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By Dr. David Kohl

Dr. David M. KohlIn the late 1950’s, there was a game show called, “The $64,000 Question,” that sprung from the late 1940’s radio show, “the $64 question.” In both games, contestants won the titled amount of money for correctly answering a series of questions. In today’s economic environment, it may be more appropriate to call such a crucial question, “the $64 Million Question,” especially in regards to agricultural transition. Already well on its way, the multi-faceted transition in agriculture is being accelerated by recent economic changes in the industry. Additionally, changing trends in demographics, technology, social, consumer, and political environments are all converging to create significant change in agricultural businesses, and daily lives. To determine level of readiness, we need to consider several variables for those of us involved in today’s agricultural industry transition.

One important variable is who will be your next agricultural lender. Recently, a CEO of an agricultural lending institution indicated he lost a century’s worth of experience to retirement, in one Friday. In lender training and schools that I conduct, over half of the young people are between 18 and 34 years of age or what demographers call the “millennials”. This new group called millennials now outnumbers the baby boomers and will be the drivers of social, economic, and political change for decades to come.

This change is occurring all across the agricultural industry landscape. Whether it is producers, suppliers, agribusiness professionals, or even academics, within the next five years, 95 percent of the institutional memory of the 1980’s great agricultural recession will no longer be active in the industry. This will place a premium on the new concept in agriculture strategic planning called intellectual capital. More specifically, there will be high demand for those individuals capable of interfacing with new, emerging technology and practices, as well as those that can demonstrate emotional intelligence. Navigating the expectations and demands of human interaction is now a necessity to successfully compete domestically, as well as globally.

Coupled with the aforementioned changes, the economic transition, both globally and in agriculture will create more opportunities over the next decade. However, these transitions will also provide greater space in which to fail. The importance of good, detailed management will only continue to increase.

Tools for Transitioning
In a recent seminar, a young farmer and rancher asked me for my top piece of advice for business success. The direct answer is people. Historically, producers were independent. The ability to navigate human relations was not required in daily operations and certainly not for overall success. In today’s environment and into the future, successful managers must be interdependent and able to work well with and through various individuals.

In his book, Good to Great, Jim Collins suggests a main key to success is to surround yourself with the right people. Sometimes, this requires asking those that are not a good fit, to exit. Collins uses the analogy of a business bus to demonstrate several steps. First, make sure you have only the right people on the bus. Next, place people in specific seats on the bus. In other words, put individuals where they are most productive and match them to the right role in your business. You also need to determine the right bus driver or leader. With everyone in the right seats, allocate time for planning. This ensures each individual is clear about your direction. If you conduct these steps, they will take you to your desired destination. However, the final step may be one of the most important; have an alternative plan. Detours are inevitable and often occur in transition.

You may also consider hiring an intern to observe and participate in your business. This affords them a valuable real-world experience and gives you a young, fresh, outside perspective. If you are a parent or mentor, encourage the young person in your care to seek an internship away from home, including one abroad. This is important because transitioning to a successful future requires a global perspective. Learning to broaden your perspective can be invaluable.

Have a business culture; whether you are solo or a complex business of lifelong learning. Today’s agriculture industry is all about knowledge, strategy and execution. A network of peer advisory teams will also be critical for your success.

Finally, economic volatility can be the friend or foe in transitioning. Positioning for extremes requires solid levels of capital. However, flexibility and the ability to capitalize on opportunities require financial liquidity. The ability to quickly turn into cash, without disrupting normal operations is crucial. Right now, cash is the most attractive asset.

Choosing the right people, broadening your perspective and watching cash flow are each some of the challenges of successful transition. Give yourself the advantage of a team approach and collaborate with valuable resources around you. Whether or not your business is positioned for the many, coming opportunities in today’s agriculture industry is really a matter of attitude. Remember attitude plus aptitude equals altitude in business and life.

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