1.

0 INTRODUCTION

Innovation is the process of making something new or doing something in a new way.
Merriam-Webster dictionary defines innovation as something new or to a change made to an
existing product, idea, or field. For example, the first telephone was an invention, the first
cellular telephone either an invention or an innovation, and the first smartphone an innovation.
Innovation involves the process of translating an idea or invention into a good or service that
creates value or for which customers will pay. To be called an innovation, an idea must be
replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate
application of information, imagination and initiative in deriving greater or different values from
resources, and includes all processes by which new ideas are generated and converted into useful
products. In business, innovation often results when ideas are applied by the company in order to
further satisfy the needs and expectations of the customers.

In a social context, innovation helps create new methods for alliance creation, joint
venturing, flexible work hours, and creation of buyers' purchasing power (Baily, 1988).
Innovations are divided into two broad categories:

a) continuous or dynamic evolutionary innovation (evolutionary innovation)

b) discontinuous innovations (revolutionary innovation)

Innovation is synonymous with risk-taking and organizations that create revolutionary products
or technologies take on the greatest risk because they create new markets.

Revolutionary innovation is the type we see and hear about most. On the one hand, it can
quickly make available wondrous new products and services. On the other, it is disruptive and
expensive, and it produces unpredictable outcomes. Revolutionary Innovation requires large
pools of highly risk-tolerant investors who are prepared to make large capital investments to try
something completely new, and those investors require, in turn, very large returns for the few
major successes that they come across (Baily, 1988). Diversity and high levels of education are
essential ingredients of revolutionary innovation. Entrepreneurs and investors are much more
likely to develop wholly new approaches to business and technology if their day-to-day
experiences include exposure to and stimulation by a host of differences in thinking and
working, and if they have both the training and the intellectual capacity to act on new ideas.
 Evolutionary innovation is broadly followed in most very large corporations, regardless
of their national heritage. Evolutionary innovation tends to be incremental in nature and less
expensive to develop than revolutionary innovation. Evolutionary innovation focuses on
preserving or gradually changing existing fundamentals, including people, product, and business
relationships. Because the changes tend to be smaller, investment in evolutionary innovation
tends to be smaller, and because the destruction wrought by evolutionary innovation tends to be
less dramatic and spread over a longer time frame, the costs, both in terms of dollars and in terms
social and business disruption, tend to be smaller as well.

2.0 IMPORTANCE OF INNOVATION

Rapid technological changes, the information revolution and increasing globalization of

business activities have intensified competition among countries for export markets, capital,
R&D, and skilled people. The competitive imperative is especially critical for Malaysia because
it depends heavily on international trade and foreign capital and competes head on with the
countries with largest and the most dynamic economy, for capital, R&D, skilled people and high-
value added activities.

Modern growth theory identifies three key determinants of productivity growth:

accumulation of physical capital, accumulation of human capital, and rate of innovation and
technological change (Chilton, 2010). It is not appropriate, however, to consider them as separate
factors, since they interact in complex ways and are complementary in nature. Advanced
technologies are generally incorporated in the production process to improve productivity. But
new investments in machinery and equipment, and skills development in the labour force are
also required to use state-of-the-art technologies effectively. In short, the quantity and quality of
these three key factors, and the way in which they are organized, managed and utilized within a
firm are what determine productivity performance.
 The link between innovation and productivity growth receives particular attention in the
literature. In fact, innovation is often thought of as the “engine of growth” because of its lasting
long-run effects on productivity. Although the conceptual links between innovation and
productivity are strong and clear, the relationship between the two is complex.

Entrepreneurship and innovation are increasingly important in all areas of business and
government. Entrepreneurial start-ups galvanise the economy by identifying new opportunities
and redirecting resources to them (Cavalcante, 2011). Established firms innovate in order to
outmaneuver or respond to their competition. And in the public sector, the need for effective
policies to deal with new challenges and for increasing service delivery with declining budgets
also places a premium on innovative thinking. The course focuses on the skills necessary for the
planning, development and launch of entrepreneurial and innovative ventures. The material
covered includes the foundations of entrepreneurship, techniques for creative thinking, and
processes for developing, planning and launching a new venture including protecting intellectual
property, evaluating markets, developing innovative business models, budgeting, and raising
finance. The major piece of assessment is the writing of a comprehensive business plan.

Considered as a global movement, entrepreneurship is presently embryonic in emerging

markets like China and India. Social, women, and youth sectors are the sectors that demand
innovative solutions, and entrepreneurs have a large playground to cater to, with out-of-the-box
ideas that will impact the quality of lives and contribute towards making the world a better and
more sustainable place. Both central and state governments across the country are now realizing
that entrepreneurship is a vehicle of economic success and prosperity that can be instrumental in
promoting entrepreneurial endeavors through different schemes and programmes. Finally, the
rise of new impact investors is a big step forward for new enterprises that thrive on innovation.

