Malaysia is innovating, but only on the fringes — study
ALTHOUGH Malaysian businesses don’t seem to be lagging behind peers in neighboring countries such as Singapore, Hong Kong, or even Australia, a new study says much of the innovation in the country is only on the fringes.
Conducted by Accenture, the study surveyed c-suite executives in Malaysia and found that up to 80 percent of the companies in Malaysia reported using innovation strategically to unlock value in new business opportunities, but did not leveraging those innovations to revitalize their core business.
According to the company’s consultants, corporate leaders currently struggle to find the right balance between focusing on the core and expanding into the new despite knowing they must harness the opportunities that accompany disruption.
“It is a matter of urgency as Malaysian companies are at a critical tipping point, with disruptive forces stalling or slowing growth in the core businesses,” read the press release accompanying the study.
Since the core business still accounts for a minimum of 50 percent of the revenues for companies in Malaysia, the consulting giant feels that leaders and managers must focus on using innovation to revitalize the core.
Upon analyzing the responses, it was found that only 13 percent of c-suite executives thought that revenues from new business opportunities outside of the core would account for more than 50 percent of the company’s overall income three years from now — re-iterating the importance of focusing on the core.
One of the primary reasons business leaders choose to innovate on the fringes is because transforming the core involves disrupting existing legacy infrastructure and processes. However, that seems to be the need of the hour.
“Legacy businesses are often attached to capital intensive infrastructures, contractual agreements, outdated technology and an attachment to existing products and services,” said Accenture Comms, Media, and Technology Director Ridhuan Sidek.
“[…] they need to prioritize innovation to transform the core business that will then free up investment capacity for other change activities.”
According to Accenture, transforming the core involves driving greater efficiencies and positioning the business for growth.
This could include moving technology infrastructure to the cloud, divesting certain business lines, or even increasing workforce efficiency through digital adoption.
The think tank’s consultants advise executives in Malaysia to prioritize these activities as less than a third of the c-suite leaders they surveyed said they saw them as “very important”.
Finally, the study pointed out that a majority of businesses are still tackling disruption with periodic, reactive, and typically rapid responses, often leading to short term, incremental changes.
To truly go digital, Malaysian companies need an approach that allows for perpetual transformation, with innovation applied pervasively throughout the organization.
“This is an approach that is less about fighting the tide, but rather, surfing the waves of disruption,” concluded the company’s consultants.