Individual Assignment 2
Course : Analisa Operasi dan Pengambilan Keputusan
Lecturer Name : Ronald Sukwadi
Name : Eiger Sumarly Situmorang (202300100005)
For this case study, we choose innovative products that launched by Toyota refer to articles/journal
that was published on IOP Conference Series: Earth and Enviromental Science Journal, on 2021.
Original title of this Journal is “Radical Innovation Process in Sustainable Development and
Knowledge Management:Toyota Prius Case Study” that was created by Richard Thomlins, Oksana
Malynka, Arun Sukumar, Mimi Rao and Kaushik Pandya.
This article looks at the inter-linkages and causalities between innovation and knowledge
management in terms of sustainable development goals through the case study method. Taking case of
the Toyota Prius, these concept are further developed in detail.
In this Journal, the writer calls Prius as a Radical Innovation, which is described as a process in which
the tacit knowledge in a firm is converted to explicit, codified knowledge that resulted in radical
product. Radical product innovations are products previously unavailable, products that improve
performance significantly, or product removing some undesired quality (Hage and Hollingsworth,
2000). One such product is the Toyota Prius, a case that is explored in detail in the subsequent
sections of this article. The case shows how such innovation requires the combinations of people-
centric decisions and diciplined subsumption to process.
1. Background: What is the problem
While technological changes occur through non-linear cycle of incremental and radical
innovation (Nonaka and Peltokorpi, 2006); the emergence of a radical innovation has devastating
effects on the old technological and aven economic system (Schumpeter, 1934). A recent radical
innovation that is the research subject of this article is the commercial manufacturing and success
of the world’s first vehicle driven by hybrid technology, called Toyota Prius.
Pict 1. Toyota Prius First Generation 1997
Toyota, incorporated in 1937, has emerged as one of the world’s largest automobile
manufacturing companies, with global sales of 7.5 million units in 2009, meaning that somewhere
in the world, one vehicle is sold by Toyota every five seconds. The company has been in the black
every year since the early 1940’s. Although the company was considered successful in most ways
by the early 1990s (the decade in which the Prius was launched), the lack of challenge was itself
viewed by senior management as the next potential future challenge.
Although the senior team at Toyota had been aware of the demand for more efficient vehicles,
the challenge we speak of above came from the demands of regulators for vehicles with lower
emission levels and the hint of legislation around cleaner fuels. The organisation responded
dynamically to this stimulus by not only deciding to radically alter its focus in favour of lower
emission vehicles, but also develop the enabling technology ecosystem that would allow it to
diffuse such an innovation within the market while retaining a leadership position. With the RAV-
4 (a classic example of incremental innovation in knee-jerk response to legislation) a failure, the
company embarked on a well-planned, systematic program of hybrid vehicle development, which
resulted in the launch of the Prius in 1997.
In the case of Toyota Prius, the central problem was addressing the growing global concerns
around environmental sustainability and fuel efficiency in the automotive industry. This
problem can be broken down into several key challenges:
a. Environmental Concerns:
• Air Pollution & Greenhouse Gas Emissions: The traditional gasoline-powered vehicles were
major contributors to air pollution and climate change due to their high levels of carbon
dioxide (CO₂) emissions. As global environmental concerns increased, there was pressure for
automakers to reduce the carbon footprint of their products.
• Limited Fuel Efficiency: Gasoline engines, while effective, were inefficient in terms of fuel
consumption, meaning that they required more fuel to travel the same distance compared to
more energy-efficient alternatives. This contributed to higher levels of air pollution and
increased dependency on fossil fuels.
b. Energy Dependency:
• Fossil Fuel Dependency: The world’s growing reliance on fossil fuels—especially oil—was a
significant concern. The automotive industry, as one of the largest consumers of gasoline, was
heavily contributing to global oil demand. Rising oil prices and geopolitical instability around
oil production made this dependency increasingly problematic.
c. Regulatory Pressures:
• Emissions Standards: Governments worldwide were implementing stricter environmental
regulations on automobile emissions. For instance, stricter standards on CO₂ emissions were
being set in markets like Europe and Japan, pushing automakers to develop cleaner
technologies to meet these regulations.
