The folly of Magical Thinking.

In 2012 I caused a stir by claiming the Year of the Farmer was the right message at the wrong time.

In just one year millions of dollars were spent on a self-indulgent pat-on-the-back aimed at encouraging people to appreciate food producers.

Since then there has been a mountain of stuff written and numerous initiatives launched hoping to bridge a perceived gap between food and consumers.

Markets are harder to engage and people are spoilt for choice.  It’s true that constant pressure to do better and the unrelenting competition of globalisation can cause an industry to suffer somewhat of an identity crisis.

In reaction to this we are now living in an era of wanting to be liked.  That is, if only people understood us and appreciated us more, they would buy our products and pay more for them.

Despite popular opinion and the purveyance of social media, being liked is not a business strategy.

The agribusiness and food industry has been suffering a bad case of magical thinking.

Magical thinking is a concept developed by famous neurologist and founder of modern psychoanalysis Sigmund Freud.

It leads people to believe their thoughts about themselves can change how others act towards them.

For businesses seeking to grow within agribusiness and food industry, the folly of magical thinking is a lesson in how not to be self-centric about what you provide.

Magical thinking should never be used as an excuse to not develop the skills your business needs to think differently and to increase the innovative capability your people.

So if you want to be noticed, put amazingly creative products or services in front of people, loaded with user experience and convenience.

Does your business have a Class of 2014?

Most products never made it because they were technically brilliant, but no one got it.  This is especially true of the food industry.

We are now in an era marked by consumer demand for food experience, convenience and value-for-money.

This means that whilst doing things right is important (product centric), true opportunity is captured by people having the skills to ask if we are in fact doing the right things (market centric).

As we start to hear that Australia may miss most of the food boom to our competitors, it highlights how continuing to have blind-faith that someone will want what we produce and happily pay us enough for it, is problematic under a new globalised food system.

To be profitable, organisations must now have the capability to not only reduce costs, but at the same time increase value (innovate).  The fact this is not happening proves the knowledge gap that exists between product and market in many businesses.

Food innovation requires new forms of thinking.  I’m concerned many owners and operators thought the food boom was just going to happen, without addressing the need to upgrade the innovative capability of key employees through education and development.

For example, someone from China would simply jump on the phone and order everything they've got.

Most businesses didn't get that phone call.

Abundant opportunities are available for agribusiness and food companies that have the capability to rethink not only what they are doing and how they are doing it, but who they are doing it for and why - and which business model will make it happen profitably.

Investing in education and development to raise the core competencies of people was once a source of competitive advantage for an innovative few.

Under globalisation, it’s now the minimum requirement just to survive – for everyone.

So if you want your business to be a winner I ask you: what does your education and development budget look like?  Do you even have one?

In many overseas agribusiness and food companies, it is compulsory that people attend management development training and education - every year.  It's in their contract.

Who will be in your Class of 2014?

Your competitors have one.

www.foodleaders.com.au

In the words of Winston Churchill...........

Much of the history behind our agribusiness and food industry is built on the stories of people that had big hairy audacious goals (BHAG).

They were larger-than-life characters with a compelling and inspiring vision of the future.  Indeed many of them were actually politicians.

Now would be a good time to have these people around.  They would revel in the opportunities before us.

Unfortunately, a different story is emerging.  There is new evidence to suggest that our agribusiness and food industry will not take advantage of the global food boom.  We are largely uninspired and will miss out.

A broad assessment is that Australia suffers from a bad case of short-termism.

So how does this erode our capacity to capture new market opportunities?

 

Short-termism is a breeding ground for two key challenges in business: the problem of shifting the burden and the problem of diminishing goals.

Put simply it means rather than improve the performance of the business, we lower our aspirations.

Consequently, as the business stops growing we then become addicted to seeking quick fixes.  It's someone else's problem.  An example of this is a heavy reliance on Government.

The impact is an industry not healthy enough to capture the global food boom.

Look closely and you’ll see that short-termism has become big business.  I find this very disturbing.

There are those that seek to gain by ensuring nothing ever really happens.  Slicing and dicing so there is no momentum.

They thrive on spin and chaos, clipping away at what little margin is left with no real vision of the future.

In the words of a man with compelling vision, Sir Winston Churchill, "sure I am that this day now we are the masters of our fate."

Now is the time for some big hairy audacious goals.

Let’s hear them.  We all want to be inspired.

The ideology behind last night's Federal Budget.

Do you have an interest in the relationship between politics and economics and why Australia got the budget it got last night?

Is the avalanche of commentary surrounding last night's budget confusing you even more?

The following speech will help you pin-back the fundamentals about what is going on and explains the political movement that has arrived in Australia.

The speech is called The End of the Age of Entitlement and was delivered as a key address in April 2012 by Minister Hockey to The Institute of Economic Affairs in London.

Click here to access:  The End of the Age of Entitlement.

There is also a great TEDx presentation by James Stone of the same title.

Click here to access:  The End of the Age of Entitlement.

What's my take-home message for regional business, agribusiness and food?

If you're not creating or extracting value, the Government will no longer be in a position to help you.

Have we lost the art of collaboration?

In 2005 the International Cooperative Alliance launched a new initiative called Global300.  It brought together information about the world’s 300 largest cooperative organisations.  

By analysing seven key industries, the Global300 Report demonstrated the strength of the collaborative business model.

The Global300 Report was recently replaced with the World Cooperative Monitor.  2032 cooperatives in 56 countries are now analysed each year.

What’s blatantly obvious from this research is the top organisations that have thrived post-Global Financial Crisis are cooperatives, especially in the agribusiness and food sector.  In fact many have experienced strong growth.

Cooperatives are punching well above their weight, with flexibility and adaptability a key feature of their success.  It’s also blatantly obvious that of the 2032 cooperatives monitored, Australia is virtually nowhere to be seen.

The Cooperative Bulk Handling (grain) ranked 153 and Murray Goulburn Cooperative Company Limited (dairy) ranked 186.  That's it.

Interestingly, New Zealand’s Fonterra Cooperative Group (dairy) is the fourth largest cooperative in the world.  A tiny nation representing a sector that is only 1% subsidised (Australia is 9%) has climbed to the top by shortening its supply chain; in other words collaborating to develop a value chain.

Indeed, many of the global food companies that people so-fear will take over our local agribusiness and food sector are cooperatives and private collaborations.

As the ‘agricultural powerhouse’ most noted to exploit the food boom, it seems Australia has been distanced from the action.  There is evidence to suggest it is because we stopped collaborating.

Consequently, the small businesses that make up 98% of industry are left feeling powerless and vulnerable to globalisation.

Cooperative is a dirty word amongst some who are in the sunset of their involvement in agribusiness and food.

So one of the great opportunities I see in the area of succession planning for the industry is to clear the way for a new generation of participants that I believe are natural collaborators.

So why don't we want to collaborate?  Are the benefits of collaborative behaviour misunderstood in Australia?  Have we lost the art of collaborating?  

Have we been losing competitive advantage because of this?

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