A management mindset will be a critical element for success in the decade of the 2020s in agriculture. The COVID-19 pandemic has accelerated change and created disruptions in markets, consumer trends and how one navigates everyday life. While some will equate the disruption as a negative, others will view it as an opportunity.
For example, let's delve into the mindset of Producer “A” and “B” from the viewpoint of an agricultural lender. Producer A engages the lender and wants to know how their performance compares to others. Producer A seeks out what others are doing, is inquisitive, never quits and is always striving for improvement. This producer has balance and focus on the immediate operations, but also thinks longer-term with an eye on the horizon. They have a “glocal” mentality, meaning that they think globally about the variables that influence their decision-making, but have the ability to filter this information to their specific business and lives.
On the other hand, Producer B has the mindset of hoping to survive another year and wondering if their lender will provide financing. They often expect the lender to fill out the financial statements and have little understanding or motivation to know what the numbers are telling them. Producer B is waiting for commodity prices to save them financially. The “magic silver bullet” or the next big moneymaker is their hope and dream.
Contrast this to Producer A who is very process oriented, proactive and adaptive to the situation as the economic climate changes. Producer A often utilizes an advisory team, which is analogous to assistant coaches for input and perspective in the decision-making process. Producer A takes a proactive approach in preparing the next generation in alignment with their abilities, skills and passions. They believe that transition management is more than asset and equity transfer, but a new management team that often adds energy and foresight. Producer A creates a culture of sweating the small stuff and following the Five Percent Rule, coined by Dr. Danny Klinefelter, Professor Emeritus at Texas A&M. The Five Percent Rule means being 5% better in many areas of the business when compared to peers.
Finally, Producer A finds methods to challenge the status quo to maintain a competitive edge. The 2020s will be a decade of economic and financial divide for those that see disruption as an opportunity, rather than making excuses and not taking responsibility.
Comments? Please send your remarks to AgGlobeTrotter@accountlist.com. I would like to know what you are thinking.
Ag Economist Dr. Dave Kohl
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.