Leading a successful feed and grain business today is no small task. With commodity prices at or near historic highs, a world economy perched on the edge of another recession, and a political process so divided and contentious that few real solutions have been forthcoming, ‘planning for the future’ can sound a bit like a pipe dream. Despite these challenges, most would argue that these are heady times for agriculture, especially the crop related industries. Livestock looks a bit different, but even the livestock industry can get excited about the prospects for global demand of animal protein. Long term issues such as feeding and enhancing the diets of nine billion people, addressing energy security issues, providing substitutes for petroleum-based industrial products, and doing all this on existing acreage and with even more modest environmental impacts and resource utilization suggests a bright future for the agricultural industries.
But, no matter how positive the long term story, firms must survive (and thrive) in the short run. Balancing this need to adapt for the long term, with the need to execute in the short run is not an easy thing to do. A McKinsey Quarterly article by Eric Beinhocker quotes work done at the University of Memphis and the University of Texas-Austin that looked at 6772 companies over 23 years (E. Beinhocker, “The Adaptable Corporation”, McKinsey Quarterly, 2006). Only 5% were able to deliver ‘superior performance’ for 10 years or more. Most firms studied enjoyed short bursts of strong performance, but lost their way once the business environment shifted.
Why is it so hard to balance the need to execute today with the need to innovate for tomorrow? Part of the story is that it takes different skills and capabilities to do these two things well. Think about a successful innovator and you think of flexibility, research, creativity, experiments, failures, risks, and so on. Think about a firm know for execution and you think of process, focus, efficiency, standardization, limited choice, scale, etc. Just a quick review of these skills and capabilities starts to explain the challenge.
But, Beinhocker takes a deeper look. He would also suggest that another reason innovation for the future is hard is what he calls “the double-edged nature of experience.” As we grow as managers we accumulate more and more experience with different situations. We then draw on these collected experiences for guidance in new situations. This works well as long as the new situation is somewhat similar to the current situation. But, put us in a ‘brave new world’ where everything/most things are different, and our experience can become a burden and limit our creativity as we struggle to apply our experience base to a situation where it does not fit. An example might be determining how to use social media to connect with our customers (see recent Manager’s Notebook column — “How to Work with the Facebook Generation,” June/July, 2011). The set of technologies, the generational issues with utilization, and the interface with more traditional marketing, among others, make navigating here difficult for the veteran marketer.
Another issue here is something that management scholars call “path dependence.” The idea is pretty simple: who we are affects who we can be. If we operate a string of country elevators scattered over the western part of our state, those physical assets say a lot about our future strategy. It is certainly true that given enough time and money, anything can be changed. However, for most organizations, this idea of path dependence does put some bounds around what we can and cannot do as we adapt to an evolving marketplace.
While obviously challenging to do well, this idea of doing things right today while laying the foundation for tomorrow is a fundamental goal of feed and grain firms that want to be successful today and tomorrow. And, balancing these somewhat competing ideas does come down to human talent. What can you do as a leader in your organization to insure your team is not only successful today, but laying the foundation for a successful 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 feed and grain firm understands the importance of great talent. A McKinsey study (E. Axelrod, H Handfield-Jones, T. Welsh, “The War for Talent, Part Two”, McKinsey Quarterly, 2001) took a look at just what great people mean to an organization in financial terms. The difference in impact generated by the top 20% of a firm’s employees and 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. Previous “Manager’s Notebook” columns have addressed issues around recruiting and retention of employees, so we won’t focus on those issues here. Rather, we want to focus on some new (preliminary) survey results on the desired skills and capabilities in leadership team members for agribusiness firms and what these results mean for helping your team manage for today and tomorrow.
