Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010

(Co. No.: 1273639-U)

In Search of InnovAsian ™
Change
Renewal
Innovasian
Second Curve Creation
The Malaysian Innovation Climate Report 2010

Azim Pawanchik & Dr. Suraya Sulaiman
Alpha Catalyst Consulting

25th January 2010

PROJECT
™
INNOVASIAN

(Co. No.: 1273639-U)

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

Table of Contents
1.0! Introduction! ! ! ! ! ! ! ! 5
2.0! What is Innovation?! ! ! ! ! ! 10
3.0! Innovation in Malaysia! ! ! ! ! ! 12
4.0! Do we really need to Innovate?! ! ! ! ! 14
5.0! Innovation: Rhetoric or Reality! ! ! ! ! 16
6.0! Barriers to Innovation ! ! ! ! ! ! 26!
7.0! Drivers to Innovate!! ! ! ! ! ! 32
8.0! Time to embrace constraints ! ! ! ! ! 34

No part of this report shall be reproduced, broadcasted or distributed in any form or by
any means or stored in any database, network or retrieval system without the prior
consent of Alpha Catalyst Consulting.

The contents of this report has been prepared by Alpha Catalyst Consulting and constitute
the views and opinions of Alpha Catalyst Consulting only, and not those of Microsoft.
Alpha Catalyst Consulting shall not bear any responsibility for any damage, loss or injury,
whether intentional or unintentional, incurred as a result of usage in any way of the
information contained in this report.

Copyright © Alpha Catalyst Consulting 2010
2

Acknowledgments

We would like to thank all the participants of the
Malaysian Innovation Climate Survey for investing the We believe innovation
time and mental energy to share their views on
innovation. We would also like to thank other partners is a mindset and culture, that is
for helping us design the survey, promote the survey capable of conceiving the need
and in preparing the report. This includes Microsoft
Malaysia, MDEC, Warisan Global Sdn. Bhd. (the host
for change and developing
for Global Entrepreneurship Week in Malaysia), breakthrough ideas and
Youth Entrepreneur Malaysia, Bugs Tan and many
solutions. It’s the willingness to
others. We would also like to express our gratitude to
Bank Rakyat, DiGi Berhad, AirAsia X, UEM Innovation choose and execute risky but
Centre, Petronas and many other organizations for promising ideas. Lastly, it is
allowing us to learn, explore and understand
innovation from a Malaysian/Asian perspective. about harnessing value when
ideas are brought to the
market. Hence, it’s a
convergence of needs, great
ideas, execution and value
creation
About Alpha Catalyst Consulting

Alpha Catalyst Consulting (ACC) is an Asian based
Innovation Consulting company. It was founded in the
year 2000. ACC’s main focus is on helping
organizations build the capability and capacity to
innovate and renew itself, to be competitive in the
market place.

Through extensive research and consulting experience
in Asia, Alpha Catalyst has pioneered a simple and
pragmatic Innovation Framework to help companies
that are curious to embrace the innovation agenda.
Our insights have helped Asian organizations explore
new approaches and ideas to innovate the way they
innovate, whilst widening perspectives and embracing
innovation without fear of uncertainty.

ACC, has done work in diverse industries ranging from
banking sector, oil and gas right up to the telco
industry. Apart from Malaysia, the ACC team has also
worked in Singapore, Indonesia and in the Middle
East.
Alpha Catalyst Consulting,
Level 36, Menara Maxis,
Kuala Lumpur City Centre,
Kuala Lumpur, 50088 Malaysia.
Tel: 603 26150133
email: info@alphacatalyst.com
www.alphacatalyst.com

Embracing constraints
to innovate 3 Copyright © Alpha Catalyst Consulting 2010

Leading Innovation from an Asian Perspective

Microsoft is committed to helping foster strong local
software economies in every country where it does
business. The Microsoft Local Software Economy
Initiative (LSE) takes a leading role in this effort through
investments in ICT education and skills development,
support of programs that encourages "entrepreneurship
and accelerates local technology commercialization,
and initiatives that inspires innovation in the local
economy.
"
Central to its efforts in developing the local software
economy in Malaysia is its commitment to inspire
innovation by providing access to its software and
technologies to select groups such as startups and
students via programs such as BizSpark, DreamSpark
and WebsiteSpark; building the capability of local
companies and professionals via training and advisory;
and fostering a closer collaboration between industries
and the government.
"
A cornerstone of the LSE is the Microsoft Innovation
Centers (MICs) that create an environment to foster
innovation. A network of 110 Microsoft Innovation
Centers across 60 countries provides access to world-
class resources for software developers, IT
professionals, university students and faculty, and
entrepreneurs. The MICs provide participants with
opportunities to exchange ideas, collaborate on
innovative solutions to shared challenges and help local
communities translate those ideas into business success.
"
In Malaysia, we have established two MICs, the
Microsoft Innovation Center @ Cyberjaya and the
Microsoft Innovation Center "@ MIMOS, collaborations
with MSC Malaysia and MIMOS Berhad respectively.
These MICs cater to a wide spectrum of organizations
and audiences, from private to public sector, from
startups to mature Independent Software Vendors and
from students to professionals.
"
"
About Microsoft Malaysia Contact Details:
Microsoft (Malaysia) Sdn Bhd (www.microsoft.com/ Microsoft (Malaysia) Sdn Bhd
malaysia) is a subsidiary of Microsoft Corporation and Level" 29-30, Tower 2, Petronas Twin Towers,
was incorporated on July 8, 1992. Kuala Lumpur City Center
Founded in 1975, Microsoft is the worldwide leader in 50088, Kuala Lumpur
software, services and Internet technologies for Malaysia
personal and business computing. The company offers Tel: +603 2179 6838
a wide range of products and services designed to URL: www.microsoft.com/malaysia
empower people through great software – any time, MIC related enquiries: micmy@microsoft.com "
any place and on any device.