Major changes are necessary to understand customer’s need, want and expectation as
they are now empowered by the increasingly connected and digitized world. Customer focus has
rapidly shifted to receiving the value that reveals that companies understand and support their
lifestyle preferences. Customers now have total control over who they are, what they do, and
what, how and where they purchase and procure products. This growing consumer expectations
and choices have made organizations become more customer-centric through innovative
amendments. Adopting human-centered devices to perk up the experience has provided
increased value and created new ways to invent products and services.

3.0 DIFFERENCE BETWEEN CREATIVITY AND INNOVATION

The primary difference between creativity and innovation is that the former refers to
conceive a fresh idea or plan, whereas the latter implies initiating something new to the market,
which is not introduced earlier.

Creativity is a function of knowledge, curiosity, imagination, and evaluation. The greater

the knowledge base and level of curiosity, the more ideas, patterns, and combinations one can
achieve, which then correlates to creating new and innovative products and services. But merely
having the knowledge does not guarantee the formation of new patterns. The bits and pieces
must be shaken up and iterated in new ways. Then the embryonic ideas must be evaluated and
developed into usable ideas. In other words, there really is a process.

Innovation is an act of application of new ideas to which creates some value for the
business organization, government, and society as well. Better and smarter way of doing
anything is innovation. It could be the introduction of:

 New technology.
 New product line or segment.
 A new method of production.
 An improvement in the existing product.

Innovation is closely tied to creativity, like putting creative ideas into action is an innovation,
whose consequences should be positive. It is the process of doing something better for the first
time, which was not previously done by any entity. It can also be termed as a change which can
bring a new edge to the performance and productivity of the company.

For example, the invention of motorcycle can be taken as good measure to differentiate
between creativity and innovation. The invention of the motorcycle was the biggest innovation
over scooters. In early centuries, people used to travel with scooters, for which they have to
make lots of efforts to start it like they need to strike the kick and knee down from either side if it
doesn’t start. So, years and years passed away, and nobody even thought for the invention of
bikes. The invention of the motorcycle make them realize that they can also ride bikes without
making any extra efforts, they just have to click the switch and its starts automatically. In this
example, the thought of creation of a new traveling motorcycle is creativity, but the actual
invention of it is innovation.

4.0 DIFFERENT TYPES OF INNOVATION

4.1 Disruptive Innovation

Disruptive innovation, also known as stealth innovation, involves applying new

technology or processes to a company’s current market. It is stealthy in nature since newer tech
will often be inferior to existing market technology. This newer technology is often more
expensive, has fewer features, is harder to use, and is not as aesthetically pleasing. It is only after
a few iterations that the newer tech surpasses the old and disrupts all existing companies. By
then, it might be too late for the established companies to quickly compete with the newer
technology.

There are quite a few examples of disruptive innovation, one of the more prominent
being Apple’s iPhone disruption of the mobile phone market (Chesbrough, 2003). Prior to the
iPhone, most popular phones relied on buttons, keypads or scroll wheels for user input. The
iPhone was the result of a technological movement that was years in making, mostly iterated by
Palm Treo phones and personal digital assistants (PDAs). It is not the first mover who ends up
disrupting the existing market. In order to disrupt the mobile phone market, Apple had to cobble
together an amazing touch screen that had a simple to use interface, and provide users access to a
large assortment of built-in and third-party mobile applications.

4.2 Architectural Innovation

Architectural innovation is simply taking the lessons, skills and overall technology and
applying them within a different market. This innovation is amazing at increasing new customers
as long as the new market is receptive. Most of the time, the risk involved in architectural
innovation is low due to the reliance and reintroduction of proven technology. Though most of
the time it requires tweaking to match the requirements of the new market.
 In 1966, NASA’s Ames Research Center attempted to improve the safety of aircraft
cushions (Doganova, 2009). They succeeded by creating a new type of foam, which reacts to the
pressure applied to it, yet magically form back to its original shape. Originally it was
commercially marketed as medical equipment table pads and sports equipment, before having
larger success as use in mattresses. This “slow spring back foam” technology falls under
architectural innovation. It is commonly known as memory foam.

4.3 Incremental Innovation

Incremental Innovation is the most common form of innovation. It utilizes existing

technology and increases value to the customer (features, design changes, etc.) within existing
market. Almost all companies engage in incremental innovation in one form or another.

Cadbury has innovated through introducing line extensions. As well as developing new
flavours, the brand has also created new formats. Wispa as an example: the popular chocolate bar
is now available as a hot chocolate and a snacking bag. By using an incremental approach to
innovation, Cadbury has been able to open up additional sources of revenue.

