11- 50 3.6

201- 1000 3.3

> 1000 3.2

43%

1 2 3 4 5

9.0%

There is a clearchannel forideas to surfacewithin mycompany.

1.7% 14% 32%

Overall 3.4

Oil & Gas 3.6

Manufacturing 3.3

ITIndustry 3.6

Services 3.2

Banking/Finance 3.1


"To have a great idea, have

a lot of them."

- Thomas Edison


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Once the idea hassurfaced what happens

to it ? If nothing is doneit will die a prematuredeath. In this stage weexplore the percentageof companies that havea process of sorting theideas and thenallocating resources toexecute the idea.

About half of the respondents pointed out that there is a clear criteria for accepting/rejectingideas. The Oil & Gas sector again dominates in this category followed by the Manufacturingsector. One point to note is that having a clear screening criteria is essential, however if thosecriteria are too stringent it will result in only low risk projects being approved and if they aretoo loose, it can result in wasted resources. Do companies allow the conventional thinking andtight budgets to rule decisions?

Here is where it isconnected to howmuchrisk are the managers/

leaders willing to takewhen it comes toinnovation? Again wesee the IT industry (3.9)and the smallercompanies leading thepack. Why aremanagers in the ITindustry more willing totake risks compared toother industries?

! What is interesting tonote is that the scorefor Banking/Finance,Manufacturing and alsolarger companies (more than 1000 employees) seem to be low (3.2 - 3.4). The manufacturingsector takes up the rear end at 3.1.

If we are to consider the manufacturing sector, what are the repercussion of having risk averseleaders on the innovation quest ? Does having a clear criteria for accepting and rejecting ideasmake a significant impact?

!

Conversion

49%

1 2 3 4 5

4.0%

There is a clearcriteria foraccepting/rejecting newideas.


Oil & Gas 3.9

1.3% 17% 29%

IT Industry 3.5

Overall 3.4

Manufacturing 3.6

Services 3.2

Banking/Finance 3.3

23

49%

1 2 3 4 5

6.0%

Our leaders/managers arewilling to take onrisks to innovate.

4.0% 11% 3.0%

IT Industry 3.7

Oil & Gas 3.4

Manufacturing 3.1

Services 3.4

Banking/Finance 3.2

51- 200 3.5

< 10 3.8

11- 50 3.6

201- 1000 3.3

> 1000 3.2

Overall 3.4




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As we saw previously,the manufacturingsector appeared tohave a clear processfor accepting andrejecting new ideas

however as theirleaders are not willingto take on risks, thetype of innovationprevalent are mostlikely more focused onoperational and incremental innovation. A risk averseculture will limit creativity and create a vicious cycleof fear to even try to do things differently.

Innovation is not about generating great ideas alone.The ideas need to be executed to create value for thecompany. The survey reveals that when it comes tohaving a structured approach in funding andproviding resources for promising ideas; the Oil andGas industry is way ahead of the rest at 4.0. Theoverall score in this section is 3.3.

Managing innovationprojects is no different

from other projects. Itrequires discipline,consistentcommunication andfollow through. In thisarea the Oil & Gassector again leads witha score of 3.8 in havinga clear approach tomeasuring progress intheir innovation efforts.Part of the equation is also to know when to abandonan innovation project. In this sense, companies mustnot lose sight of the initial focus of the project (theC1(Conception) stage of the innovation cycle).

43%

1 2 3 4 5

4.7%

There is astructuredapproach tofund and

provideresources forpromising ideas.

3.0% 16% 34%

Overall 3.3

Oil & Gas 4.0

Banking/Finance 3.4

Manufacturing 3.2

IT Industry 3.2

Service 3.4


! ! ! ! ! ! !

41%

1 2 3 4 5

6.4%

We have a clearapproach inmeasuring theprogress of ourinnovationefforts.

2.6% 16% 34%

Overall 3.4

IT Industry 3.4

Oil & Gas 3.8

Banking/Finance 3.4

Manufacturing 3.2

Service 3.2

! ! ! ! ! ! !