4

etavonni ot
stniartsnoc gnicarbmE

1.0 Introduction
# A company may maintain a healthy competition against Singapore, India,
profit margin and enjoy continued success Philippines, Taiwan and Korea.
without innovation, by maintaining status
quo — focusing on quality, cutting costs and Thus, if a company’s competitors does
customer relationship. This is especially true not drive it to innovate, its shareholders’
if the company is unexposed or immune to demands for greater return on
competition, and more so if its customers investment, certainly would. And
demand little choice. increasingly, companies will feel the
However, few companies operate in such a pressure of demands from its
utopia. For the rest of the corporate and stakeholders — from its partners to
commercial world, there suppliers — to advance
are several reasons into, if not catch up,
companies should with innovation.
embrace innovation.
Malaysian based Many new concepts on
companies need to innovation have
innovate as competition emerged in the past
rises globally and our few years. This list
customers become more includes open
discerning. As the innovation, disruptive
consumer’s lifestyle innovation, front-end
evolve to reflect their innovation, blue ocean
level of affluence, they strategy, value
will demand better and innovation, business
more innovative products model innovation,
and services. design thinking, design
In addition to that, the for six sigma and many
current global financial more.
crisis is sign of times
when doing more of the # We believe
same is not enough to that innovation is still at
generate adequate shareholder value. its infancy stage in Malaysia. We are
still lagging behind other Asian countries
such such as Singapore, Japan, Korea
The Malaysian economy has been slowly and Taiwan. Currently our focus has
shifting away from agriculture and low-cost been on productivity and quality of our
manufacturing, as local labour costs services and products. The time for
skyrocket at a far greater rate than in change is here. How ready are
countries like China, Indonesia, Thailand Malaysian companies to innovate? Does
and Vietnam. But Malaysia has, thankfully, the Malaysian/Asian culture support or
moved up the value chain by investing hinder innovation? Can we adopt a
heavily in the services and knowledge- developed countries’ or Western models
based sectors such as the ICT industry, bio- to innovate as how we emulated the
technology, engineering and design Japanese culture in productivity? This
services, hospitality, outsourcing and curiosity lead us to embark on a journey
financial services. But within this realm, in search of innovation in Malaysia.
Malaysia has to face even greater

5

6
stniartsnoc gnicarbmE
etavonni ot
evitcepsreP naisA na morf noitavonnI gnidaeL
kihcnawaP mizA
namialuS ayaruS .rD &
kihcnawaP mizA
m oc.t s yla ta c a h pla@ m i z a :E tnatlusnoC lapicnirP
tsav sah eH .noitavonni dna egnahc lanoitasinagro fo saera eht ni sesilaiceps mizA
lanoitasinagro dna snoitisiuqca dna sregrem ,stcejorp egnahc erutluc ni ecneirepxe
eH .moclA dna ICI ,GPP rof dekrow eh tsylataC ahplA gnidnuof ot roirP . tnemngila-er
hcus aisenodnI dna eropagniS ,aisya laM ni seinapmoc htiw dekrow dna detlusnoc sah
ynam dna sanorteP ,pinhceT , llehS ,sserpxE naciremA ,ORMA NBA ,iGiD ,cinosanaP sa
tcejbus eht no snoitasinagro dna secnerefnoc ni ylra luger stneserp /skaeps eH .srehto
ot egaruoC ehT “ dna ”etavonnI ot stniartsnoC gnicarbmE“ no yllaicepse noitavonni fo
”.etaerC
tnerruc siH .ayalaM ytisrevinU morf y rtsimehC ni )snoh( cSB sih dna KU eht morf ABM sih deviecer eH
ot seinapmoc ni y golodohtem tnemeganam noitavonni ®egnahC rof tsylataC eht gniylppa no si sucof
stra laitram naisA dna gniknihT lausiV gnisu ni sesilaiceps osla eh taht morf trapA .eulav etaerc
.ytilibixefl dna ytivitaerc lanosrep ecnahne ot yhposolihp
August 2009.
namialuS ayaruS .rD
Innovation Centre, Malaysia. We ended the survey in
m oc.t s yla ta c a h pla@a ya r u s :E tnatlusnoC roineS
Climate Survey 2009 in collaboration with Microsoft
lanosrep ni sesilaiceps gnitlusnoC tsylataC ahplA rof tnatlusnoc roines a ,ayaruS .rD
htiw dekrow dna slaudividni dehcaoc sah ehS . tnemeganam sserts dna y grene ,ytivitaerc
morf trapA .sanorteP dna cinosanaP ,pinhceT , liO noppiN ,ydaL hctuD ,iGiD sa hcus stneilc
In March 2009, we launched the Malaysian Innovation
sah ehS . KU eht morf tnemeganam sserts ni etacfiitrec a sah ehs tsilaiceps lacidem a gnieb
lortnoC dniM avliS eht sa hcus saera detaler ecnamrofrep lanosrep lareves ni deniart neeb
morf euqinhcet A( my gniarB dna )tnemeveihca laog dna noitaxaler ,sserts ni euqinhcet(
.)ecnamrofrep rehgih rof snoitcennoc ydob-dnim eht gnitargetni rof SU eht
various parties.
reh ni si htgnerts reH .ygolonhceT niarB elohW eht dna IDBH eht gnisu ni tnatlusnoc defiitrec a osla si ehS
pleh ot htlaeh larutan dna secneics htlaeh ,ecneics niarb morf egdelwonk gnidnelb fo ytilibapac
Change® Innovation framework along with inputs from
.ytilibapac dna stnelat s’elpoep rieht no pat snoitazinagro
The survey itself is largely based on our Catalyst for
!
age group.
,s i x a M a ra n e M ,r o ol F h t6 3
e r t n e C y t iC r u p m u L a l a u K
and reflections of employees from diverse industries and
ai s ya la M ,r u p m u L a la uK 8 8 0 0 5
8 8 0 0 5162 30 6 :x aF 3310 5162 30 6 :l eT m oc.ts yla tacah pla.w w w
view. Hence we designed a survey to tap on the experience
1 90/8002 ©
of innovation, not from a macro economic or policy point of
innovation but with this survey we wanted a utilitarian view
We are fully aware that there are so many approaches in
otherwise!
and within the country, and what will make them tick or
so, and discover their views of innovation; within their company
are supposed to be practicing innovation or those aspiring to do
operating level. To really bore down to the exact individuals who
pragmatic bottom-up perspective, to explore innovation at an
different. We wanted to look at the innovation scene from a
innovation in Malaysia. However, we wanted something a little
academic researches conducted, to understand the state of
company level. We are also certain, that there are many
innovation at a country level, industry level and even at a
We have come across many surveys in the past that looks at
The Survey

