The science, technology and business of farming in the 21st century are changing rapidly. To compete on a global scale, farmers need to know much more than how to grow a good crop; they need to know how to lead complex, management-intensive operations effectively. And they must be increasingly astute and nimble to keep those operations profitable.
That’s why North Carolina State University’s College of Agriculture and Life Sciences teamed with East Carolina University’s College of Business and the Center for Innovation Management Studies (CIMS) in NC State’s Poole College of Management to launch a new Executive Farm Management Program.
In her article below, CIMS Managing Director Michelle L Grainger explains how the new program is working.
Traditional business planners draft vision statements based on their view of the future for their business; then an environmental scan is completed and a mission statement drafted; then goals and objectives are formed, followed by an action plan with detailed financial projections years into the future.
Farming operations are different. Business plans are rarely done and even more rarely revisited and revised. Even if such plans are developed they are often static plans that act as if the dynamic world in which businesses operate is also static.
A Better Way
At CIMS we believe there is a better way. In Business Model Generation Alexander Osterwalder and Yves Pigneur present the business model canvas as a better approach to modeling businesses in a world where change and innovation occur increasingly rapidly. To our knowledge, this approach has not yet been applied in agriculture. For that reason, CIMS undertook to apply it in a pilot of the new Executive Farm Management Program, in its first cohort, directed toward the largest sweet potato and tobacco growers in North Carolina.
The goal of the program is to strengthen core business competencies in large, diverse farms, particularly those with specialty enterprises, by offering custom executive education for interested operators. In this approach, the educators take all of the business management concepts being taught and ensure that the examples provided and class exercises tasked are customized to the specific type of grower.
Alumni of the program have told us that their participation in this course taught them to not be so hyper-focused on operational production and efficiency, but rather to consider the value proposition they are providing or could provide to their end customer. Others stated that such learnings as identifying new markets and having time and space to think strategically not only benefited the operators themselves but their operations as a whole.
Applying the Business Model Canvas
The Program was initiated by the Department of Agriculture and Resource Economics in the College of Agriculture and Life Sciences at NC State University in collaboration with CIMS in the NCSU Poole College of Management and the College of Business at East Carolina University. CIMS was specifically tasked with providing strategic innovation content and tools to the program, which we did by utilizing the Business Model Canvas (BMC) as the foundational framework for not only the content we provided but for the overall structure of the program.
Before introducing our farmers to the BMC, we took them through an overview of what strategic thinking is and then provided examples of different types of business models. These included Tesla, Dollar Shave Club and Amazon. After that, the students were ready to be exposed to the Business Model Canvas (BMC) and how it is used.
Nine blocks comprise the BMC; Key Partners, Key Activities, Key Resources, Value Proposition, Customer Relationships, Channels, Customer Segments, Cost Structures, and Revenue Streams. Each of these blocks is initially considered individually and is meant to foster a brainstorming-like activity of identifying all possible relevant factors for each.
While the BMC was created to help entrepreneurs “flesh-out” their business plans, for our program we created a fictional farm-operation case study of the Brown family that each of the teams used to address each of these nine blocks (see “Students Case Study,” next page). The students were instructed to use a single sticky note per idea and then place each thought on the corresponding block of the nine-block canvas. Once this initial pass was made, the real work began.
PESTEL Analysis—This exercise includes the application of new strategic tools, such as a PESTEL Analysis, which had the students examine each of the six influences on North Carolina’s sweet potato and tobacco industries: Political, Economic, Societal, Technological, Environmental, and Legal. This gave them a broad understanding of the pressures facing farmers in these industries today.
SWOT ANALYSIS—The participants applied their conclusions from the PESTEL analysis to a SWOT Analysis, the same SWOT tool used successfully for so many years in management: Strengths, Weaknesses, Opportunities, and Threats. With information captured by both the PESTEL and SWOT, students could now roll up their sleeves to consider what their value proposition(s) might be.
It is important to note that each value proposition requires creating its own BMC. We follow Osterwalder’s (co-author of Business Model Generation) definition of value proposition, which simply states: A value proposition is how a business/operation/organization Gets the Job to be Done – Done. Said differently, it’s a clear statement of the exact product/service offerings that meet the needs of the customer and differentiates a business from its competitor.
