Up until 2020, Malaysia’s Sime Darby Plantation (SDP) had experienced a century of unchanged harvesting practices and a total dependence on manual labor. The COVID-19 pandemic changed all that. In this case study, based on a presentation to Members of The Conference Board Asia Innovation Council, we learn how the company developed and leveraged significant operational advantage from unexpected adversity.
Malaysia’s Sime Darby Plantation (SDP) is Asia’s leading producer of palm oil—an industry that accounts for 3% of Malaysia’s GDP—and is the country’s second largest employer after the government sector. Necessity truly proved to be the mother of invention for SDP. But the journey wasn’t easy.
What SDP’s Response to Its Crisis Teaches Us
- Crisis can force organizations to challenge outdated and entrenched assumptions, while acting as a catalyst for new ideas. It also provides organizations an opportunity to do things that seemed out of reach before the crisis hit.
- Leadership from the top—in terms of vision, expectations, guidance, and support—is critical in driving the changes needed for successful innovation, while sustaining the pace and progress of the transformation.
- It is important to take advantage of low-hanging fruit and quick wins to boost progress and heighten morale. Demonstrating early success can reduce resistance to change.
- The newest technology may not be the best technology—the timing needs to be right for innovation to work. For SDP, tapping into the technological revolution underway, from digital sensors to AI to robotics, only made business sense once the new technology became affordable for nonpremium industries like palm oil.
- The answers may be at your doorstep. Local solutions and problem-based ecosystems at the local level can turn out to be the smart solution compared to oversophisticated global approaches from developed markets that most often try to make the problem fit their product—and hence turn out to be overdesigned and unaffordable.
Changing a Dinosaur
Up until 2020, SDP had experienced a century of unchanged harvesting practices and a total dependence on manual labor. The senior management team had flirted with the idea to add automation but were put off by the cost and the investment of time and effort it would entail.
However, the Malaysian government’s COVID-19 pandemic interventions changed all that. As described by Dr Harikrishna Kulaveerasingam (Hari), the company’s former Chief Research and Development Officer: “Prior to the pandemic, there was a prevailing sense that we needed to somehow mechanize our operations, but there was no urgency then. It was easier bringing in cheap labor to do the work than to innovate. But then, suddenly, we found ourselves with a critical need for immediate action that was previously deferred.”
The reality check came in the form of a significant decline in the number of allowed legal foreign workers, which dropped from 2,000 in 2018 to less than 500 in 2021. As a result, SDP launched “Project Infinity,” an across-the-board mechanization strategy covering all crop protection, fertilization, and harvesting operations. As Hari explains, “The timing was right because the new technology we relied upon had become affordable for nonpremium industries like ours. The task was broken up into two parts. The first one was to accelerate mechanization beyond the flat terrain. The challenge was in the undulating or terraced terrain, so you couldn’t get tractors in there. We had to put a great deal of thought into what kind of machines might be perfect for the job and whether they existed at all.”
“The second part was to start work on the development of prototypes for these machines, envisioning a transformative leap in our operational efficiency. The effect overall would be to remove strenuous manual labor from the plantation, shifting several tasks online and addressing the “three Ds” of manual labor: dangerous, difficult, and dirty. To realize this vision, we embarked on a journey to connect with the forefront of AI and automation, forging partnerships within the ecosystem that leads the world in these technologies,” he said.
The Value of Quick Wins
Looking for a quick win, Hari chose the low-hanging fruit of crop protection, developing specifically adapted drones and unmanned aerial vehicles (UAVs)—in partnership with several start-up ventures. This development involved two particular application challenges. First, the creation of modified spray heads that enabled the drones to spray the insecticide under the palm leaf, where the insects that fed off the shoots and leaves tend to cluster. And second, allowing point to point application, supported by camera and map grid technology, which would enable the drones to spray the tips of the spear leaves that were subject to infestation by rhinoceros beetles during early growth.