! A t o t a l o f 27 3 i n d i v i d u a l s AGE
participated in the survey. On the
average, each section had between
230-250 responses. We had opened the
survey to the general public and decided Below 30
31-40
not to define the demographics early on. 40%
47%
Thus, we decided to report the survey
based on the profile of people who have
participated.
41-50
12%
# As expected a large percentage
of the respondents, 40%, came from the Above 51
IT industry, contributed by Microsoft 1%
Innovation Center’s involvement. The
demographics of the data is highly
diverse and we saw many angles of LEVEL
analyzing and reporting the results.
However, as we wanted this report to be Project Leader/Manager
very general and broad, we shall be 25%
reporting the survey based on industry
(top five), company size, respondents Executive/Senior Executive
age and from an overall perspective. 46%
Senior Manager/Middle Manager
!
6%
!
Non Executive
14%

Top Management
9%

0 13 25 38 50
FUNCTION
IT 40.5
Technical/Engineering/Quality 15.5

Others 12.9
Sales & Marketing 11.4

Human Resource, Admin & Corporate Communication 6.1
Strategy 6.1
Customer Service 3.4
Finance + Accounting 3.4
Supply Chain (Procurement, Warehouse, Distribution) 0.8

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

7

Number of employees Company age

201-1000
24%
3-10 years
51-200 33%
>1000
21% 22% > 10 years
52%

11-50 Below 3 years
Below 10
15% 18% 15%

0% 10% 20% 30% 40%
Industry
ICT
Services Yes
No
Banking/Finance/Insurance Pending Approval
Planning to apply
Manufacturing
7%
Oil and Gas
2%
Infrastructure/Construction
Public Sector 32%
Creative/Media/Entertainment
Telecommunication
Retail
Plantation/Agriculture 60%
Agriculture
Social Enterprise
Mining MSC Status Company

Company Type 0% 15% 30% 45% 60%

Local - Private 51.8%
Multinational Company(MNC) 20.0%
Local - Public Listed 11.0%
Foreign - Private 5.3%
Local - GLC 4.9%
Government/Semi Government 4.9%
Non Proﬁt/NGO 2.0%

8 Copyright © Alpha Catalyst Consulting 2010

The Report

! This report is not a fully scientific USING THE REPORT
endeavor that would meet the vigorous
statistical scrutiny and analysis that is fit for a
management journal but more of our view of For the individual, we hope that this
the innovation climate in Malaysia. It is report will help you understand where
based on a combination of the survey data,
our interviews and conversations with you fit, in the innovation equation.
various individuals, consulting experience
with our clients, our innovation framework
and philosophy; and finally the current For the innovators we hope this report
reports, research and publications on will help you understand your
innovation.
challenges better as well as provide
The report has seven main sections. The first some clues of how to overcome them.
one is on the sur vey design and
demographics. The second part looks at the
definition of innovation and this is followed For the leaders, we hope it will guide
by the third section, Innovation in Malaysia,
at a broad perspective. The fourth section you to lead your team to be more
explores the innovation priority, where we innovative and create a culture where
analyzed the company’s desire to innovate.
The fifth section looks at the readiness of innovation will thrive.
Malaysian companies to innovate. We
believe that there is a big difference between
having the desire and having the capacity For the strategist, we hope this report
and capability to innovate. will help you be more strategic when it

! In the subsequent section we go deep comes to innovation and be more
and expose the barriers to innovation from effective at managing your portfolio of
the various perspectives. The seventh section
shifts the focus from the company towards innovation investments and projects.
the individuals and looks at the critical
elements for the individuals to innovate.
For the academician, we hope this
! In the final section, we shall be report will help you explore new
sharing our take of the overall results and
the optimum environment for innovation to territories to conduct new experiments
happen within Malaysian companies. We and research; with higher
believe that this report can be used as a
starting point for innovation; to build on and commercialization rate.
expand on what is already there. We want
this report to provide a common language
for innovation so that companies and Finally, for the policy makers, we hope
individuals alike can start having a deeper that this report will help you create
and more meaningful conversation with your
teams about innovation. policies and develop initiatives to build
Malaysia’s long term capability and
capacity to innovate.