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In the end, innovationhappens when value has

been created. A patent,an invention or a brilliantidea is still not of valueuntil it has created animpact. What isapparent from the surveyis that many felt thatwhen they haveinnovated, value hasbeen created. Especiallythose from the Manufacturing sector (4.1). This is followed by the Oil and Gas and IT sectors.What could not be measured in this survey was the quantification of the value created as thiswould have involved a lot of confidential data which many employees are not privy to.

Innovation is normally arisky venture and failureis a norm. In this sectionwe can see a dip in thescores as only half of therespondents believe that

failure in an innovationproject does notjeopardize a personscareer within thecompany. The trend is alittle bit more interestingwhen it comes tocompany size. Thesmaller companies seemto be more receptive offailure compared to the

larger companies. Is thisan influence of the entrepreneurial mindset among the smaller companies?

!When cross-referenced, this data connected well with the data from C3, whereby managersfrom larger companies were much more risk averse.

How then can you change the culture within your organization to be less risk averse? Whatare the paradigms that need to be addressed?

Connection

62%

1 2 3 4 5

7.7%

Our innovationshave createdvalue for ourcustomers/externalstakeholders.

Banking/Finance 3.7

0.0% 5.6% 25%

Overall 3.7

IT Industry 3.7

Oil & Gas 3.9

Service 3.6

Manufacturing 4.1


! ! ! ! ! ! !

43%

1 2 3 4 5

6.4%

Failure in an

innovationproject does notjeopardize aperson's careerwithin thecompany.


Banking/Finance 3.3

Oil & Gas 3.5

2.1% 12% 36%

IT Industry 3.4

51- 200 3.5

< 10 3.8

11- 50 3.6

201- 1000 3.3

> 1000 3.2

Manufacturing 3.3

Service 3.3

Overall 3.4



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6.0! Innovation BarriersUnveiling the

road blocks:The survey hasuncovered severalbarriers toinnovation. The keybarriers that arecommon across thedifferent industries,age groups andcompany size areLack of ClearDirection to innovate(C1) and RiskAversity ofManagers/Leaders(C3).

This diagram pairsthe key barriers toinnovationaccording to thevarious groupsegments (industry,age of respondentsand company size).Although thereappears to be ajumble of connectinglines, what is crucial to observe is the congregation of lines towards Lack of Clear Directionto Innovate (C1) and Risk Aversity of Managers/Leaders (C3). No matter how we look atthe data, these two indices form the most significant barriers to innovation. This further

emphasizes the crucial role a leader plays in innovation.

What emerges as a barrier next is the lack of understanding of customers needs and lackof funding to develop and commercialize ideas.

How can these be vanquished within your organization?

Will addressing the two foremost issues lead to a significant increase in innovativeness?

Yes, we think so!

Next, we will examine further whether the culture, capability and capacity within anorganization is favorable to propagate innovation.

!



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Success in innovation is not made up of a single silver bullet. It comprises of a myriad of stages.We have collated parameters from the various stages of innovation, ones that we feel are more

crucial for organizations to use as a tipping point. At the initial stage (C1), the direction toinnovate has to be absolutely clear. The second stage (C2), is where we come up with ideas toinnovate. What companies need to look for is breakthrough ideas. Many organizationsmaintain that their employees come up with ideas however if these are incremental ideas, wewill not experience breakthrough innovation. The third stage of innovation (C3) is where weneed to narrow down and choose the innovation project to embark on. Here, the willingness totake risk is crucial. Organizations need to have both the low and high risk project portfolios.The last measure on the diagram reflects the willingness of employee to stick their neck out forinnovation. If the company culture makes it unsafe to practice innovation, this will be clearlypronounced.

Our research shows that the score on the direction to innovate is generally low, with the ITindustry leading the pack. This is re-emphasized again as lack of a clear direction to innovateleads the way as an innovation barrier. However, this was not listed as a barrier for the ITindustry. This just goes to show that the role leaders play in setting the direction is crucial forinnovation. But the role of the leader doesnt stop there. Their willingness to take risks have asignificant impact on innovation. Here, again we see the IT industry leading the way and scoresfor the Manufacturing and Banking/Finance industry are a bit worrisome .

!

3.0

3.2

3.4

3.6

3.8

4.0

Manufacturing

Oil & Gas

Services

IT

Banking

Overall

Where is the Culture of Innovation?