4.4 Radical Innovation

Radical innovation is what people think of mostly when considering innovation. It gives
birth to new industries or swallows existing ones and involves creating revolutionary technology.
The airplane, for example, was not the first mode of transportation, but it is revolutionary as it
allowed commercialized air travel to develop and prosper.
5.0 INNOVATIVE ORGANIZATIONS IN MALAYSIA

5.1 Air Asia

AirAsia is one of the leading airlines corporation of Malaysia that performed exceedingly
well in terms of its past investments and the profits that it made out of it after it’s relaunch. It
was acquitted by a private entrepreneur Tony Fernandes when it was highly under debt. The
sudden changes in the profit graph came to the surface soon when it announced its first profit
right in seven months of its re-launch. The innovations in strategy and investments brought
immense amount of profit to the company in the following years. It invested amounts on new
and effective services and cut shorted various not essentially required expenditure to reduce the
overall cost. With the implementation of its successful Low Cost Carrier (LCC) model, the
whole business model of AirAsia was changed and it became first Airline Corporation to have
no-cost, no-frill concept to lower the prices by 40-60% than its rivals (Air Asia, 2016).

The AirAsia opted for various cost-effective, customer-oriented and highly innovative
strategies to shape its business model to reach its ultimate missions and objectives. With its
innovative low-fare, no-frills concept it highly reduced the cost of air ticket such as by having
just a single standard cabin, paid meals instead of pre-paid free meals, etc. The corporation found
efficient ways of reducing the expenditure on travel by the customers while expanding its
domestic and international business. Like for example, the short-haul flights took less than four
hours for travel which provided it opportunity of having the return of the flights on the same day
conserving many of the expenses of the corporation. The company also launched its long-hauled
air services at the time when many of the LCCs were reluctant for that. All the strategies or mix
of strategies were consistently aiming at gradually achieving the goals and the objectives of the
corporation and dynamic with the changing internal and external environment.

5.2 Maybank

Maybank was incorporated in 1960 and began its first operations in the capital of
Malaysia, Kuala Lumpur. Maybank spread its wings to Hong Kong and London and much later
to New York, Bahrain, Saudi Arabia, Uzbekistan, Pakistan, India, China, Philippines, Papua
New Guinea and other countries in Southeast Asia. Maybank’s home markets – Malaysia,
Indonesia and Singapore contribute the largest proportion of Profit Before Tax (PBT) in 2014
amounting to 88.6% of the total group’s profits while the remaining percentage is derived from
Maybank’s overseas markets in London, Saudi Arabia, Uzbekistan, Bahrain and New York
(Maybank, 2014).

Maybank’s pioneering self-service technology via its online portal, M2U, has clearly
transformed customers from a passive to an active audience, reflected in the astounding number
of over 2.8 million monthly unique visitors and 2.6 million active users from a total of 7.4
million registered users for the service in Malaysia in 2014. Since then, Maybank’s rivals have
started to utilise the Internet as marketing and distribution platforms in order to stay agile and
competitive in the marketplace (Maybank, 2015).

6.0 CONCLUSION

In the business world, for an innovative idea to be useful, it has to be replicable without
being too expensive and it has to resolve a particular need. Innovation is achieved by providing
something original and is often seen to produce efficiency, leading to an idea that significantly
affects the general society. Innovation is vital in the workplace because it gives companies an
edge in penetrating markets faster and provides a better connection to developing markets, which
can lead to bigger opportunities, especially in developing countries.
REFERENCES

Maybank 2014, Maybank Online Annual Report 2014 Group President and CEO’s Statement,
Maybank, viewed 10 July 2019,
http://www.maybank.com/iwovresources/corporate_new/document/my/en/pdf/annual-
report/2015/Maybank_AR2014- Corporate.pdf

Maybank2U.com 2015, Maybank One Solution: The convenience of an all-in-one banking

solution, all at one stop, Maybank, viewed 10 July 2019,
http://www.maybank2u.com.my/mbb_info/m2u/public/personalDetail04.do?channelId=ACC-
Accounts&cntTypeId=0&cntKey=ACC13.05&programId=ACC13-
M1Account&chCatId=/mbb/Personal/ACC-Accounts

Baily, M.N. and A.K. Chakrabarti (1988). Innovation and the Productivity Crisis. Washington:
The Brookings Institution, 1988.

Cavalcante, S. A., Kesting, P., & Ulhøi, J. P. (2011). Business model dynamics and innovation:
(Re)establishing the missing linkages. Management Decision, 49(8), 1327–1342.

Chesbrough, H. W. (2003). Open innovation: The new imperative for creating and profiting from
technology. Boston: Harvard Business School Press.

Chilton, M. A., & Bloodgood, J. M. (2010). Adaption-innovation theory and knowledge use in
organizations. Management Decision, 48(8), 1159–1180.

Doganova, L., & Eyquem-Renault, M. (2009). What do business models do? Innovation devices
in technology entrepreneurship. Research Policy, 38(10), 1559–1570.

Fernandes (2017). Flying High: My Story From Air Asia To QPR. Penguin Random House, UK.