2.0 What is Innovation?
# First and foremost, the word innovation Creativity
Creativity 75%
75%
comes from the Latin root ‘nova’ meaning R&D 46%
‘new’. Many associate innovation with
Technology 40%
creativity (75%), as reflected in our survey.
Other typical responses includes R&D (46%) Mindset
Mindset 36%

and of course technology (40%). Products 19%

! Services 18%
! Some have also associated it with Business Model 17%
patents and invention. As we go down the list, Design 15%
we saw something surprising as 36% of the
Culture 15%
respondents associate innovation with
Processes 11%
mindset; something that is intangible and
Risks 10%
unexpected, leading significantly ahead of
products, services and business models. Is
there a revolution brewing in the world of
Innovation happens when
innovation, ready to be unleashed? significant value has been
# What came out the lowest was risk, created
where only 10% linked it to innovation. This is
rather intriguing, as embarking on something
new is usually risky! Does this reflect the 0% 25% 50% 75% 100%
Malaysian approach to ‘safe’ changes? Does
it mean that we are hungry for innovation as >1000 !"# !"# $%# $'# (# '#
long as its not too risky? How then do we
expect a major turnaround? We feel this
deserves a bigger share in terms of
association.# 200-1000 $%# %&# '# !$# $$# $"#
! According to our respondents, their
companies largely practice service(28%) and
product (20%) innovation. In larger <200 !$# !'# $%# $$# $*# $%#
companies, with more than 200 employees,
process/operational innovation (19-21%)
appears to have a stronger presence as well.
Based on our conversations and observations, Overall !&# !(# $!# $)# $!# $%#
this is largely tied to quality, continuous
improvement and six sigma based projects. Types of Innovation based
# What we did not capture in our survey on company size
was the level of innovation; whether it was
!"#$%&'()*!+,(-&./0
simple/incremental or something that was
12"3-&2(
radical or breakthrough. Even though the
42(-56
change may be small it doesn’t mean that it
76'2"6./)!"#&2(()*892".:#6./)766#3.:#60
does not create value. We believe that in the
1./2();)<."=2:65
end, innovation happens when significant
>%(-62(()<#$2/
value has been created regardless whether it
is a financial or an intangible value such as
brand building and loyalty.


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 DiGi
and AirAsia. The rationale behind the selection included great design, price, understanding of
customer’s needs, branding, creativity and freshness.

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

# We believe that the practice of innovation is
also changing. The traditional view of innovation or as
Innovation 1.0
we call it, Innovation 1.0 is about invention of new
products. Something that is tangible, for instance, yet • Invention + Products
another mouse trap that people don’t need. • Solo + Low Resources
Innovation 1.0 is normally practiced by an individual
or a small team that have really limited resources, just
like the Wright Brother inventing the airplane or
Leonardo Da Vinci who designed or conceptualized Innovation 2.0
many inventions such as the parachute, tank and
various weapons. The practice of Innovation 1.0 is still • Technology + R&D + IP
critical as this is where an array of new products and • High Budget + Big Team
technologies may emerge. • Long Term

! The second type of innovation is Innovation 2.0.
This is resource heavy, focusing on predominantly
Innovation 3.0
developing new technologies as well as exploring
basic sciences. This is mainly practiced by large • Mindset + Culture + Web 2.0
companies, research centers and academic institutions • Constraint Driven + Open
(as they have large budgets and teams). The key focus • Market Driven + Co-Creation
here is in obtaining patents and publications for
research. The pressure to commercialize is not very
intense 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 characteristic
of 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 and
collaboration with a network of partners and customers forms part of the foundation. The
driving force of this type of innovation is the right culture and mindset. It is not about creation of
technology but application of different and new technologies, usage of web 2.0 and open
sourcing. The focus is of creating value with fresh services or new management and business
models. Examples of companies practicing this type of innovation include AirAsia X, Tune Hotel,
Pulse Group, DiGi and Bank Rakyat.!

11

3.0! Innovation in Malaysia
! Over the past ﬁve hundred years
our country has been a melting pot for
culture, trade, technology and Malaysian Economy in Transition
ideology. We were famous as a bustling
trade hub of the east. It began with the
line of Sultanate of Melaka in 1401,
then beginning 1511 the Portuguese, the
Dutch and then the English conquered
what was then known as Malaya.
In 1957, we achieved
independence, and then in 1963,
Malaysia was formed and we became
a nation full of diversity, talents and
natural resources. Since then we have
seen tremendous changes in our
economy. In the 50s right up to the 70s,
we were strong in the agricultural
sector. By the 80s we shifted to the
industrial age through our look east
policy. In the 90s we had a vision of
being a developed nation by 2020 and Malaysia’s % GDP share by sector
began investing in knowledge based D?
industry with our K-economy master vice
s
Ser 70% by
plan. 2020
CA
!
As globalization descended upon Ag Manufacturing
r ic
the world we did not sit still. The B? ult
ur
ﬂattening of the world provided us the e

opportunity to make a shift as well as
pressured us to change. Beginning in @A
1990, we saw a sharp rise of the
services sector share of our GDP and
?
by 2020, it is projected that 70% of
@ED? @EF? @EG? @EE? H??? H??A
our GDP will be from this sector. With I#6('"%&:#6 <-6-65 J5"-&%/'%"2 <.6%K.&'%"-65 12"3-&2(
clear competition from China, India,
Vietnam and many other countries,
Malaysia will need to continue being
resilient as in the past and move into the
next stage of our economy.
Time has come for us
! The time has come for us to
embrace the Innovation Economy. to embrace the
Agriculture, manufacturing and the
other sectors are still relevant; what is
critical is that we need to innovate in innovation economy
the way we compete and operate our
businesses.

