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A successful innovation is usually a response to a market need identified by the entrepreneurial organisation or individual.A successful innovation is usually a response to a market need identified by the entrepreneurial organisation or individual.KUALA LUMPUR, April 20 — The Malaysian entrepreneurship landscape is making remarkable progress. Entrepreneurs are identified as a critical component to drive Malaysia towards a knowledge-driven economy by 2020.

Through their innovation, creativity and inherent willingness to embrace risk, entrepreneurs make invaluable contributions to the nation’s growth.

Various national initiatives and programmes highlight the government’s strong commitment to transform Malaysia into the world’s next innovation capital.

However, this vision needs a resilient and coherent ecosystem that stimulates the creation of new ideas and speeds them to the market in order to position ourselves towards a developed nation.

Fostering creativity and innovation within an organisation or individual is the principal challenge of most businesses in the 21st century.

Innovation is a process of seeking market opportunities through identifying the value potential in existing operations and adapting them to generate new business or enhance existing business.

Successful innovation is often simple and understandable. What we need to know is that innovation is not intrinsically difficult and does not have to involve high risk.

A successful innovation is usually a response to a market need identified by the entrepreneurial organisation or individual. Incremental rather than revolutionary change is usually more important.

Companies and start-ups can easily lose the initiative and sink without a proper innovation culture and management.

In my experience of consulting with entrepreneurs and SMEs from various sectors, most companies fail to innovate for these obvious reasons:

1. Lack of direct engagement of the head of the company and clarity around leadership of innovation
2. Absence of a sound, well-established innovation process
Failure to distinguish clearly between science, product engineering and innovation
3. Risk aversion and low tolerance for failure
4. Lack of resources, funds and unwillingness to support innovation budgets
5. In addition to the above, some companies and entrepreneurs do not undertake sufficient due diligence to recognise the pain points in the market so that their innovations are market addressable.

Interestingly we see more and more corporate R&D labs opening their doors, collaborating with suppliers and customers, sharing software code with programmers and tapping networks of scientist and entrepreneurs for the world’s best ideas.

There is no doubt that open innovation is the way of the future, fueling the economy through multiple outputs from collaborative activities such as the creation of new intellectual properties, partnerships, complementary skills, new wave of revenues, increase in brand value, new markets and cross fertilisation in the business landscape.

Creativity and innovation interweave the open innovation pathway and knowledge is becoming the most critical factor of production in today’s knowledge base economy.

Knowledge is a commodity in itself and skilled human resources or human capital is the most valuable asset in contrast to a production-based economy.

In a knowledge-based economy, a high proportion of its GDP derives from knowledge-based and knowledge-enabling industries such as high and medium technology industries, financial and other business services, and the education services.

The open innovation ecosystem accelerates both technology and knowledge transfer which are major tools for a knowledge base economy.

As Malaysia leaps into a new, advanced open innovation paradigm, building and funding ecosystems for co-creation, relevant stakeholders and players should take part and work together.

For Malaysia to continuously raise and reach its growth potential, it has to be innovative and thoroughly enterprising. We need to build and grow innovative markets, innovation hubs, and incubators for start-ups and networks for both collaboration and competition.

Enhancing the role of universities as co-creators and as interactive partners in innovation systems is extremely crucial as universities and public research institutes do not only create intellectual capital but also an ideal platform for knowledge and technology transfer.

That said, there are challenges to universities’ co-creation capabilities, including the design of incentives for academics when working with users and the absorptive capacity of academic knowledge within firms.

This requires enhancing the skills for open innovation and knowledge transfer across the industry-science spectrum.

It involves challenges to the management and leadership skills within the knowledge transfer profession as well as the support of good governance practices of universities and public research institutes.

Universities and research organisations need to be supported to adopt good practices when engaging with users or industry players. This enables them to build trustworthy, transparent and long-terms relationships with industry players in order to reap full benefits of open innovation.

We need to build more innovation-friendly financial instruments that could allow open innovation to thrive through a smart funding ecosystem. One successful model of such is the High Impact Programme 2 under the SME Masterplan 2012-2020, a national programme that offers funding mechanism but an end-to-end facilitation support for SMEs and entrepreneurs where over 170 technology licensing deals have been achieved between the industry and academia.

So what fuels the knowledge-based economy? A healthy ecosystem for co-creation that will breed trust, visibility and transparency. In order for open innovation to move the next level, the essential building blocks for this co-creation and open innovation to survive are:

1. Emphasis should be put on open innovation and knowledge transfer
2. Creation of innovative businesses, grow innovative markets, innovation hubs and networks
3. Make universities and public research institutes more entrepreneurial
4. Smart integration of capital into the ecosystem through quadruple helix model
5. Joint public-private action in finance for innovation and entrepreneurship
6. Make the Intellectual Property regime fit for Open Innovation 2.0

In this new age economy transition, co-creators must be more open, more networked, more collaborative and more absorptive of external ideas which are enabled by innovative investment schemes.

Intellectual property policy and system must be continuously revisited and enhanced to accommodate the increasing need for open innovation and new technologies that could boost the country’s GDP. It needs to take the principles of co-creation in an innovation ecosystem.

As competition and co-creation are an important trinity, we cannot sit on our laurels. Over the last two decades, driven mostly by cheap labour, developing countries in Asia have seen unprecedented global economy growth rates and the emergence of new technologies.

We need to continuously innovate and collaborate in order to achieve the paradigm shift. The vibrant SME, entrepreneurship and innovation-driven landscapes in Malaysia are great for anyone who wants to wear the entrepreneurship hat as we drive ourselves towards the formation of knowledge-based economy.

* Biruntha Mooruthi is Vice President and Head of IPR & Commercialisation Services of PlatCOM Ventures Sdn Bhd — the national technology commercialisation platform of Malaysia, a wholly owned subsidiary company of Agensi Inovasi Malaysia (AIM) formed in collaboration with SME Corp Malaysia.

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