Leading a successful farm or agribusiness today is no small task. With the challenges of weather, commodity prices, a world economy affected by regional wars and crises, and a contentious political process that has offered few real solutions, planning for the future can sound like a pipe dream. Despite these challenges, many would argue that these are still heady times for agriculture, with promising new technologies and prospective new markets, such as the sustained increases in the global demand for animal protein. Agriculture has a promising role in meeting well-known global challenges:
- meeting the caloric and nutritional needs of nine billion people
- addressing energy security issues
- providing substitutes for petroleum-based industrial products
These challenges require farms to learn a balancing act of achieving each challenge without dramatically increasing acreage while also managing environmental impacts and resource utilization.
But no matter how positive the long-term story is for the industry, individual firms must survive (and thrive) in the short run. Balancing the need to adapt for the long-term with the need to execute in the short run is not easy. The dynamic capabilities theory describes how firms’ future decisions are shaped by their previous ones; adaptation to changing business climates, innovation by competitors, or new market dynamics is made more difficult by this chosen trajectory (Teece, 2016). Empirical research confirms this challenge. In a long-term study of firm performance, only 5% of more than 6,000 firms were able to deliver superior performance for at least 10 years. Most firms delivered strong performances in short bursts but lost their edge when the business environment shifted (Beinhocker, 2006).
Why is it so difficult to balance execution and innovation? Part of the story is that these managerial functions demand different skills. Think about the characteristics of a successful innovator. What comes to mind? You might think of flexibility, creativity, and a willingness to take risks. Innovators fill their time with research, experiments, and pilot projects. On the other hand, when you think of a firm known as a great executor, their characteristics are more along the lines of focus, efficiency, and process-orientation. Their time is spent considering standardization, limiting choice, and expanding via scale rather than novelty. Understanding the capabilities and activities of an innovator versus an executor illuminates the challenge of excelling in both managerial functions.
In his article, Beinhocker takes a deeper look, suggesting that one reason innovation for the future is hard is what he calls the double-edged nature of experience. As managers grow, they accumulate experience. Drawing on this experience guides managers in new situations, especially when the new situation is similar to past situations. In unprecedented times where factors are different, however, past experience can become a burden. Recalling what worked in the past can limit creativity, resulting in managers wasting time and struggling to apply lessons from their accumulated experience to situations where they do not fit.
Another reality that prevents the emergence of transformational leadership is what management scholars call path dependence. The idea is simple—who the manager or firm is affects who or what the manager or firm can be. This can be identified in practical, logistical ways. For instance, if a manager operates a string of country grain elevators scattered over part of their state, those physical assets can determine their future strategy. It can also shape a firms’ psychologically based intangible assets, such as reputation or style. Of course, it is certainly true that given enough time and money, anything can be changed. However, for most organizations, path dependence does result in real and imagined limits on what managers can and cannot do to adapt to an evolving marketplace.
While challenging, the idea of doing things right today to create a foundation that takes advantage of promising opportunities tomorrow should be a fundamental goal of successful farm and agribusiness firms. Ultimately, balancing these occasionally competing goals comes down to human talent. What can you do as a leader in your organization to ensure your team is not only successful today, but also in the future? Let’s take a look at some ways you can help your team be great today and tomorrow.
Talent Makes a Difference
Every leader of a successful farm or agribusiness firm understands the importance of great talent. A McKinsey study (Axelrod, et al., 2001) examined what great people mean to an organization in financial terms. The difference in impact generated by the top 20% of a firm’s employees versus its average employees is staggering. The top 20% of employees in operational roles boost productivity 40% over average employees. For general managers, the top 20% increase profitability 49% over their average counterparts, while the top 20% of those working in sales generate 67% more revenue than average employees. Recognizing and rewarding the value your top people deliver is key because their impact goes well above and beyond their less talented or less dedicated coworkers.
The Survey: What Skills are Valued in an Agribusiness Firm?
We turn now to a survey about the desired skills and capabilities of leaders in agribusiness and how these results can help your team manage business today and tomorrow.
Fifty-nine CEOs of cooperatives responded to a survey focused on key success factors for the future and on the necessary leadership competencies for their employees to be successful in the future. These CEOs came primarily from Corn Belt and High Plains states, with some from the Mid-South and South. The study was conducted by the Center for Food and Agricultural Business at Purdue University in partnership with Land O’Lakes Cooperative. For more information on the survey, contact Allan Gray, gray@purdue.edu, 765-434-4323 at the Center for Food and Agricultural Business.
While the survey explored several issues, our focus is on leadership competencies needed by senior management to effectively lead organizations in the future. Based on a review of previous work in this area, the leadership consulting firm PDI Ninth House developed a set of four general leadership competencies:
- Thought Leadership: Using insightful judgment, applying financial acumen, innovative thinking, displaying a global perspective, and thinking strategically.
- Results Leadership: Focus on customers, lead courageously, driving for results, and ensuring execution.
- People Leadership: Building relationships, promoting collaboration, influencing others, building talent, and engaging and inspiring others.
- Personal Leadership: Inspiring trust and adapting and learning.
The cooperative CEOs were asked to rank these four capabilities from least important to most important based on how they contributed to making a senior management team member an effective leader in the future. Before reading on, ask how you would rank these four items in terms of importance for your leadership team or yourself as a leader. What you believe to be important for senior leaders in your organization will say a lot about who you promote into these roles, how you coach and train, your definition of success, etc.
Skills and Capabilities for the Future
The 59 CEOs ranked people leadership as the most important, followed closely by results leadership. Personal leadership and thought leadership were ranked almost identically. Both were ranked substantially less important than people leadership and results leadership. What do these preliminary survey results suggest?