12

The responsibility to innovate lies with
Innovation Drivers and Inhibitors
many parties; the government,
corporate sector, academic institutions
and of course the society at large. 0% 25% 50% 75% 100%

Customers 81% 6%
The burning question lies on how does
the corporate sector move into this new Technology 73% 6%
era as we have prepared our people to
operate in the industrial and knowledge Competitors 72% 5%
age?
Current Economic Situation 56% 11%

• Do we have the suitable culture and Business Partners 51% 10%
mindset to innovate?
• Do we have the appropriate expertise Infra-structure 50% 19%
and knowledge to innovate?
Human Capital 44% 15%
• Do we have the necessary technology
and tools to innovate?
Government Policies/Support 38% 20%
• Do we have sufﬁcient cash to
innovate? Financing 37% 13%
!
Suppliers/Vendors 29% 16%
# Our survey revealed that the top
three driving forces of innovation in Malaysian Culture 25% 27%
Malaysia are the customers,
competitors and technology. The survey
outcome got us thinking; if there is little Driver Inhibitor
competition and customers don’t have a
choice would a company or

25% of the
organization still innovate?
!
! Further down the list we see that
only 29% viewed the suppliers/vendors
as a driver for innovation. Why is this respondents viewed the
ﬁgure so low? Are the suppliers not
partnering with these companies to Malaysian Culture as a
innovate?. Are they merely traders of
products/services with little capability
to innovate? Finally right at the bottom;
driver for innovation
while another 27%
27% of the respondents viewed the
Malaysian culture as an inhibitor to
innovation while 25% viewed it as a

viewed it as an inhibitor
driver.

Why is this so?
of Innovation.
Which part of our culture drives
innovation and which part inhibits
innovation?


innovation; the challenges however lies in their capability and capacity to innovate.

4.0 ! Do we really need to innovate?
Based on the current
Strongly Disagree Neutral Agree Strongly
economic situation, we Disagree! ! ! ! ! ! ! Agree
should not be
questioning whether 1 2 3 4 5
we should innovate or Innovation is a
Oil & Gas 4.6

not. It is just like key priority for
Manufacturing 4.4

Strongly Disagree Neutral IT Industry
Agree 4.3 Strongly
asking the question my company to Disagree! ! ! ! ! ! ! Agree
Services 4.3
whether your services be successful
1 2 3
Banking/Finance 4.0 4 5
and products needs to
Oil & Gas 4.3
be safe and have a My company
Services
< 10 4.3
4.4
high quality. Instead should intensify
11- 50 4.0
Manufacturing 4.1
we should be innovation efforts
51- 200
IT Industry 4.3 4.0
questioning how much because of the
Banking/Finance 4.34.0
current economic 201- 1000
emphasis should be
crisis > 1000 4.4
put into innovation.
< 10 4.0
We realize that doing Overall score 4.3
11- 50 3.9
more of the same isn’t
0.4% 0.8% 6.0% 54% 4.0
51- 200 38%
enough anymore. 201- 1000 4.1

> 1000 4.2

Our survey reveals Overall 4.1
that more than 90% of the respondents viewed innovation as a key priority for their company
0.4% 1.6% 20% 48%
to be successful, especially in the Oil and Gas sector (4.6). This is also reﬂected across all 30%
other industries. Even the traditionally conservative sectors; the Banking/Finance sector, Consulting 2010
Copyright © Alpha Catalyst

scored a 4.0. When we look at companies of different sizes, there is a very clear message
across the board, innovation is critical with most of them scoring between 4.0 to 4.4.

How about the
customers, do they want Disagree! ! ! ! ! ! ! Agree
innovation? Looking at
1 2 3 4 5
the results, 69% of the IT Industry 3.9
respondents viewed that Oil & Gas 3.9
Our customers
their customers demand demand innovation
Services 3.9

innovation from them. from us.
Banking/Finance 3.8

How many organizations Services 3.7

are tapping on their Overall 3.8
customers for fresh
ideas ? Where do 0.0% 5.5% 25% 50% 19%
customers give feedback
on what they want? What
seems a little ironic is that the
lowest scores are from the 90% of the respondents viewed
service sector, which
presumably has one of the innovation as a key priority for their
higher customer interactions.
company to be successful


When we launched the
survey in Q1 2009, Disagree! ! ! ! ! ! ! Agree
Malaysia was still deep 1 2 3 4 5
in the midst of the global Oil & Gas 4.3
financial crisis. Still, 78% My company
Services 4.3
of the respondents felt should intensify
Manufacturing 4.1
innovation efforts
that their company IT Industry 4.0
because of the
should intensify current economic Banking/Finance 4.0

innovation efforts despite crisis
the hovering economic < 10 4.0
crisis (scores ranged 11- 50 3.9
between 3.9 to 4.3). 51- 200 4.0

201- 1000 4.1

> 1000 4.2
Based on these results,
we can clearly conclude Overall 4.1

that employees feel that 48%
0.4% 1.6% 20% 30%
innovation is critical even
with the economic crisis.
Scrutinizing the data, this
perception is especially felt by those in the Oil & Gas and Service sectors and also most
significantly 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 the
Strongly Disagree
Disagree! !
to ! Neutral !
!
Agree
financial crisis, the natural response is to cut cost, scale down ! conserve resources but
!
Strongly
Agree
instead many felt that their company should be investing into innovation.
1 2 3 4 5
IT Industry 3.9

Oil & Gas 3.9
Our customers
Services 3.9
demand innovation
Banking/Finance 3.8
from us.
Services 3.7

Overall 3.8

0.0% 5.5% 25% 50% 19%

innovation is critical even with the
economic crisis.


