KUALA LUMPUR, Oct 20 — Innovation and creativity are prerequisites to the successful development of both new processes and new products. 

Therefore, these attributes are essential for companies wishing to remain competitive. But where do these necessary attributes come from? Is it through good management? Is it by hiring the most creative individuals? Does it require an institutional culture that fosters creativity? 

These are all important questions that need to be addressed by firms wishing to increase creativity and competitiveness. 

Small and medium‐sized enterprises (SME) may be particularly keen to discover how they can compete with larger companies by becoming more innovative and creative than their larger competitors.

Today’s competitiveness at the company level depends crucially on the speed with which new products can be brought to the market place and new cost-saving improvements made. 

Similarly, the creation of wealth and employment depends to a very large extent on the speed with which scientific and technological breakthroughs are converted into practical and attractive solutions.

Innovation is the ability to reap the rewards of scientific achievement.

Innovation requires much more than the ability to turn a new idea into a working product. 

Not only is it because efficient flows of technology are not enough but also ready supplies of finance and of business skills are also needed. There must be accessible protection for intellectual property, and adequate incentives for entrepreneurial drive. As such, what is exactly needed is a dynamic, self-sustaining culture of innovation.

At the core of such a culture of innovation are the SMEs which have in recent years proved themselves to be the engines of economic growth, and the principle sources of new employment in almost every economy. SMEs account for over 99 per cent of all Malaysian businesses and in many fields provide the channels along which new technologies develop. 

Their ability to exploit new technologies, and to respond quickly to changing market needs, give SMEs a pivotal role in the success of the European economy. Support for the creation of new ventures and spin-offs from research institutions and large companies, as well as the removal of barriers to their rapid growth and support for the transfer of know-how, also deserve to be accorded the highest priority.

What is needed?

Technology-based organisations are more innovation-ready than other industries. Continuous innovation is their DNA and they have competencies to support this. Even for start-ups, young innovative entrepreneurs have access to the support of university incubator models. However, for many SMEs, which make up the larger part of Malaysia’s business landscape, it’s still a different story.

While most SMEs understand that innovation entails more than just the generation of a new product or service idea, they may not have a clear idea of how to develop an innovative culture and capability, initiate processes that reveal profitable new service or product opportunities and mitigate risks when developing new products where demand is uncertain.

Organisations should develop an innovation framework to suit its style and objectives. This framework should define the steps of innovation implementation from discovery to commercialisation to risk-balancing of an innovation portfolio.

Top down support

Innovation should be a standing item on board and management agendas that prompts updates from different functional areas within the business. This will reinforce innovation as an overarching organisational capability that touches all functions.

Boards can facilitate benchmarking with businesses and organisations who deal with similar research challenges. Such knowledge sharing will often be surprisingly useful. Innovation benefits greatly from the sharing of experience between companies from completely different industries.

Five practical steps

A recent research report from Microsoft on Australia said every SME has the ability to enhance its level of innovation, and recommended five practical steps to improve:

• Evaluate current performance: The first step in improving any business’s innovation efforts is to understand how it is performing today. This also entails the identification of innovation implementation gaps and strengths of the existing structure, systems, processes and culture. 
• Establish the right culture: Addressing cultural barriers and creating the right environment can improve SMEs’ innovation activities. This also includes the improvement of communication and trust amongst the employees. 
• Create innovation-oriented collaborative networks: Some SMEs may need help turning their appetite for and awareness of innovation into action.
• Encourage flexible work practices: Flexible work practices are common at innovative SMEs
• Attract next-generation staff: Create better connections, for example with tech-savvy school leaders and university graduates to help SMEs bridge any technology gaps.

According to the same report, 70 per cent of SMEs are failing to reach their full growth potential because their workplace culture is making it impossible for innovative ideas to flourish, which found that SMEs fall into three main groups, the first of which are leaders. 

Only 33 per cent of SMEs were considered innovation leaders, which are businesses that are skilled at responding to change, threats and opportunities in their markets. This group have dynamic and flat structures that encourage employees to innovate without a fear of failure. They are also growing faster than their peers, and report higher levels of staff retention and customer loyalty.

The report found that 43 per cent of SMEs were innovation cruisers or businesses with an interest in innovation but that tend to under-deliver in practice. While they recognise the importance of innovation, they lack the tools and support to see innovative activities to fruition.

The third group consisted of laggards at 24 per cent, which are businesses with little or no appetite for innovation.

Overall, innovation leaders perform better than other businesses. For example, 39 per cent of leaders reported revenue growth ahead of their industry, compared with 24 per cent of cruisers and 23 per cent of laggards reporting above average growth. Furthermore, leaders reported stronger performance on factors such as revenue, business efficiency, market share, staff satisfaction and retention; and customer loyalty.

At PlaTCOM ventures, we help SMEs to strategise their innovation roadmap and provide advisory and facilitation to design and implement a fruitful innovation landscape within their organisations. For innovation, strategy is key during all stages of design and implementation of the innovation plan.

For more information please contact us via info@platcomventures.com