Some 59 CEO’s of cooperatives responded to a survey focused on key success factors for the future, and on leadership competencies needed by their employees to be successful in the future. The CEO’s came from Corn Belt and High Plains states primarily, with some form 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, [email protected], 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 the organization in the future’. Based on a review of previous work in this area, 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, ensuring execution
- People Leadership: building relationships, promoting collaboration, influencing others, building talent, engaging and inspiring
- Personal Leadership: inspiring trust, adapting and learning
The cooperative CEOs were asked to rank these four capabilities from least important to most important according to how important each is for a senior management team member to be an effective leader in the future. (Before reading on, you might take your own pulse on this question: how would you rank these four items in terms of importance for your leadership team?)
Skills and capabilities for the future
The 59 CEOs ranked people leadership the most important, followed closely by results leadership. Personal leadership and thought leadership were ranked almost identically, and were substantially less important than people leadership and results leadership to this group of CEOs.
We would suggest this is an important exercise: what you believe to be important in 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. What do these preliminary survey results suggest to us?
It is hard to argue with people leadership taking the top spot in this ranking. The leadership competencies included under the umbrella of people leadership are important in the short term and long, in large and small organizations. Capabilities such as building relationships, promoting collaboration, and building talent really embrace much of what it means to be a manager, to be a leader in a feed and grain organization.
The fact that results leadership follows relatively closely and that thought leadership is last deserves a closer look. At some level, these CEOs are managing for today and are focused on senior leaders that can execute. Given the uncertainty and volatility in today’s environment, a focus on executing and operations sure seems appropriate. But, the fact that thought leadership and the capabilities it includes such as thinking strategically and innovative thinking is ranked last suggests that these firms are vulnerable to the shifts of a rapidly evolving market. If the focus of the leadership team is on making sure that the mill is operating at peak efficiency, that timeliness of grain unloading is enhanced, that delivery costs are as low as possible, that.... who is asking the bigger questions around structural changes in the marketplace and the resulting implications for the business?
Finding a balance here is not easy as we have indicated. But, in the end, the senior leadership team is responsible for making sure the longer term questions are getting asked, that the firm is taking steps to adapt to an evolving future, that strategic options are being considered.
Please note that we are not arguing that the here and now is unimportant — far from that! As indicated earlier, any successful feed and grain firm has to be successful in the short run to even get a shot at the longer run. We are saying that 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 the question “can we do it better” can go a long way toward creating the climate of innovation and adaptation you are looking for. This does not mean every hare-brained idea blurted out in a brainstorming session will be explored. But, it means that your senior team is constantly on the lookout for new and better ideas.
- Take a look around. Make sure you push the team out of their offices and into your customer’s business, to industry seminars and conferences, to local Chamber of Commerce events, etc. Our agricultural business environment is moving fast, but so are most other sectors of the economy. Taking a look outside the organization into the world of your customer, into other parts of the industry, and into other industries may seed creative thinking on the question “can we do it better.”
- Make time for the future. Make sure you create opportunities to discuss the longer term at your firm’s regular meetings, at planning sessions, retreats, etc. We don’t worry about the short run, you will spend plenty of time in meetings on how do we get through the next few weeks, or months. But, dedicating time to what changes do we need to make today to be successful in five years is a different question all together. If you don’t make time to discuss it, we are pretty confident it won’t come up.
- Invest in professional development. Sending key managers to professional development programs intended to extend their time horizon, build planning 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 senior staff meeting. Such a report can be a great way to kick off some of the discussions outlined above.
- Coach for the future. You in your role as President/CEO/general manager can support a longer run perspective by reinforcing these ideas 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 ultimately will need both sets of skills. So, how your folks respond to your coaching, and which managers can begin to balance the short and long run, will say much about who has the ability to take your place some day.
Upshot of employment
Getting through the next harvest, the next downturn or upturn in prices, the next competitor initiative can absorb every bit of managerial brain power an organization has. But, the most successful feed and grain organizations find a way to invest some of that managerial talent 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, next week, next month, or do you find time to talk about next year or the next three years? Are your people not only working hard to execute your processes and procedures flawlessly, do they regularly bring you suggestions on how those processes can be improved? Dynamic and successful feed and grain organizations will keep certainly be successful at getting it done right day in and day out. But, 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, said, “things turn out best for the people who make the best of the way things turn out.”