5.0 Innovation: Rhetoric or Reality

In the previous section,
we concluded that
Disagree! ! ! ! ! ! ! Agree
innovation is critical.
The question now is 1 2 3 4 5
how innovative are the IT Industry 3.6

Manufacturing 3.6
companies in Malaysia
and are they Oil & Gas 3.4
I believe my Services 3.3
practicing things that
company is
will lead to innovation? Banking/Finance 3.2
very
innovative. < 10 3.7

Our survey reveals 11- 50 3.4

that only 9.3% of the 51- 200 3.2

respondents strongly 201- 1000 3.2

believe that their > 1000 3.4

organization is very
Overall 3.4
innovative. The overall
3.6% 14% 34% 39% 9.3%
score for this question
dipped to 3.4
compared to the score
of 4.3 for ‘I believe that
innovation is a key priority for my company to be successful’. What this means is that even though
the majority (90%) saw the importance of innovation, only 50% believed that their company is
innovative.

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


!


Our next endeavor was to explore the innovation climate
in the respondent’s company. Will the practices in the
respondent’s companies lead to innovation or will it hinder
innovation?
!
ACC’s Catalyst for Change® Innovation Process served as
guide for the purpose. Each phase needs a unique set of
competency and it would be unﬁtting to expect an
individual to be exceptional at every phase.
“Innovation
cannot be taught,
The process looks at four key areas: but it can be
learnt. I can!t
C1 - CONCEPTION
• What are the catalysts for innovation? How do
teach you to be
companies get inspired to innovate? Is there a clear innovative, but
direction to innovate?
can provide you
C2: CREATION with the process
• What is sparking the generation of new ideas and and it is up to you
possibilities? Is there a system to capture the ideas? Who
are the people involved in idea generation? to discover what!s
your style when
C3: CONVERSION
it comes to being
• Is there a process for converting the ideas into a tangible
solution? Are there resources available? Are the leaders innovative.”
willing to take risk?

C4: CONNECTION
• Have the solutions generated value? How do companies
connect the solutions to their customer?

C4: Connecting the solution with the challenge to
create value = Innovation

C3: Converting the most promising alternative
into a speciﬁc solution = Invention

C2: Creation of Breakthrough Ideas = Creativity

C1: Conceiving the need for Change = Insight

Catalyst for Change®
Innovation Process

17 Embracing constraints
to innovate
Leading Innovation from an Asian Perspective

presence of a strategic direction to innovate. Without a clear direction to innovate, employees would be lost in
terms of what is expected out of them.
! Which market to focus on? What sort of technology should it focus on ? These strategies are apparent in
world class innovators such as Apple, which is very focused in their industry and market of choice. (maybe can add
a bit more on apple - how steve sets the direction) .Locally, we see AirAsiaX being very focused in innovating the
way they reduce their operational costs.
! Our survey reveals that the IT industry is slightly ahead when is comes to having a clear direction to

C1 Conception innovate. However as a whole, we see that only 10% of the respondents strongly view that their company has a
clear direction to innovate. Does this translate to mean that only 10% of companies have a very clear direction to
innovate?
! Innovating is not about having great ideas alone as without proper focus the great idea would be lost.

We believe that market
driven innovation begins Strongly Disagree Neutral Agree Strongly
Disagree! ! ! ! ! ! ! Agree
with the needs of
1 2 3 4 5
customers. One of the IT Industry 3.9
indicators of an Manufacturing 3.7
innovative organization We have a Oil & Gas 3.6
is the presence of a clear Banking/Finance 3.4
strategic direction to direction on Services 3.4

innovate. Without a the areas to
clear direction to innovate. < 10 3.9

innovate, employees 11- 50 3.6

51- 200 3.6
would be lost in terms of
201- 1000 3.5
what is expected out of
> 1000 3.5
them. Which market to
focus on and what sort Overall 3.6

of technology should it 1.3% 10% 29% 50% 10%
focus on. These
attributes are apparent
in world class
innovators, which are very focused in their industry
and market of choice.

Illustration of this is seen in AirAsiaX and Tune Hotel,
which is very focused in innovating the way they
reduce their operational cost. Our survey reveals
that the IT industry is slightly ahead when is comes
to having a clear direction to innovate. However, on
the whole we see that only 10% of the respondents
strongly agree that their company has a clear
direction to innovate. Innovating is not about having
great ideas alone, without proper focus the great
idea would be lost. !


hovers around the 3.5 mark. Although 48% of respondents agreed with the statement, only 9.3% strongly agreed.
" Our conversations with various executives also support this finding, whereby innovation is not regularly
discussed in meetings, as are other topics such as sales figures and operational efficiency.

Strategy/intent and
execution are two Disagree" " " " " " " Agree
separate things. Just 1 2 3 4 5
like the new year Oil & Gas 3.6

resolution that is IT Industry 3.5

never executed. Banking/Finance 3.4
Innovation is part
Good intention but Manufacturing 3.4
of our agenda in
poor follow through! Services 3.4
meetings and
One of the indicators discussions, just
of seriousness of an like any other < 10 3.8
initiative in matters(e.g. sales, 11- 50 3.7

companies is the quality etc.) 51- 200 3.6

management 201- 1000 3.5

attention. Our > 1000 3.4

research showed that
Overall 3.5
the score for
innovation as being 1.7% 9.3% 32% 48% 9.3%
part of the agenda in
meetings and The smaller org have a much more intense/ commited approach to innovation.

discussions, is a disappointing 3.5 out of 5. Even
though 48% agreed with the statement, only 9.3%
strongly agreed. It is interesting to note that the highest
score (3.8) in this section is from companies with less
than 10 people. Is the innovation agenda stronger in
these companies? If so, why is that?