Results Are Win-Win for SDP and Its Strategic Start-up Partners
The rapid development of this technology allowed SDP to reduce, over a period of two years, the damage to crops from around 10% to just 2%. Hari explains how the adoption of the “quick win” strategy showed immediately tangible benefits, which propelled the entire process to greater heights: “The start-up companies became solvent and the inventiveness galvanized people. It started a chain reaction, generated more ideas, and a greater number of start-up companies approached us.”
A Spin-off Benefit: A Better Workplace, a Better Workforce
The resulting boost in energy and morale has enabled Hari’s team to develop prototype semi-autonomous machines to cover the fertilization and harvesting of crops. A socially beneficial by-product has been the transformation of the demographics of the local workforce, creating new job opportunities for women to operate, with the correct training, the new semiautonomous machines. The company has 480 machine specialists, of which 21 are women. Prior to the pandemic when the accelerated mechanization program was in its infancy, local workers made up 25% of its Malaysian workforce. By the end of last year, the proportion had increased to 40%. Mechanization played a pivotal role in this shift, rendering plantation work less physically demanding and substantially diminishing the challenges encapsulated in the traditional manual labor's “three Ds.”
Innovation Is a Journey—What’s Next
The company is now entering the next phase of Project Infinity, developing electrical vehicles to replace the gear-driven diesel machines currently in use. The company hopes to finalize the mechanization of the harvesting process, often referred to as the “Holy Grail” due to its complexity, by 2027 and the total electrification of the plantation fleet of vehicles by 2030.
Local Solutions Stemming from Leadership at the Top
Hari points out that turning to problem-based ecosystems at the Malaysian local level delivered the smart solution, over global approaches from developed markets that most often try to make the problem fit their product and turn out to be overdesigned and unaffordable.
He also says leadership from the top played a pivotal role in achieving remarkable progress within a short time frame. This success was attributed to a compelling vision, clear expectation-setting, engagement, and regular update meetings personally led by SDP’s Group Managing Director, Datuk Mohamad Helmy Othman Basha. Leaders successfully connected to the organization and its ecosystem partners who worked collaboratively and seamlessly to create new solutions, tapping into available and affordable technologies.
Hari concludes: “Never waste a good crisis. The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”
Up until 2020, Malaysia’s Sime Darby Plantation (SDP) had experienced a century of unchanged harvesting practices and a total dependence on manual labor. The COVID-19 pandemic changed all that. In this case study, based on a presentation to Members of The Conference Board Asia Innovation Council, we learn how the company developed and leveraged significant operational advantage from unexpected adversity.
Malaysia’s Sime Darby Plantation (SDP) is Asia’s leading producer of palm oil—an industry that accounts for 3% of Malaysia’s GDP—and is the country’s second largest employer after the government sector. Necessity truly proved to be the mother of invention for SDP. But the journey wasn’t easy.
What SDP’s Response to Its Crisis Teaches Us
- Crisis can force organizations to challenge outdated and entrenched assumptions, while acting as a catalyst for new ideas. It also provides organizations an opportunity to do things that seemed out of reach before the crisis hit.
- Leadership from the top—in terms of vision, expectations, guidance, and support—is critical in driving the changes needed for successful innovation, while sustaining the pace and progress of the transformation.
- It is important to take advantage of low-hanging fruit and quick wins to boost progress and heighten morale. Demonstrating early success can reduce resistance to change.
- The newest technology may not be the best technology—the timing needs to be right for innovation to work. For SDP, tapping into the technological revolution underway, from digital sensors to AI to robotics, only made business sense once the new technology became affordable for nonpremium industries like palm oil.
- The answers may be at your doorstep. Local solutions and problem-based ecosystems at the local level can turn out to be the smart solution compared to oversophisticated global approaches from developed markets that most often try to make the problem fit their product—and hence turn out to be overdesigned and unaffordable.
Changing a Dinosaur
Up until 2020, SDP had experienced a century of unchanged harvesting practices and a total dependence on manual labor. The senior management team had flirted with the idea to add automation but were put off by the cost and the investment of time and effort it would entail.