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In addition to a clear direction to innovate, employeesmust be able to generate breakthrough ideas. Thelow score prevalent across the industries are areflection of our general capability to innovate. Howcan we change this ? Where can we get inspirationfrom?

The last two indices on the graph are a reflection ofthe pervasive culture. The willingness to take risks (bythe leaders or managers) and the impression thatfailure in an innovation project does not affect thecareer of an individual. The scores of the latter, whenanalyzed, almost converge to a single point, with nosignificant difference between industries. Is thiscompounded by our Malaysian culture? How aboutthe willingness to take risks? How can we change

that?

On the whole, the Oil and Gas and IT industry seemto on the right path, with their indices above theaverage score. Industries that we see are lackingbehind are the Banking/Finance and Servicesindustry, where generally the scores are low. Whenwe scrutinize the Manufacturing industry, the directionto innovate appears to be somewhat strong howeverwithout the capability to come up with breakthrough

ideas and the lack of company culture that supportsinnovation, it is still not enough.


Does your companyculture supportinnovation?


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Do we have the Capability to Innovate?

In the line of our work, many a time thequestion how do you get good ideas?

surface. Arguably, if we look at literature,there are many underlying factors to comingup with creative ideas. Here we look at thedegree of collaboration that happens withinan industry and how this relates toemployees coming up with breakthroughideas. How do we assess if companies havethe basic capability to innovate?

The IT industry appears to be leading in this

area. All their scores for collaboration(which include constantly exploring newperspectives; inside and outside the industry,collaboration with suppliers, businesspartners, engaging customers and sharingtheir wealth of information within the group)are above the average scores and theygarner the top spot in almost every one ofthese indices. It is then no surprise that theirlevel of coming up with breakthrough ideas

are also the top scores.

Before we get too comfortable, we need torealize that all the scores, for all industries,

fall below the 4.0 mark. This does not bodewell for the overall innovation scenario.

! Another leader amongst industries isthe Oil& Gas sector. Their scores dip only atengaging their customers in the early stagesto get feedback. Their other scores maintainon the higher side. Their scores for coming upwith breakthrough ideas are also on thehigher end. Collaboration efforts appear to

be on the higher side in this industry. Thismust surely also be supported by the fact thatthey have a clear channel for ideas tosurface, clear criteria for accepting andrejecting ideas and a culture which is moresupportive of innovation (this is seen in thenext graph). How then can other companiesemulate this?

BL?

BLH

BLC

BLD

BLG

CL?

IA IH) IB) IC) I@



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An uncomfortable point in this graph is the level ofbreakthrough ideas in the Banking/Finance,Manufacturing and Service sectors which hover around the3.2 mark.

The Manufacturing sector appears to lead in terms ofengaging the customer but fall far below when it comes togenerating great ideas. Here, their scores for sharinginformation with others are also low. The willingness oftheir leaders to take risks are also low (as seen in theprevious chart). Compounded, this spells disaster when itcomes to breakthrough idea generation. How can we haltthis trend ?

Another perturbing area is the general low scores for theService sector, constantly below average. The Banking/

Finance sector is just slightly better, managing to scoreaverage points on two areas. Overall, these two industriesappear to constantly be under the bar when compared tothe others.

What are the areas in which your company can focus on,to tap on the collaborative energy to innovate?


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Do we have the Capacity to innovate?

We define capacity to innovate as having theresources and tools to innovate. For

example, someone may have the knowledgeto innovate; however they may not have thetime or energy to do so. In an organizationalcontext, a company may have the equipmentand tools to innovate; however all thiscapacity may be tied up for routine workonly. In this case our emphasis is the processof innovation. Where are Malaysiancompanies in terms of their capacity toinnovate?

If in the first place employees are given theresources to innovate, is there a clearchannel for ideas to be put forth? Are therethen clear guidelines to accept or reject theidea? How much risk are leaders willing totake to champion a new innovative project?How do companies allocate funds forinnovation projects?

If we are to study the graph below, clearleaders in most of the areas are again the ITand Oil & Gas sector. Almost all their indices

lie above average. The exception is that inthe oil & gas sector, they dont have the

luxury of time and resources. Even with thisconstraint, they are coming up with morebreakthrough ideas than the other threeindustries (Manufacturing, Banking/Financeand Services) as seen in the previous graph.

