How to Differentiate in a Commoditized Ag Industry

David Lazarenko

The agricultural industry is no stranger to commoditization. Although ag companies continue to invest in research and development, innovation, protecting intellectual property and so on - it is an uphill battle. Today's customer sees less differentiation in the market than ever before.

In the battle to differentiate, we have seen brands and products go to value-add services; a strategy that is now commonplace and therefore no longer differentiated. This leaves us asking the question - what is next? What can we do to truly stand apart from the rest?

Let's start with a discussion about the trends we are up against:

  1. A shift from product revolution to evolutionAlthough agriculture continues to increase its investments in innovation, revolutionary new technologies and services are on the decline. This is largely due to increasingly difficult market access and government approval, which favor frequent, iterative improvements (think: iPhone 8 to iPhone X) rather than truly new offerings.
  2. A shift from competition to acquisitionWith large agricultural mergers and acquisitions happening more and more frequently, the industry now has fewer uniquely differentiated offerings than it has in decades. Furthermore, this “blending of companies” has created a sense of sameness even between the competing entities that still exist (e.g. Bayer/Monsanto vs. Dow/Dupont).
  3. A shift from focused to broad-based brandingToday, agricultural branding and customer messaging is plagued by a generic “sameness.” Think about the frequency of “farmer-in-the-field" images and the ubiquity of gentle “we’re here to help” messaging in agriculture ads, and you’ll soon find that these generic qualities make it difficult to tell one organization from another. This could be due in part to the mass M&A activities of the past few years, or simply that most global agriculture companies rely on a common mix of characteristics in order to differentiate themselves. Regardless of the cause, it's clear the branding choices agriculture companies make are overwhelmingly too broad and safe to connect deeply with their audiences, to say nothing of differentiating them from the competition.

At the end of the day, whether one believes these problems stem from a state of increased commoditization or just an erosion of differentiation, reality clearly indicates that agricultural organizations can and should do more to communicate and protect the unique value they provide.

Do to so, we suggest that they start to explore (and not ignore) an underutilized, yet immensely impactful practice: creating and leveraging intentional corporate cultures.

What is an intentional corporate culture?

A culture is a collection of values, behaviors and beliefs that guide and define a group of people. In the business world, it’s the “secret sauce” that makes your organization unique. Corporate cultures can develop naturally over time, or they can be created intentionally by leadership.

At the core of a company’s culture is the organizational narrative — the story about why the organization came to be, and how its success will help make the world a better place. It’s the rallying cry for employees, and the behaviors employees exude in pursuit of this shared goal become the physical expression of the company culture. By encouraging and reinforcing behaviors they feel will best support the company’s growth, senior leadership can shape the culture of their organization. In a small company or start-up environment, this hands-on approach is employed often.

However, as a company grows and more people become part of the organization, they bring with them behaviors and experiences gleaned from previous employers. These new people may influence the existing culture by introducing new behaviors, possibly dampening the original company culture and putting the foundation of the company — that shared story — at risk.

If you further consider the cultural effects of mergers and acquisitions, which are synonymous to the blending of family routines, rituals and ideals in mixed marriages, one can see how cultures can quickly become unintentionally watered down or even hostile or negative without proper strategic attention and management.  Thus, it’s crucial for leaders to take responsibility for cultural stewardship by defining and reinforcing the behaviors they feel will best support their organization in the long-term (for more on this topic, read our blog post on building an intentional corporate culture).

If developed, executed and nurtured correctly, agricultural organizations can realize what the likes of other industries and organizations like Google and Apple have before them: that culture may be their next great bastion for true and lasting differentiation.

It may sound questionable, but the research is sound: a strong organizational culture can and will give your company a competitive advantage. Consider an extensive study of over 200 corporate cultures by Drs. Kotter and Heskett, who found that companies with strong, performance-enhancing cultures experienced an average net profit growth of 756 percent over an 11-year period, as compared to an average net profit growth of 1 percent among companies that didn’t prioritize culture.

If it works for the corporate world, it can work for ag.

Can Culture Counteract Commoditization in Agriculture?

At the end of the day, it is difficult to argue that the homogenizing trends currently taking place will not have a negative effect on the perceived value of many agricultural brands, businesses, products and services. It is also hard to argue that the cultures of many agriculture organizations may be under duress over the coming months and years as M&A activities start to hit the shop floors and customer fields throughout the world. And finally, its especially difficult to argue that culture has been proven ineffective in agriculture, as so few organizations have even tried to embrace it as a mechanism for bettering their business.

If there is a silver lining to all of this, it is that, thankfully, a lack of commitment to intentional culture in the past has created a reality in which the first to do so can stand to win big. For not only can they reap the many benefits of an intentional culture, but they can also stand out significantly from all others who have yet to (and may never) follow.

Want to learn more about harnessing the power of culture to differentiate your brand? Read our recent eBook, “How CEOs Drive Lasting Change.”

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