However, the Malaysian government’s COVID-19 pandemic interventions changed all that. As described by Dr Harikrishna Kulaveerasingam (Hari), the company’s former Chief Research and Development Officer: “Prior to the pandemic, there was a prevailing sense that we needed to somehow mechanize our operations, but there was no urgency then. It was easier bringing in cheap labor to do the work than to innovate. But then, suddenly, we found ourselves with a critical need for immediate action that was previously deferred.”
The reality check came in the form of a significant decline in the number of allowed legal foreign workers, which dropped from 2,000 in 2018 to less than 500 in 2021. As a result, SDP launched “Project Infinity,” an across-the-board mechanization strategy covering all crop protection, fertilization, and harvesting operations. As Hari explains, “The timing was right because the new technology we relied upon had become affordable for nonpremium industries like ours. The task was broken up into two parts. The first one was to accelerate mechanization beyond the flat terrain. The challenge was in the undulating or terraced terrain, so you couldn’t get tractors in there. We had to put a great deal of thought into what kind of machines might be perfect for the job and whether they existed at all.”
“The second part was to start work on the development of prototypes for these machines, envisioning a transformative leap in our operational efficiency. The effect overall would be to remove strenuous manual labor from the plantation, shifting several tasks online and addressing the “three Ds” of manual labor: dangerous, difficult, and dirty. To realize this vision, we embarked on a journey to connect with the forefront of AI and automation, forging partnerships within the ecosystem that leads the world in these technologies,” he said.
The Value of Quick Wins
Looking for a quick win, Hari chose the low-hanging fruit of crop protection, developing specifically adapted drones and unmanned aerial vehicles (UAVs)—in partnership with several start-up ventures. This development involved two particular application challenges. First, the creation of modified spray heads that enabled the drones to spray the insecticide under the palm leaf, where the insects that fed off the shoots and leaves tend to cluster. And second, allowing point to point application, supported by camera and map grid technology, which would enable the drones to spray the tips of the spear leaves that were subject to infestation by rhinoceros beetles during early growth.
Results Are Win-Win for SDP and Its Strategic Start-up Partners
The rapid development of this technology allowed SDP to reduce, over a period of two years, the damage to crops from around 10% to just 2%. Hari explains how the adoption of the “quick win” strategy showed immediately tangible benefits, which propelled the entire process to greater heights: “The start-up companies became solvent and the inventiveness galvanized people. It started a chain reaction, generated more ideas, and a greater number of start-up companies approached us.”
A Spin-off Benefit: A Better Workplace, a Better Workforce
The resulting boost in energy and morale has enabled Hari’s team to develop prototype semi-autonomous machines to cover the fertilization and harvesting of crops. A socially beneficial by-product has been the transformation of the demographics of the local workforce, creating new job opportunities for women to operate, with the correct training, the new semiautonomous machines. The company has 480 machine specialists, of which 21 are women. Prior to the pandemic when the accelerated mechanization program was in its infancy, local workers made up 25% of its Malaysian workforce. By the end of last year, the proportion had increased to 40%. Mechanization played a pivotal role in this shift, rendering plantation work less physically demanding and substantially diminishing the challenges encapsulated in the traditional manual labor's “three Ds.”
Innovation Is a Journey—What’s Next
The company is now entering the next phase of Project Infinity, developing electrical vehicles to replace the gear-driven diesel machines currently in use. The company hopes to finalize the mechanization of the harvesting process, often referred to as the “Holy Grail” due to its complexity, by 2027 and the total electrification of the plantation fleet of vehicles by 2030.
Local Solutions Stemming from Leadership at the Top
Hari points out that turning to problem-based ecosystems at the Malaysian local level delivered the smart solution, over global approaches from developed markets that most often try to make the problem fit their product and turn out to be overdesigned and unaffordable.
He also says leadership from the top played a pivotal role in achieving remarkable progress within a short time frame. This success was attributed to a compelling vision, clear expectation-setting, engagement, and regular update meetings personally led by SDP’s Group Managing Director, Datuk Mohamad Helmy Othman Basha. Leaders successfully connected to the organization and its ecosystem partners who worked collaboratively and seamlessly to create new solutions, tapping into available and affordable technologies.
Hari concludes: “Never waste a good crisis. The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”
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