The Service and Banking/Finance sector arestill below average on this juncture. TheManufacturing industry is seen to wax andwane around the average scores but drops

significantly when it comes to the willingnessto take risks. What also appears to belacking is a clear channel for ideas tosurface within the manufacturing sector. Howthen do leaders expect to tap on their vastcollection of idea generators (employees) tomove forward?

Are these indices difficult to adopt? How canyou make it happen in your organization? Its

clear that these appear to work for the ITand Oil and Gas sector. What makes themso different from the other industries?

BL?

BLH

BLC

BLD

BLG

CL?

>@ >H) >B) >C



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7.0 Drivers to Innovate

What is obvious is that its not about technology, money or process but its leadership!

What was so blatantly clear in this sectionwas that the majority of respondents wantedleadership support and trust for them to beable to innovate. This was seen across theboard in all the various age groups andcompany sizes. Even in the more mature agegroup, this was an issue. One point to ponder is, if the more senior people feel they are notgetting enough leadership and trust, how are they demonstrating it themselves? Does it thenbecome a chicken and egg situation?

Are employees really given insufficient freedom and empowerment to innovate?!How much empowerment is enough?


What employees need to Innovate:

respondents wanted leadership

support and trust


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0 20 40 60 80

Knowledge Sharing Portals e.g Wikis, Blogs, Podcasts, Videocasts, Tagging etc.

System to capture insights and ideas e.g. Forums etc.

Internal Social Networking e.g Groups etc

Idea generation tools/system e.g. mindmapping, TRIZ

On-line Collaboration tools to manage projects

External Social Networking e.g. Facebook, Ning

Voting/Polling System to select issues, ideas or provide opinion.

More open internet access to everybody

< 30 31-40 41-50

The second element is a tie between more resources andtools to innovate and a great team. As seen in the tableabove, employees want to have more knowledge sharingportals (Wikis, blogs, videocasts) and a system to captureinsights and ideas. These tools form a platform for

collaboration and idea capture which is essential ininnovation.

Forming great teams can be a physical entity however weshould not forget that with the advent of web 2.0, teamscan be virtual too. A diverse team would be more apt atcombining insights and knowledge from the differentdivisions of the company.

Other elements which surfaced as drivers to innovatewere the need to have a clear process to innovate, moretraining and exposure and exciting projects to work on.

How then can leaders make this happen within theircompany?


More knowledge sharing portals

(Wikis, blogs, video-casts)

Tools to Innovate (based on age)


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The Bottom line!!

The survey revealed that innovation iscritical for Malaysian companies to besuccessful. However only a small percentageof the companies viewed themselves ashighly innovative. The challenges toinnovation is now laid clearly in front of us.

At C1(Conception) we saw that manycompanies are not very strategic when itcomes to managing innovation. In fact, thekey barriers to innovate at this stage is not

having a clear direction to innovate andlack of understanding of the customer's(internal/external) needs. At conception wealso found that companies are not reallyinvesting in R&D and innovation is notsomething that they emphasize strongly intheir day to day operations.

! At C2 (Creation) of our innovationprocess, we found that many companies are

not investing in innovation as only half arespending time to innovate. Even then, theyfelt the creation of breakthrough ideas is stillnot very strong. Among the key barriersidentified here is the lack of innovative talentsand inadequate rewards to innovate.

At C3(Conversion) the challenge lies intwo areas. Firstly there is no strong processand discipline within Malaysian companies tocapture, fund and manage new ideas andinsights. The other challenge lies in the levelof risk managers and leaders in Malaysiaare willing to take to innovate. In fact thesurvey revealed that barriers related to thisstage include risk aversity of managers/leaders and also the lack of funding todevelop/commercialize ideas. When itcomes to the funding issue, the challenge liesnot with the fact that we dont have enoughcash for innovation but it is rather that we

are not willing to spend it on risky innovationprojects!

Finally at C4 (Connection), those braveenough to reach the final stage ofinnovation, found that their efforts ininnovation frequently generated value fortheir stakeholders. The challenge is that inmost companies failure at this stage does notseem to be favorable and could insteadimpede someones career within a company.