It is hard to argue with people leadership taking the top spot in this ranking. The competencies included under the umbrella of people leadership are important in the short-term and long-term, regardless of the size of an organization. Capabilities such as building relationships, promoting collaboration, and developing talent embrace much of what it means to be an effective and capable manager in a farm or agribusiness organization.
The fact that results leadership came in a close second and that thought leadership ranked last deserve a closer look. At some level, this suggests that the CEOs responding to the survey are managing for today and are focused on senior leaders that can execute. Given today’s uncertain and volatile environment, a focus on execution and operations seems appropriate. Nonetheless, the low value placed on thought leadership and the capabilities it includes, such as thinking strategically and innovatively, suggests that these firms may be vulnerable to the shifts of a rapidly evolving market. If the focus of the leadership team is making sure that the farm or agribusiness is operating at peak efficiency (that timeliness of crop planting or harvesting is enhanced, that crop production costs are as low as possible, etc.), who is stepping back to ask the big-picture questions about impending structural changes in the marketplace and their implications for the business?
Finding a balance here is not easy. But the senior leadership team is responsible for asking longer-term questions, that steps are being taken to adapt to an evolving future, and that strategic options are being considered. Being aware of and acknowledging the importance of today and tomorrow’s environment is the first step to integrating the transactional and transformational functions of management. Transactional management focuses on achieving specific goals. Transformational management inspires and motivates employees to go beyond expectations by creating a shared vision and fostering personal growth.
Some Thoughts
Please note that the information provided in this article does not suggest that the here and now is unimportant. As indicated earlier, any successful farm or agribusiness must be successful in the short run to operate in the long run. Your organization’s leadership team needs to ultimately be good at both managing for today and adapting for tomorrow. What can you do to cultivate such a perspective in your organization?
- Can we do it better? Creating a leadership team that regularly asks this question can go a long way toward creating a climate of innovation and adaptation. This does not mean every idea proposed in a brainstorming session will be explored. Instead, it means that your senior team is constantly on the lookout for new and better ideas and that the organization’s culture is open to suggestions for change, as opposed to being stuck in a rut.
- Take a look around. Make sure your team leaves the farm or office at your agribusiness to visit your customers’ businesses, industry seminars and conferences, local Chamber of Commerce events, etc. The agricultural business environment is moving fast, but so are most other sectors of the economy. Linkages between the ag and non-ag sectors of the economy are growing ever more important. Looking outside the organization into the world of your customer, suppliers, and your competitors (as well as into other industries) may spur creative thinking on the important question of “Can we do it better?”
- Make time for the future. Make sure opportunities are created to discuss the future at your farm or agribusiness firm’s regular meetings, planning sessions, retreats, etc. Don’t worry about carving out space for the short-run—you will naturally spend plenty of time in meetings on questions like, “How do we get through the next few weeks (or months)?” Dedicate time to big picture questions like “What changes do we need to make today to be successful in five years?”
If you do not make time to discuss big picture questions, they will not come up.
- Invest in professional development. Sending key employees and/or managers to professional development programs intended to extend their planning horizon, build planning and innovating skills, and hone strategic decision-making can be a great investment. This is especially true when you ask them to report on their experiences at a staff meeting. Such a report can be a great way to kick off some of the discussions outlined above.
- Coach for the future. The President/CEO/general manager can support a longer run perspective by reinforcing the ideas reviewed previously whenever an opportunity arises. Some managers will have more skill here than others. And, frankly, those who will move to the top of your organization will need both innovator and executor skills. So, how your folks respond to coaching, and which managers can begin to balance the short- and long-run, will provide great insight into who could someday take your place.
Upshot
Getting through the next harvest, or the next downturn or upturn in prices, or the next competitor initiative can absorb every bit of an organization’s managerial brainpower. The most successful farm and agribusiness organizations find a way to reserve managerial talent to maintain investments in longer-term questions. Take a few minutes and assess the kinds of conversations you have in your organization. Are they focused only on tomorrow (or next week, or next month) or do you find time to talk about the next three years or even the very next year? Are your people not only working hard to execute your processes and procedures, but also feeling confident and comfortable in suggesting how those processes can be improved? Dynamic and successful farm and agribusiness firms will certainly be successful at getting it done right day in and day out. What sets them apart is that they will also keep their managerial talent focused on adapting to whatever tomorrow brings. As John Wooden, UCLA’s legendary basketball coach (and a Purdue University alumnus!) once said, “Things turn out best for the people who make the best of the way things turn out.” Embodying that adaptative and responsive attitude may be the best way to pivot your organization and its people towards sustained future success.
Additional Resources
Portions of this publication were originally published by WATT Global Media in Feed and Grain Magazine at:
feedandgrain.com/grain-handling-processing/grain-facility-management/article/15401687/managing-talent-for-success-today-and-tomorrow
References
Axelrod, E., Handfield-Jones, H., Welsh, T. (2001). The war for talent, part two. McKinsey Quarterly.
abebooks.com/9781578514595/Talent-Michaels-Handfield-Jones-Helen-Axelrod-1578514592/plp
Beinhocker, E. D. (2006). The origins of wealth: Evolution, complexity, and the radical remaking of economics. Harvard Business Press.
scirp.org/reference/referencespapers?referenceid=2369900
Teece, D. J. (2016). Dynamic capabilities and entrepreneurial management in large organizations: Toward a theory of the (entrepreneurial) firm. European Economic Review, 86, 202–216.
doi.org/10.1016/j.euroecorev.2015.11.006