Our conversations with various executives also
substantiate this data, whereby innovation is not
regularly discussed in meetings in contrast to other
topics such as sales figures, safety issues and
operational efficiency.

How much emphasis has your company put into
innovation in this perspective? Will there come a time
when innovation is discussed with the same vigor as
safety is emphasized in the Oil and Gas sector?

Is innovation part of the agenda in
meetings and discussion?

19

A final indicator on the
seriousness of innovation Disagree! ! ! ! ! ! ! Agree
of a company its R&D
1 2 3 4 5
budget. Some may
Manufacturing 4.1
argue that an R&D
Oil & Gas 3.8
budget does not reflect
IT Industry 3.4
the innovativeness of a My company Services 3.0
company. However if invests heavily Banking/Finance 3.0
there is no investment on in Research &
exploring new Development < 10 3.4
possibilities and 11- 50 3.2
developing new 51- 200 3.1

solutions, it would be 201- 1000 3.1
highly challenging for a > 1000 3.6
company to innovate.
Overall 3.3

4.4% 20% 32% 14% 29%
Slightly more than 40%
of the respondents Large MNC spending. O&G had to compete globally. New areas to drill oil. New
challenges. Therefore direction to innovate is clear. Resources are put aside for R&D.
indicated that their company invests heavily in innovation. If we were to compare industries,
< 50 are most likely start ups
the manufacturing and Oil & Gas sector leads the pack. This is followed by the IT sector and
SME are not spending. Why?
then Services and Banking/Finance.
Ind -
Manufacturing and O&G are prob ‘product’ driven - something tangible.
The service and Banking sector do not appear to spend on R&D. Why?
When we analyzed based onHOw are we to target 70% GDP by 2020 from Services ifmore than 1000 employees
company size, its companies with the R&D is so low?
that seem to be investing on R&D.will our smaller companies, international banks in 2010 onwards? Would
HOw The banks sustain against influx of and this would probably reflect the
group comprising predominantly SMEs,‘protection’ from the government?
we still rely on appear to be venturing an alarmingly low amount into

R&D (scoring 3.1). Overall, our spending is low in R&D? Do we really have the cash? Is it low because not
much is spent in that sector or is it also a reflection of the outcome from previous R&D, i.e
we do not hear of success stories that result from R&D therefore we think not much is being
done there.



Do ?

C2 Creation
There’s no magic when Strongly Disagree Neutral Agree Strongly
its comes to innovation. Disagree! ! ! ! ! ! ! Agree
You need to spend time 1 2 3 4 5
and resources to IT Industry 3.5

Manufacturing 3.4
innovate. Our survey
Oil & Gas 3.4
reveals that 54% of the We are given Services 3.4
respondents are given the opportunity
Banking/Finance 3.1
the opportunity to (time and
generate creative resources) to
< 10 3.6
solutions. However, out generate
11- 50 3.5
of the 54%, only 7.6% creative
solutions. 51- 200 3.5
strongly agrees with the
201- 1000 3.4
statement. 3M for
> 1000 3.3
instance, allows their
Overall 3.4
employees to spend
15% of their time on 1.3% 14% 31% 46% 7.6%
their own projects and
innovation. The scenario
in 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 results
reveal a score of 3.5 in this area; which is on the lower side of the spectrum. If we look back
at the earlier part of the survey, suppliers are not seen as a strong driver of innovation.

Does the challenge lie Strongly Disagree Neutral Agree Strongly
with the company or is it Disagree! ! ! ! ! ! ! Agree

with suppliers? 1 2 3 4 5
We constantly Oil & Gas 3.6

collaborate with IT Industry 3.6
Are these companies our suppliers/ Banking/Finance 3.5

ready to co-create with business partners Manufacturing 3.5
their partners, or are to come up with Services 3.3

they just focused on new ideas/
Overall 3.5
getting big discounts or solutions.
great bargains form 0.4% 11% 36% 48% 4.6%
them? A McKinsey
survey showed that O&G/ IT - high dependancy on supplier/buis partner cause do not normally deal direct to customers
companies 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 large
organization, under the umbrella of open innovation, is slim.


C2
One of the key Strongly Disagree Neutral Agree Strongly
ingredients for innovation Disagree! ! ! ! ! ! ! Agree

is breakthrough ideas 1 2 3 4 5
Oil & Gas 3.6
that can transform a
IT Industry 3.6
business or industry and
Manufacturing 3.2
propel it to an entirely People in my Services 3.2
new playing field. company Banking/Finance 3.1
frequently come
up with
In our survey, the overall breakthrough/
< 10 3.5
score in this section is exciting ideas.
11- 50 3.6
3.4 only. Oil & Gas, IT 51- 200 3.4
sector and the smaller 201- 1000 3.3
companies seem to be > 1000 3.2
leading in this area. The
Manufacturing, Services Overall 3.4

and Banking/Finance 1.3% 16% 32% 43% 7.2%
sectors show a
perturbing score of 3.2
Larger org - fear factor of jeopardizing career high.
and 3.1.
O&G/ IT - ? Direction to innovate clearer? IT/ O&G - leaders are willing to take risk (highest 2 scores). This
keeps the employees more confident. More experience in trying new things therefore after a long time
Does this truly reflect the capability of our people that
breakthrough ideas easier to come by

are not able to
consistently generate
breakthrough ideas or is Strongly Disagree Neutral Agree Strongly
it that they don’t have Disagree! ! ! ! ! ! ! Agree

the courage or channel to 1 2 3 4 5
IT Industry 3.6
express their ideas or is There is a clear
Oil & Gas 3.6
it that they simply don’t channel for
Manufacturing 3.3
have the time to think? ideas to surface
Services 3.2
within my
Banking/Finance 3.1
company.
Overall 3.4
The final part of the C2
(Creation) process 1.7% 14% 32% 43% 9.0%
explores whether there’s
a clear channel for ideas
to surface within an organization. This may seem
trivial, however we have come across many idea
snipers within organizations, that ideas don’t have a
chance of getting through the gate, to be heard.
Channels for ideas can be as simple as web forums or
intranet. Some of these are already practiced within
organizations, with success. The overall score here is
again a low 3.4. Clear leaders in terms of
having a proper channel are the Oil & Gas
and IT Industry.
"To have a great idea, have
a lot of them."
- Thomas Edison


