S.E.T: Scalability, Enablement, and Transformation.
Scalability is especially relevant for AgTech companies as increasing consumer demand, continuous technology advancements, and shifting macro-economic trends create new opportunities to expand revenue, customer bases, and win new industry segments.
In our original article, we covered the concept of S.E.T. and how this flexible model can help agriculture companies and related verticals adapt in times of rapid change and increasing risks. We saw it in the 2008 recession, and today, COVID-19 is a stark reminder of the inherent uncertainty in modern agronomy.
Scalability is a term rarely used in times of economic downturn – but smart AgTech companies will not only weather the storm but emerge with enhanced capabilities and strategies that will put them ahead of the competition.
Scaling means exponentially increasing ‘yields’ or gains while increasing costs/resource spend linearly. Scalability does not simply mean growth – it is a mindset and process to act as a catalyst and rapidly outpace traditional growth mechanisms.
Each company may have a different portfolio of growth opportunities – but in order to uncover those opportunities and execute, use a simple model to frame the process:
Understanding the Opportunity
Before attempting to scale, the most important step is gathering data in order to understand what key opportunities are available. Having these data points available will make the process easier, but research and analysis will be required in establishing an effective plan.
Companies of all sizes are scalable and can seize opportunities for growth. However, no two companies face the same challenges and reap the same rewards. With that said, there are some general guidelines which all businesses should follow in order to determine the best approach to scale.
When is it time to scale? The question is most likely not a question of when, but how.
In order to obtain the full range of options and opportunities for scalability, rapid iterations of research to both understand internal and external factors is recommended.
It is important to make the distinction between scalability and other growth opportunities – and to understand the risks/costs behind each path forward.
The increasing focus on big data in AgTech is an opportunity John Deere has hedged on due to its strategic position. Due to the amount of exposure to data sources, technical infrastructure, and other key factors, the AgTech giant knows that data will be one of their opportunities to scale out additional service offerings.
“The scale of the data is also daunting. We are one of the largest users of cloud computing services in the world. We are gathering 5 to 15 million measurements per second from 130,000 connected machines globally. We have over 150 million acres in our databases, using petabytes and petabytes [of storage]. We process more data than Twitter does.” -Alexey Rostapshov. Head of John Deere Labs at John Deere.
Being able to scale around big data is not applicable or feasible to many AgTech companies, but AgTech startups and giants alike need to stay agile and continuously update their understanding of the market dynamics that will unveil new, profitable opportunities to scale.
Planning for Success
Once a team is equipped with research and viable business cases, strategic planning is the natural next step.
Each case for scalability should have specific goals and supporting metrics – these will define the requirements from a resourcing and timeline perspective.
Make technology part of the plan – not just THE plan
There is a lot of excitement in the AgTech space about technical solutions, especially around big data, AI, machine learning, and newer age concepts. Each area of innovation will serve to empower growers, agronomists, and other partners in many positive ways, but careful analysis is necessary to understand the costs and resources needed to support new technical initiatives.
Technological initiatives should always link to a business case, with clearly defined expectations, and requirements for support, expertise, processes, and general resourcing. These fundamentals serve to support technical implementation and maturity.
However, fundamental excellence may still see technology as a major component of a scalability plan. For instance, a scalability opportunity to expand a global user base is unlikely to succeed without data transformation and translation capabilities.
Common technology opportunities and blockers encountered include:
- Cybersecurity – Securing the data supply chain to open data to subscribers and partners
- Data Pipeline Management – Cleaning and tagging dirty data to maintain the quality of data provided to services and subscribers
- Infrastructure Agility – Rapidly meeting new product opportunities (imagine shifting a technology stack from weather analysis to including soil analysis)
- Data transformation and translation – Supporting and acquiring a global user base
Execution and Analysis
Executing on scalability plans requires frequent measuring of key performance indicators against the goals set during the planning phase. In times of economic downturn, the ability to adapt and stay dynamic become even more important.
A study by the Harvard Business Review analyzed a large sample set of companies that successfully pulled ahead after the recession of 2008. From their analysis, 3 common traits were found among the successful firms: preparation, agility, and investing in innovation.
Well prepared companies were low on debt and had cash at hand. Less cash at hand and more debt typically drove more panicked reactions. Most of the same firms also had detailed lists of first-line defenses and cuts, including areas impacting workforces.
The ability to fail fast is never more important than during times of limited resources and customer demand. With each business case, it’s important to establish what the meaning of failure is and quickly transition resources to the next most promising opportunity for scalability after a failed hypothesis.
Investing in Innovation
Winners during recessions and other times of downturn often focus on long-term technology investments due to one seemingly obvious fact: opportunity costs are lower during times of low demand.
Execution Consideration: Cyber Security
“Every new connection, that’s an opportunity for a breach”, Clay Gooch, CISO Headstorm.
Scalability may mean hundreds of thousands of new pathways for data to flow between integration points – or a new, powerful analytics tool for agronomists to predict yields. Either way, powerful technology requires increased vigilance to protect the advantages your firm provides to its customers.
Additional considerations for any scalability plan that includes technology:
1) Security should be considered at the beginning and constantly revisited
2) Scalable security comes in several forms:
- Organizational commitment
- Business practices
3) For cloud-based services, cybersecurity is often available out of the box
- Understand requirements for security and if customization is needed
- Review the default protection provided
The economy will continue to swing between different seasons of profitability and recession, but the winners will always be the firms that both prepare ahead of time and seek to innovate in preparation for the next windfall. COVID-19 means tough times for many agriculture companies, but now is the time to double down and plant the seeds for the next round of opportunities.
Part 2 of our S.E.T. series will cover the concept of Enablement – or how to help customers serve themselves with the right data, the right tools, and the right experiences.