Is this the year you take your agribusiness digital?
The world is changing, and as society as a whole reflects on the changes we will need to make, its also a time for business leaders to reflect their goals and strategy.
Here’s a question for your business planning during the quiet days at the start of the year:
Are you ready to take your agribusiness digital?
You’re thinking that your business is already digital. You have an ERP and a CRM, a web site and a mobile app. Your IT team has already virtualised your core business systems. What else is there?
You already use technology in your business. You may even use it well, though many agribusinesses are saddled with 10 to 15-year-old software and significant “technical debt” that acts as a drag on business agility. Taking your agribusiness digital however, implies something more significant: transformation.
Gartner defines digital transformation as the creation of new business designs that blur the boundary between the digital and physical worlds. More than just digitisation in support of business processes, it is making use of technology to change your:
- Customer engagement model;
- Connection with the ecosystem of your partners; and/or
- Core business model.
Most agriculture and food businesses, rural supply, and advisory businesses have grown over many years, starting life and establishing business models well before the connectivity, data flows and analysis of today were envisaged. Would your business look the same if it were started today?
1. Customer Engagement
With the internet and mobility connecting most people on the planet (and likely your customers), how could your business leverage technology to substantially change how you engage with your customers, streamlining their experiences and introducing greater perceived value?
A short story of two pizza companies
Dominos’ Pizza (DXP) and Papa John’s Pizzas (PZZA) both had a market cap of around US $600M at the start of 2010. Both companies still sell pizzas with take-out and delivery options. Dominos invested early and continuously in technology innovation for customer engagement, radically changing the way that pizza is ordered, and delivery is tracked. The value proposition for customers was a different, improved, and easier experience in ordering pizza. A benefit for Dominos was an increase in average order value and a massive switch from phone to internet orders. Arguably, Dominos has set the customer engagement bar that other pizza franchises have followed, and in the process grown its market cap to over US $12B, while Papa John’s followed incrementally, and has grown to US $3B.
2. Connected Ecosystems
What transformative opportunities could your business leverage by effectively connecting its digital information with suppliers and supply-chain partners? Common data standards, APIs, principled and secure sharing of data open the way for you and your partners to gain new insights and radically change business logistics.
Seven of the top 12 largest companies in the world by market capitalisation: Alibaba, Alphabet (Google), Amazon, Apple, Facebook, Microsoft, and Tencent – are ecosystem players, sharing data and common services with their supply chains and partners. At least one of those companies may have been too connected on occasion! We recommend principled and secure sharing.
Benefits of an open platform
Newspaper “The Guardian” developed its open platform in 2009 and has been evolving it ever since. The platform provides APIs for developers and for partners. Many sites and mobile services use the Guardian API to deliver timely news, and the Guardian benefits with referrals, ad placements, and the ability to understand how and when people consume its content. Partner integrations allow the Guardian to crowd-source additional data for its services (such as location tagging), and to position its brand beside influential partners.
3. Changing Business Models
Many of our agricultural and service businesses, or their forerunners, started life 80 or 100 years ago. The fundamentals remain, but models of communication and distribution, use of information and analysis have all changed dramatically. Our business models – how we create and monetise value – have changed more incrementally.
Digital transformation offers agricultural sector businesses the opportunity to reframe their business models for the new and evolving business environment. Ford has started to redefine itself as “a mobility company and not just as a car or truck manufacturer”. GE is seeking to make analytics the new “core to the company”. Certainly, if you were starting a personal transport company today in the face of Uber and Lyft, it would not look like an existing taxi company.
How might your business leverage technology and connectedness to create value in different ways?
Considering your digital agribusiness options?
Revised. Originally posted in January 2019.