Understanding Local Innovation System as an Intelligent Organism Using the Viable System Model Case Study of Palm Oil Industry in North Sumatra Province

This paper aims to analyze the local innovation system as an intelligent organism which has various organs with their unique tasks in order to achieve the main goal the so called innovation. Furthermore, this paper uses a Palm-oil industry, especially on on-farm industry, in North Sumatra Province as a study case. Using the Viable System Model as a tool of analysis, this paper has found that this local industry quiet successfully create an innovation system which in some extent has a talent to grow as a smart-organism in producing innovation, especially in the long run. This organism already has five functional and complete organs which are quiet capable to perform their specific tasks. These organs include: (1) operational organ (palm-oil producer, local university, local research institute), (2) coordinator organ (business culture), (3) controller organ (business culture and the government), (4) planner/intelligence organ (the government), and (5) policy organ (brain) (the government). However, this organism faces too much of the government domination (acts as controller, planner and brain of the innovation system at the same time) which possibly hinders other organs (the business actors them self, the market and the business association) to more independently and significantly perform. Furthermore, as an autonomous body, the system is divided into two big groups of organ which work somehow disconnectedly. Those two groups are machines organs (which consist of industry, research institute and university) and think-thank organs (which consist of the government). Hence, the system could not efficiently and effectively perform.