VPC—Next, participants were provided with a Value Proposition Canvas (VPC) to assist in further articulating the team’s value propositions. This tool has the team list the prospective products and services that would be offered. One example would be a high-quality, consistent product (sweet potato), which is transparent in its ability to be tracked and traced.
These offerings must address how they will act as both a “Gain Creator” and a “Pain Reliever.” A key component of the VPC is the task of identifying which element(s) of a value proposition offering provide a Gain, or a benefit to the customer, by meeting desires and expectations, and which element(s) relieve specific Pains, those experiences that eliminate negative emotions such as undesired costs.
Using this same tool, customer segmentation is then fleshed out, the priority being to identify the specific Jobs to Be Done (JTBD) that their value proposition is addressing. In the case of North Carolina sweet potato growers, a JTBD could be the cultivation of purple sweet potatoes, which have an extended shelf life to enable further global export options.
It is the end customer’s JTBD that is to be the focus of this activity; by identifying that as the target, the teams are then able to more easily capture both the gains and pains of such a JTBD.
Brainstorming ‘Sticky Note’ Thoughts
After using these tools, the students return to their team’s Business Model Canvas and begin organizing and prioritizing their initial brainstorming “sticky note” thoughts (see photo, next page). This is essential because the participants now have far more information allowing them to see where their ideas are applicable and can be leveraged for maximum benefit. In other words, do their sticky note ideas fall into the category of efficiency or value creation?
The canvas is divided into the two sides of business operations: creating efficiency on the left side and creating value on the right. On the left are key partners, key assets, key resources and cost structure, and creating value. On the right side are value proposition, customer relationships, channels, customer segments and revenue streams.
This tactile and interactive process has proven to be a valuable teacher for participants from all levels in any industry. It encourages those who avoid speaking up in group settings to engage and contribute as sticky notes are being created, edited and moved from one block of the BMC to the next.
The canvas also sparks ah-ha moments where students recognize additional opportunities to pursue after a value proposition has been further vetted and tested with the combined tools described above.
Brandon Batten, farmer and owner of Flying Farmer LLC, was one participant from the pilot program. He had such an ah-ha moment, and the canvas allowed him to clearly see what he would need to do to create a new business he had been considering. He told us:
“The business model canvas changed the way I think. As a farmer, I am hyper-focused on the production and efficiency of my operation, or the left side of the canvas. Shifting my focus to the right side of the canvas, to the value propositions and thinking about a way to give customers something before they know that they need it, inspired me. As a farmer, engineer, and tech enthusiast, I decided to create Flying Farmer LLC to educate farmers about the drone industry and their applications in agriculture. I hope to position myself to provide these services when the industry is ready for them.”
Praise for the Program
Student participants and their sponsoring operations, financial supporters of the program and University leaders have judged the pilot program a success. Participants walked away with a new set of tools they can use in their operations for years to come. They gained new knowledge about strategy, human resources and labor management, succession planning, financial management, and how to effectively lead change, assess markets, manage risks, and strengthen their own value propositions.
For instance, Steven Archie Griffin, chief operations officer for Griffin Farms Inc., of Washington, N.C., attended the program because he wanted to gain insight into how other farms operate. With this new insight, in combination with materials learned during the program, Griffin has already put these new lessons to work. As he told Michael Rudd in “Supporting Farmers” (ECU News Service, 3/29/2017):
“We have been able to properly take a much deeper look into how our company is performing from a financial standpoint, our financial solvency and how we stand compared to others of a similar scale,” said Griffin, who is a current MBA student in East Carolina University’s College of Business.
See “Participants in An Amazing Start,” this page, for more testimonials.
The success of the pilot Executive Farm Management Program has been the spark of encouragement to offer the program again, but in an expanded manner. Early this year, the program will be offered to all growers, processors and packers of tobacco and any type of produce.
In addition to the expansion of geographic and crop focus, the program is adding two additional academic partners to the returning group of providers: Clemson University Cooperative Extension and University of Georgia Extension. To learn more about the program, visit go.ncsu.edu/efm.
Michelle Grainger, Managing Director, CIMS and Executive Farm Management Program email@example.com