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Has the plantation industry misunderstood innovativeness?


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The Sri Lankan plantation industry is 150 years old, highly traditional and labour intensive, its innovativeness seems to be a far cry. With the passage of time, at various points, different opportunities were available in Sri Lanka to enhance its economic standing through innovative initiatives to optimise the utilisation of land and labour. 

This could have been done by shifting to other crops which have a better land productivity, or through increased labour productivity by mechanisation of traditional agricultural and harvesting practices, or shifting part of the labour to more economically viable industries and placing more emphasis on value addition through innovative initiatives. 

 

Economic vs. socioeconomic cultivation

Due to the failure of the plantation industry to make much changes, allegations are already been levelled against the sector, which is of low viability but directly engages nearly 10% of the labour force due to its lack of innovative orientation compared to the more economically viable industries such as garment manufacturing, construction and tourism, thus compelling the viable industries to operate in a labour shortage environment. 

The situation is in stark contrast with some other countries that produce similar crops where various innovative techniques have been introduced for greater economic contributions such as diversification into more viable crops and adding value to traditional as well as newly introduced products, whilst constantly improving land and labour productivity. Such countries treat these crops as pure economic crops/products and therefore consistently striving to optimise profitability by way of product innovation, service innovation, process innovation and business model innovation to provide competitive advantage.

A drawback in Sri Lanka’s plantation sector is that crops aren’t looked at from a purely economic perspective, but also socioeconomic, political and environmental, unlike more successful global competitors.

Although the management of the Sri Lankan plantation sector acknowledges the importance of economic benefits brought about by the sector, there is a tendency to look at the plantation sector crops not merely as economic crops, but rather in the context of socioeconomic, political and environmental perspectives. The wages of plantation workers are the major cost component of the total cost of production. All plantation workers are unionised and to make the situation even worse, these unions are politically-affiliated.

 

National treasure to national burden

Such an overemphasis on non-economic aspects has resulted in mediocre performance which eventually leads toward a vicious cycle that incrementally worsens competitiveness due to:

  • Reduced input abilities
  • A lower flexibility to implement developmental activities
  • A decrease in research and development
  • An inability to take risks and introduce innovative initiatives

The failure to identify and address these underlying complexities and the lack of dire need to address such issues with innovative business solutions in the plantation sector has further aggravated the problem where the industry is shifting from the status of the ‘then cash cow’ to ‘present problem child’. This is not only due to the fact of reduced export income and taxes to the national economy, but also due to the government being compelled to continue allocating funds from its coffers for subsidies in order to avoid socio-political pressure. 

In a commercial sense, innovation is a necessity. Constant innovation is required to optimise plantation operations and output. As a sector, we have to take a step back and understand where we are presently in comparison to our competitors.

 

Understanding Innovation

Innovation can have different meanings in different contexts. Essentially, the main characteristic of innovation is change. The definition proposed by The Organisation for Economic Co-operation and Development is adopted where innovation consists of all those scientific, technical, commercial and financial steps necessary for the successful development and marketing of new or improved manufactured products, the commercial use of new or improved processes or equipment or the introduction of a new approach to a social service. 

Most empirical researches and surveys of firms show that innovation leads to new products and services that are higher in quality and cheaper to produce. Research and development (R&D) is only one of these steps.

Customer demand keeps adding pressure on innovativeness, compelling producers to make constant improvements and replacements to product lines with shorter product lifecycles in order to remain competitive in the global market. Researchers define innovation as the introduction of a new product, service or process into the marketplace through a certain business model, either by utilisation or commercialisation. These include product innovation, service innovation, process innovation and business model innovation to provide competitive advantage to an organisation.

 

Creativity, innovation and innovativeness

Eminent Swedish Academic and Research Dr. Leif Denti in an attempt to differentiate the concepts of innovation and creativity, explains that researchers frequently use these concepts interchangeably in the literature and that the concepts of innovation and creativity are intertwined. When these two concepts are combined, they produce original outcomes but creativity leads to innovation as it is a process which consists of multiple stages. 

Although creativity is required at various stages of the process to turn ideas into outcomes, it is only a part of the innovation process. Unlike creativity, innovation is often aimed at deriving a benefit to the organisation through an implementation-focused process, but the aim of creativity is not necessarily to derive a benefit through an implementation process. 

Creativity cannot be equated to innovativeness. They are both important parts of the process of innovation.