Making Innovation A Reality! Innovation is about creating value,whether it is bringing an idea to market ortransforming a listless company into a vibrantorganization that enriches the bottom line.An innovative company is one that boldlydevelops and executes great ideas whiletaking informed risks. We believe that theability to innovate is inherent in a companythat possesses a culture and a mindset thatrecognizes the need for change.

8.0! Time to Embrace Constraints

The ability to innovate

is inherent in a

company that

possesses a culture anda mindset that

recognizes the need

for change.



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! We have no shortage of books oninnovation flooding the market. Why is it thenstill elusive to most companies? Truth be told,

the innovation challenge differs fromcompany to company, country to country andculture to culture. We believe that innovationis very much within the reach of many Asian/Malaysian based companies, neverthelessthey should refrain from simply adopting,copying or bench-marking against Westerninnovation models. Instead they need to findtheir own way in the innovation agenda.Sadly, there is no one size fits all in this.

! We have seen the best brains sent tothe top business/engineering schools thatequipped them with brilliant ideas andconcepts only to find that it is misaligned withthe Asian culture. We have hired world classconsultants to develop strategies to innovateyet progress is slow. Borrowing Westernideals is, of course, more boon than bane.But our culture, talent pool, size of capital,technological and market accessibility limitsour ability to emulate the Western style of

innovation.

!

The reality is that our Asian culture isnot going to change in the next few yearsand the mindset of our people wont

transform overnight. We are not going to geta sudden upsurge of cash, time and resourcesto innovate. Our education system will alsotake time to produce innovative talents tofeed into the innovation economy.

The key to innovate is to take from the bestand blend with the rest. We must accept therealities of the operating environment andits packaged constraints then develop an

approach to innovation that is most native toour culture, values and modus operandi. Wemust move away from focusing on bestpractice and work on the next practice orourpractice. We must innovate in the way weinnovate. This is the beginning of our journeyin search ofInnovAsian.


We mustinnovate theway we innovate

InnovAsian: Innovating Innovation


36/39

In Asias risk-averse culture that demonizesmistakes and failure, new insights and ideasare easily dismissed. And as a result,innovative ideas rarely take off. Similarly,unless a project is safe, low-risk and promisesimmediate returns on investment, it is rarely

given an adequate budget or any funds.More often than not other short-termendeavors take priority over promising butunconventional ones. This leads to anotherbarrier to innovation, cash, which isprevalent in many Asian companies.

Even when a company takes a chance oninnovation, several inhibitors come into play.Companies may not have the leaders,

partners and talent with capability,technological ability or know-how toinnovate. Do leaders trust and empower theiremployees to innovate? The trouble is,middle managers and executives continue tohold onto linear mindsets, which some say isthe result of rote learning and conformitypromoted in the education system. Thisprevents their organizations from moving intothe innovation front. Many are unwilling to

explore new frontiers in innovation simplybecause failure is often dealt with severely.

But also, leaders may find themselvesswamped with the traditional aspects of

management, leaving them very littlecapacity to lead the innovation process.Companies should not be surprised to findthat some of their most talented, capable andpassionate employees are buried in routinetasks and internal fire-fighting.

While customers are always looking toimprovement in the products and servicesoffered to them, there are always those whoshun change and improvement and wouldmuch rather stick to the tried and true.

But companies need not fear theseconstraints as it can act as a force to spur

innovation. In some cases, companies areforced to innovate when theyve lost marketshare, stricken with an outdated businessmodel or faced with a daring newcompetitor, only to bounce back bigger andbetter than before. Everybody plays a partin making innovation real regardless of yourrole in your company or society. We hopethat this report will help companiesunderstand the state of innovation withinMalaysian organizations. We hope thatcompanies can find the courage to acceptthe constraints facing them and begin theirquest in innovation.


Constraints can actas a force to spurinnovation


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Innovation isnt the work of a lone visionary,it is instead the sum of many parts. More than

often, management must ensure that its nutsand bolts among them the organization'sculture, structure, finances and people arealigned before they even think aboutinnovation.