• Fuel Economy Standards: Many countries were introducing stricter fuel economy standards,
demanding that automakers produce cars that consumed less fuel and reduced overall
emissions.
d. Market Demand for Sustainable Solutions:
• Consumer Demand for Eco-Friendly Vehicles: As awareness about environmental issues
grew, consumers began seeking more eco-friendly options. There was a rising interest in
vehicles that offered better fuel efficiency and reduced environmental impact, even if that
meant paying a premium for such innovations.
e. Competitive Landscape:
• Innovation Pressure: Toyota had to innovate to maintain its competitive edge in the
automotive industry. Other automakers were beginning to explore alternative fuel
technologies, and Toyota faced pressure to be a leader in this space. At the time, no
automaker had yet developed a mass-market hybrid vehicle, so Toyota was entering
uncharted territory
2. What is the Design Process
The design process for Toyota Prius—as a radical innovation in hybrid vehicle technology—can
be broken down into several key stages, highlighting how Toyota approached the development of
the vehicle. The process was focused on integrating sustainability, technological advancements,
and knowledge management in the design of the Prius. Here's a detailed look at the design process:
a. Identifying the Problem and Opportunity
• Environmental Concerns: Toyota recognized the growing global concern about environmental
issues such as air pollution and fuel inefficiency in conventional vehicles.
• Regulatory Pressures: Increasing government regulations on emissions and fuel efficiency
created a demand for cleaner, more sustainable transportation solutions.
• Consumer Trends: Rising interest in fuel-efficient, eco-friendly vehicles presented an
opportunity to lead the market with a revolutionary product.
The problem was clear: creating a vehicle that could offer high fuel efficiency while reducing
emissions. The opportunity lay in developing a hybrid system that combined an internal
combustion engine with an electric motor.
b. Conceptualization and Ideation
• Cross-functional Teams: Toyota established a cross-functional team of engineers, designers,
and environmental experts. These teams worked together to brainstorm solutions and explore
how to merge internal combustion with electric motor technology.
• Research and Development (R&D): Toyota invested heavily in R&D, focusing on the
development of hybrid technology that could optimize fuel efficiency and minimize
environmental impact without sacrificing performance.
• Innovative Technologies: During this phase, Toyota explored various hybrid configurations
(series, parallel, and combined) and eventually settled on a parallel hybrid system, where both
the gasoline engine and electric motor could drive the car, either together or independently.
Pict 2. Knowledge Creation Model
c. Prototyping and Testing
• Engineering and Simulation: Extensive simulations and modeling were conducted to test the
new technologies, including hybrid powertrains, regenerative braking, battery systems, and
aerodynamics.
• Building Prototypes: The first Prius prototype was developed and rigorously tested. Toyota
engineers worked on overcoming challenges like battery efficiency, weight management, and
system integration. The goal was to create a car that would perform reliably, provide better
fuel efficiency, and be environmentally friendly.
• Testing and Feedback: Prototypes were subjected to real-world conditions and tested under
different driving scenarios. Feedback from engineers and early testers was used to refine the
design and improve various aspects of the vehicle’s performance.
d. Design Optimization and System Integration
• Battery and Powertrain: One of the major challenges was designing a battery that was
compact yet powerful enough to complement the internal combustion engine. Toyota's
solution was to use Nickel-Metal Hydride (NiMH) batteries, which were more efficient and
durable for the type of hybrid powertrain being developed.
• System Integration: Toyota focused on integrating the hybrid powertrain seamlessly, ensuring
that the gasoline engine and electric motor could work together efficiently and that the vehicle
could switch between them based on driving conditions.
• Aerodynamics and Lightweight Design: To further improve fuel efficiency, the design team
optimized the Prius for aerodynamics, using lightweight materials and streamlining the
vehicle's shape.
e. Manufacturing and Production Design
• Production Line Adaptation: Toyota had to adapt its production processes to accommodate
the new hybrid technologies. This involved updating the manufacturing facilities to handle the
specialized components required for hybrid vehicles, including batteries and electric motors.