C3 Conversion
Once the idea has Strongly Disagree Neutral Agree Strongly
surfaced what happens Disagree! ! ! ! ! ! ! Agree
to it ? If nothing is done 1 2 3 4 5
it will die a premature There is a clear Oil & Gas 3.9

death. In this stage we criteria for Manufacturing 3.6

explore the percentage accepting/ IT Industry 3.5

Banking/Finance 3.3
of companies that have rejecting new
Services 3.2
a process of sorting the ideas.
Overall 3.4
ideas and then
allocating resources to 1.3% 17% 29% 49% 4.0%
execute the idea.
Important to have clear process. In addition to leaders who are willing to take risk.
This is seen in O&G.
About half of the respondents case of manufacturing, the process is clear but leaderscriteria for accepting/rejecting
In pointed out that there is a clear are not willing to take risk. You still get incremental

ideas. The Oil & Gas sector again dominates in this category followed by the Manufacturing
innovation.
Overall for banking and services very low.
sector. One point to note is that having a clear screening criteria is essential, however if those
criteria are too stringent it C3result in only low risk projects being approved and if they are
will ?
too loose, it can result in wasted resources. Do companies allow the conventional thinking and
tight budgets to rule decisions?

Here is where it is
connected to how much Strongly Disagree Neutral Agree Strongly
risk are the managers/ Disagree! ! ! ! ! ! ! Agree
leaders willing to take 1 2 3 4 5
when it comes to IT Industry 3.7
innovation? Again we Our leaders/
Oil & Gas 3.4
managers are
see the IT industry (3.9) Services 3.4
willing to take on
and the smaller Banking/Finance 3.2
risks to innovate.
companies leading the Manufacturing 3.1

pack. Why are
managers in the IT < 10 3.8

industry more willing to 11- 50 3.6

take risks compared to 51- 200 3.5

other industries? 201- 1000 3.3

> 1000 3.2
!
Overall 3.4
What is interesting to
note is that the score 4.0% 11% 3.0% 49% 6.0%
for Banking/Finance,
Manufacturing and also The smaller the company - the more risk leaders are willing to take.

larger companies (more than?Reflect a more intimate relationship with higher level of communication andThe between diff org levels
1000 employees) seem to be low (3.2 - 3.4). trust manufacturing
sector takes up the rear end at 3.1.
Why is IT significantly ahead of the rest? Nature of the buisness - high level of new products globall;y -
high competition?

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


As we saw previously, Strongly Disagree Neutral Agree Strongly
the manufacturing Disagree! ! ! ! ! ! ! Agree
sector appeared to 1 2 3 4 5
have a clear process Cont C3 a
There is
structured
? Oil & Gas 4.0

for accepting and approach to
Banking/Finance 3.4

Service 3.4
rejecting new ideas fund and
IT Industry 3.2
however as their provide
Manufacturing 3.2
leaders are not willing resources for
Overall 3.3
to take on risks, the promising ideas.
type of innovation 3.0% 16% 34% 43% 4.7%
prevalent are most Disagree! ! ! ! ! ! ! Agree
likely more focused on 1 2 3 4 5
There is a
operational and incremental innovation. A risk averse Oil & Gas 4.0
structured
culture will limit creativity and create a vicious cycle Banking/Finance 3.4
approach to
of fear to even try to do thingsfund and
differently. Service 3.4

IT Industry 3.2
provide
Manufacturing 3.2
resources for
Innovation is not about generating great ideas alone. Disagree
Strongly Neutral
Overall 3.3
Agree Strongly
promising ideas. Disagree! ! ! ! ! ! ! Agree
The ideas need to be executed to create value 1 thefor 2 3 4 5
company. The survey reveals that when it comes to 3.0% 16% 34%
Oil & Gas 3.8
43% 4.7%
We have a clear
having a structured approach in funding and Banking/Finance 3.4
approach in
providing resources for promising ideas;the Oil and
measuring the
IT Industry 3.4

Gas industry is way ahead of the rest at 4.0. The
progress of our
Manufacturing 3.2

overall score in this section is 3.3.
innovation
Service 3.2

efforts. Overall 3.4

Managing innovation 2.6% 16% 34% 41% 6.4%
projects is no different Disagree! ! ! ! ! ! ! Agree
from other projects. It 1 2 3 4 5
requires discipline, We have a clear
Oil & Gas 3.8

Banking/Finance 3.4
consistent approach in
IT Industry 3.4
communication and measuring the
Manufacturing 3.2
follow through. In this progress of our
Service 3.2
area the Oil & Gas innovation
sector again leads with efforts. Overall 3.4

a score of 3.8 in having 2.6% 16% 34% 41% 6.4%
a clear approach to
measuring progress in
their innovation efforts.
Part of the equation is also to know when to abandon
an innovation project. In this sense, companies must
not lose sight of the initial focus of the project (the
C1(Conception) stage of the innovation cycle).


Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010

Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (13)

Ähnlich wie Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010

Ähnlich wie Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010 (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Alpha Catalyst Consulting Malaysian Innovation Climate Report 2010