Nevertheless, influencing 400 instead of 40employees to innovate is a mammoth taskthat lavishes on more time and resources thannecessary. Companies should, instead,

empower and influence leaders to mobilizethe troops. It is an efficient and powerfulstrategy aided by Asias patriarchal traditionsthat have resulted in organizations that thriveunder top-down management styles.

Once an organizationhas its leaders soldon the idea ofinnovation, its time

to turn the Kenduri(feast) sized affairthat is the process ofinnovation into amanageable andseamless soiree. Tocover all bases,leaders must embedeight crucial elementsin their organization:

E1: Concentration:Have a clear senseof purpose. Embarkon an internal andexternal branding campaign to ensure thatthe message to innovate is clear andconsistent within the company.

E2: Coordination: Design a formalizedinnovation process that includes riskand project management mechanisms.

Alternatively, look at yourorganizations existing system, identify

the obstacles and develop ways toovercome them. This will allow leadersto tap into the flow of insights and ideasfrom employees. Set up a resourceallocation system to realize those ideas.

E3: Context: Tune in and map out.Get a feel for the vibe that resonatesin your organization. Walk thehallways and cafeterias of your

headquarters and find the answersto these questions: How do youremployees feel about innovation?What are the issues they face? Beaware of the changes that arehappening in and around yourcompany. Extrapolate the

environment in which yourorganization operates in. Operatingin isolation exposes you to the risk ofbeing dated. Furthermore, stagnancywill only kill your bottom-line andyour company culture.


InnovAsian: The Critical Elements


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E4: Communication: Extensive communications acrossthe board is essential. Here, companies should nothesitate to use new technology to communicate andshare information.

E5: Collaboration: Encourage people with diverse viewsand background to make extensive collaborations formal or open within your organization and withyour partners, clients and competitors. Externalcollaborations can also serve as short term solutions toovercome internal capability. This can also give freshinsights.

E6:Creativity: This is a crucial, but not the sole,element necessary to generate fresh or novel ideas toinnovate upon. Remember that creativity isoutsourceable. Leaders cant undo three decades ofwhat an educations system does to a person in threedays of creativity training. However, be ready toaccept new and radical ideas if it emerges.

E7: Base Knowledge: Innovation doesnt happen invoid. People need a large assortment of tacit andexplicit knowledge as well as technical, operational

and financial competencies. The cross pollination ofideas will also give rise to new knowledge, betterideas and insights.

E8:Energy: As with any other task, managing onesenergy is extremely important. Leaders must becognizant of employee engagement. Challengeemployees to step out of their comfort zone but keepstress under control. Concentrate on buildingrelationships and a sense of solidarity, which is typical

in Asian societies. Small acts could have a significantimpact.



39/39

For the leader, whether at the macro ormicro level, you need to create a culture

where innovation can thrive, build yourteams capability to innovate, provide thecontext and capacity for them toinnovate. Lean towards creating a diversecross-functional team. Practice managingambiguity and risks. Tap on the Gen Ys(Below 30s) freshness. Source ideas fromoutside the organization (this may be fromuniversities, customers, suppliers,competitors, innovators and entrepreneurs)to innovate. Finally provide cash or riskcapital to innovate.

For the the individual, we hope that bynow you understand where you fit, in theinnovation equation. Innovation is notabout creativity alone, you can beinvolved in any stage of an innovationprocess (C1-C4). The key is for you tohave the willingness to explore newterritories, experiment doing new thingsdifferently and be prepared to take higherrisks (even if it may mean loosing out onyear end bonuses!). Remember that greatideas come from cross pollinating conceptsfrom different industries and disciplines.Expose yourselves to areas not connectedto your field/discipline. Assimilate new andemerging trends, market products, insideand outside your industry.

For the innovators we hope this report willhelp you understand your challenges

better at the different stages of theinnovation process. Innovation is a teameffort and you need to respect thedifferent stages of the innovation process.Lastly, make sure that you have acombination of simple and radicalinnovation projects.

To conclude, innovation is a mindset andculture, that is capable of conceiving the

need for change and developingbreakthrough ideas and solutions. Its thewillingness to choose and execute risky butpromising ideas. Lastly, it is aboutharnessing value when ideas are broughtto the market. Hence, its a convergenceof needs, great ideas, execution and valuecreation.

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