• Supply Chain Management: Toyota also had to establish a reliable supply chain for the
specialized components, such as the batteries, which were sourced from different
manufacturers.
f. Launch and Marketing
• Launch Strategy: Toyota launched the Prius in 1997 as a revolutionary product in Japan, with
global expansion soon after. The marketing strategy emphasized sustainability and fuel
efficiency.
• Brand Positioning: Toyota positioned the Prius as an environmentally friendly, forward-
thinking vehicle. It was marketed as the world’s first mass-produced hybrid car, attracting
consumers who were environmentally conscious and looking for innovative technologies.
g. Post-Launch Improvements and Continuous Innovation
• Feedback and Iterative Refinements: After the launch, Toyota continued to gather feedback
from customers and improve the vehicle. Regular updates and model refinements were
introduced over the years, focusing on improving battery life, fuel efficiency, and driving
comfort.
• Technology Upgrades: Toyota continued to advance hybrid technology through successive
generations of the Prius, incorporating newer technologies like solar panels, improved
batteries, and enhanced powertrain efficiency.
3. What is The Alternative Solutions
In the context of Toyota's Prius and the problem of developing a more sustainable, fuel-efficient
vehicle, there were several alternative design solutions Toyota could have explored, aside from the
hybrid system they ultimately chose. Below are some of the key alternatives.
a. Fully electric vehicle
A vehicle powered entirely by electric energy stored in rechargeable batteries, with no
internal combustion engine
b. Compressed Natural gas (CNG)
Vehicles powered by compressed natural gas (CNG), which burns cleaner than gasoline or
diesel.
c. Hydrogen Fuel Cell Vehicle
Vehicles powered by hydrogen fuel cells, which generate electricity by combining hydrogen
with oxygen, emitting only water vapor as a byproduct
d. Diesel Engine with improved Emission Control
A diesel-powered vehicle with advanced emissions control technologies (such as Selective
Catalytic Reduction (SCR) or Diesel Particulate Filters (DPF)).
e. Plug in Hybrid Electric Vehicle
A vehicle that can run on electric power for shorter trips but switches to a gasoline engine for
longer distances, offering a blend of electric and combustion engine power.
f. Bio fuel-powered Vehicle
Vehicles running on biofuels such as ethanol (made from corn or sugarcane) or biodiesel
(made from vegetable oils or animal fats).
g. Fuel-Efficient Internal Combustion Engine (ICE)
Further improving the internal combustion engine's efficiency using advanced technologies
like turbocharging, direct fuel injection, or variable valve timing.
Each of alternative solutions has some pros and cons at that time. Look below the table of
Comparison of Alternatives.
Solutions Pros Cons
Fully Electric Vehicle (EV) Zero emissions, renewable Limited range, charging
energy potential infrastructure, high cost, long
duration for refuelling
CNG Vehicle Lower emissions, cheaper fuel Limited fuel infrastructure,
reduced range, fossil fuel-based
Hydrogen Fuel Cell Vehicle Zero emissions, quick refueling, Infrastructure challenges,
long range expensive technology
Diesel Engine Better fuel efficiency, lower High NOx and particulate
CO₂ emissions emissions, regulatory issues
Plug-in Hybrid (PHEV) Flexible (electric power + Complexity, limited electric
gasoline), lower emissions on range, higher cost
electric power
Biofuel Vehicle Renewable source, lower CO₂ Land use concerns, efficiency
emissions lower than gasoline
Improved ICE Familiar technology, lower cost Still fossil-fuel dependent,
(Gasoline/Diesel) limited emissions reduction
Final Choice (Toyota Prius):
Ultimately, Toyota chose the hybrid solution (a combination of an internal combustion engine and an
electric motor) because it offered a balance between fuel efficiency, reduced emissions, and
consumer acceptance. While fully electric vehicles were a promising option, they were not yet
practical in the 1990s due to range and infrastructure limitations. The hybrid approach allowed Toyota
to innovate within existing frameworks, reduce emissions, and make the Prius a viable, mass-market
vehicle