However, some authors differentiate creativity with innovation, arguing that creativity is limited to idea generation, whereas innovation goes beyond ideation to realise and apply these ideas through a process. Concept of innovativeness is having an ‘innovative culture’ in the organisation.

 

Importance of innovativeness

Innovativeness is considered as the notion of openness to new ideas as an aspect of culture of a firm, a measure of the orientation of an organisation towards innovation. It is in academic circles, referred to as an organisational-wide tendency to introduce “newness and novelty” through experimentation and research and development of new products or services and new processes.  

 

A drawback in Sri Lanka’s plantation sector is that crops aren’t looked at from a purely economic perspective, but also socioeconomic, political and environmental, unlike more successful global competitorsIn a commercial sense, innovation is a necessity. Constant innovation is required to optimise plantation operations and output. As a sector, we have to take a step back and understand where we are presently in comparison to our competitors

 

In the context of the Sri Lankan plantation sector or any type of business otherwise, the innovative action of a company must be a constant one and not resulting from occasional efforts, which means the presence of an “innovative attitude‟ which is a key factor for the success of a progressive organisation.

 

Organisational culture and innovativeness

Researchers argue that, to great extent, innovation depends on the culture of the organisation and to be precise, on the degree of organisational support. Organisational support can be divided into three forms: 1) organisational encouragement of innovation; 2) access to requisite resources; and 3) empowerment. 

The availability and the level of availability of these resources and values may lead to actual improvement in innovation performance. Sri Lankan plantation sector places very little or no emphasis on these elements, thus resulting in lack of innovative orientation. Instead, the Sri Lankan plantation sector places high emphasis on “control‟ by management and the “dependency‟ of followers even as at to date, continuing its origins from the colonial management systems. 

The plantation sector’s main focus of the sector over the years has been merely making incremental advancements to the existing processes and practices. This has been happening at a much slower pace than the pace of change and advancement in the external environment, leading to Sri Lanka being overtaken by more savvy competitors.

World-renowned authors argue that real innovation is a complex process which involves many factors and actors rather than one-off incremental change.

 

Whose responsibility is innovativeness?

In addition to the plantation companies, the research institutes have a major role to play here in creating awareness amongst the current and potential producers as well as educating policy makers in encouraging investors with appropriate incentives such as tax holidays, funding through state banks on special interest schemes, marketing support through embassies and assistance for R&D activities.

Notwithstanding the above, involvement of policy makers is of paramount importance in order to revive the industry, especially as it has surpassed the intervention stages of custodians and research institutes. The continued poor business performance leading to the declining contributions to the national economy have resulted in the deteriorated interest and eroding the confidence of public which affects the assistance provided to the plantation sector. It is imperative to address this through a more conducive national policy that emphasises on innovation and appropriate leadership styles within the sector. Involvement of policy makers is bound to draw attention to the graveness of the issue considering all aspects, and with the participation of all stakeholders it is bound to increase investor confidence. 

 

Creativity cannot be equated to innovativeness. They are both important parts of the process of innovationWorld-renowned authors argue that real innovation is a complex process which involves many factors and actors rather than one-off incremental change

 

In addition, the involvements of national and international investors are paramount. In the present situation, very few investors could be attracted, but introducing innovative measures in new product development can attract more investors. Likewise, it is important to involve politicians and trade unions in such an effort. Their cooperation and support to the industry will result in better performance of the sector. The same goes to the financial institutions. There is a need to boost their confidence in terms of return on investments so that financial assistance with sufficient gestation periods and special interest rates can be guaranteed.

 

Going forward

Reforming the plantation sector is no easy task, with multiple stakeholders at all levels and monumental changes required to do so. The purpose of this in depth thought piece on innovativeness, organisational culture and leadership styles in the Sri Lankan plantation sector is to study shed light on overlooked aspects and to increase awareness across all stakeholders on innovativeness, its underlying complexities and the importance of many factors and actors.

Next week, I’ll be exploring how regional competitors have overtaken Sri Lanka on the value addition front and how further analysis on innovativeness, leadership styles and organisational culture in the Sri Lankan plantation sector, can help it make up for lost time and revenue.



(The author, Dr. Neil Bogahalande, is a Director of State and private sector plantation companies with extensive experience at operational and strategic levels. He can be contacted on: nbogahalanda@gmail.com.)


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