article fourMALAYSIAN DIRECTORS ACADEMY 12further subdivided into two groups: continuous anddynamic continuous innovation. Straightforward continuousinnovation is the result of a change in product characteristicsor performance which does not require the user to learnnew skills or a different routine to use the product orservice. Changing from desktop to laptop computer wouldbe a good example: the user does not have to learn newsoftware nor how to use the keyboard differently – the onlydifference is that the laptop provides mobility whereas thedesktop does not. On the other hand dynamic continuousinnovation does require some user learning, but withoutdisrupting the user routine. Examples of this are the faxmachine which is a modification of making a phone call – sothe routine is no different even though the application is.Discontinuous innovation, also called disruptive innovation,is revolutionary. Learning to use the telephone, personalcomputer, Walkman or Internet when they were firstintroduced, demanded a change of routine by the new userand took time and effort to master.The problem with making innovation succeed is thatit requires risk-taking and a change in behaviour.Evolutionary innovation is less risky than discontinuousinnovation because it does not require a dramatic changein the behaviour of prospective users of the new productor process – and dramatic changes may be sufficientlydisruptive to traditional patterns of behaviour so thatpeople are not willing to try the new product, even thoughit meets their latent needs. Being first mover in a marketis not always as advantageous as is implied by the phrase“first mover advantage”. It is true that if a company is ableto get a head start over its competitors, it may becomevery difficult for them to catch up; but it is also true thatfirst movers have to spend a great deal of money creatingawareness of their products, and they make may fatalmistakes from which they cannot recover. This is why itis often best to be second into a market, benefitting fromthe investments in demand creation of the first mover andlearning from their mistakes.There are therefore good rational grounds for being cautiousabout innovation as well as the more normal emotionalreasons for not welcoming it – the fear of change and theinertia most people have that prevents them from tryingout something new and unknown. However, if Malaysiais to break out of the middle income trap and achieve theambitious goals set in the New Economic Model, we mayhave to improve our rate of innovation, both in adoptingnew processes and ways of doing business and in developingnew products and services to offer the world. As Malaysia’sranking in the world innovation index below shows, we arenot doing badly in 22 nd place. Only Singapore, South Korea,Hong Kong, Japan, and China are ahead of us, with Indiaand Thailand trailing us among Asian countries receivinga positive overall score. Nevertheless we cannot afford tobe complacent, because we are still way behind Singapore,South Korea, Hong Kong and Japan – all countries, likeMalaysia, heavily dependent on exports for growth.The difference in their scores on innovation performanceis more worrying – the ability to apply ideas to developnew products and processes – shown in bold in the lastcolumn of Table 1. What is notable is the margin by whichall the countries mentioned above are able to outperformMalaysia – in particular China, suggesting that they arebetter able to change how they do things, which brings usto the importance of being able to manage and implementsuccessful change – Charles Darwin’s adaptability.
article fourTable 1: Ranking in World Innovation IndexRank Countries achieving positive scores Overall Innovation Inputs Innovation Performance1 Singapore 2.45 2.89 2.012 Switzerland 2.16 1.52 2.753 South Korea 2.15 1.75 2.554 Iceland 2.11 2.21 2.015 Finland 2.02 2.01 2.026 Hong Kong 1.82 1.77 1.857 Ireland 1.81 1.78 1.848 Japan 1.80 1.28 2.259 United States 1.66 1.16 2.1610 Sweden 1.56 1.25 1.8811 Netherlands 1.54 1.40 1.5512 Denmark 1.52 1.55 1.4913 Luxembourg 1.52 1.02 2.0314 Israel 1.44 1.34 1.4315 Canada 1.36 1.39 1.3216 United Kingdom 1.35 1.33 1.3717 Austria 1.16 1.16 1.1218 Norway 1.15 1.16 1.1119 France 1.06 1.17 0.9620 Spain 1.03 1.02 1.0321 China 1.03 0.06 1.9622 Malaysia 0.96 0.89 1.0123 Australia 0.93 0.89 1.0524 Estonia 0.91 1.50 0.2525 Belgium 0.86 0.85 0.7926 Germany 0.81 0.79 0.8427 New Zealand 0.77 0.79 0.6928 Cyprus 0.63 0.64 0.5629 Portugal 0.60 0.92 0.2230 Qatar 0.52 1.02 0.0231 Hungary 0.51 0.80 0.1832 Malta 0.39 0.24 0.5433 Slovenia 0.37 0.47 0.2434 Czech Republic 0.34 0.88 -0.1035 South Africa 0.33 0.15 0.4736 Bahrain 0.27 0.78 -0.2637 Chile 0.24 0.36 0.0438 Italy 0.21 0.16 0.2439 Slovakia 0.19 0.72 -0.3140 Tunisia 0.16 0.64 -0.3241 Greece 0.12 0.02 0.2242 Latvia 0.11 0.36 -0.12-- Lithuania 0.11 0.64 -0.4044 India 0.09 0.12 0.04-- Thailand 0.09 -0.24 0.3646 Kuwait 0.08 0.64 -0.3647 Croatia 0.06 0.32 -0.2148 Trinidad and Tobago 0.05 -0.24 0.3649 Bulgaria 0.04 0.48 -0.36Source: ”The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge.” BostonConsulting Group, March 2009, pp25-613BOARD VIEW_SEPTEMBER <strong>2011</strong>
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