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 Knowledge for the CommonWealth

The Farm Executive for the 21st Century

Farm Business Management Update, October 1998

By By Danny A. Klinefelter, Texas A&M University

This article has appeared in a number of publications and is reprinted with the permission of the author.

Over the past seven years, The Executive Program for Agricultural Producers (TEPAP) has given me the opportunity to get to know some of the best farmers and ranchers in North America. But even among this group there are those who stand out. It's clear that being a top producer, focusing on controlling costs, keeping good records, and having a sound marketing program are necessary to being a good manager, but they aren't sufficient to describe the top executives.

So what are some of the major characteristics that distinguish the best from their competitors? Based on my observations and input from the TEPAP participants and faculty, I have identified 15 attributes. While not inclusive, they are as follows:

1. There are four patterns that consistently emerge when you look at the most successful managers:

They adapt to the changing needs of their markets.

They are open to exploring new ideas.

They operate more as resource managers than as producers.

They realize the importance of networking and developing alliances across the value chain.

2. They are strategic thinkers. Most farmers are good at tactics and operations. But the top executives recognize that to be successful, you first have to clearly define what you want to accomplish, then let that determine how you do it. In contrasting the operations approach and the strategic approach, the operations-oriented manager says, these are the skills and resources I possess, and this is what I know how to do, now what can I accomplish?

The strategic approach says, what is it I want to accomplish (vision), and what will it take to get there (goals/plan)? It's knowing the difference between doing things right and doing the right things. By way of analogy, hockey great Wayne Gretzky was once quoted as saying, "What separates me from the average player isn't that I'm stronger or faster, but that they go where the puck is while I try to go where it's going to be."

3. They are able to objectively and accurately assess strengths and weaknesses in people, including themselves. Looking at our own deficiencies is something most of us aren't very good at. There is a tendency to develop blind spots and to err in being either overly critical or overly confident. Becoming the best requires knowing the weaknesses that need to be compensated for. This is true whether seeking outside expertise, hiring employees, building a management team or choosing business partners.

4. They operate in a continuous improvement mode. They realize that however well they are doing, there is a better way. Their behavior reinforces the notion that if your competition is walking, you need to be running.

5. They look at things more from a systems than from a component perspective. It is a matter of not looking at things or decisions as independent stages or events. They have the ability to see the whole picture and how things fit together, not just within their own business but across the value chain.

They recognize that many of the inefficiencies and risks within any system occur at the interfaces between the stages, and that many of the opportunities and potential economic advantages lie in reconfiguring and coordinating the various components. Poultry and hog integrators are prime examples.

6. They are calculated risk takers and excellent risk managers. They realize that successful management is, to a large extent, successful risk management and that high rewards involve high risks. Because they tend to push the envelope, most have made their share of mistakes and experienced their share of failures, but they're not crap shooters. They do their homework, consider their options, and develop a strategy before undertaking any new venture.

7. They spend more time thinking about "what-if" scenarios and developing contingency plans. They don't dwell on the negative, but with every decision, they think about what could go wrong and what they will do if it does. For every entry strategy, there needs to be an exit strategy.

8. They are more likely to seek input and expertise from outside the business. They seek out successful people with whom they can talk openly and get candid feedback. This often means getting outside their commodity group and away from their home territory. It frequently involves interacting with people outside agriculture.

They recognize that you can sometimes be too close to the problem to see things clearly. It is critical that the CEO be the business's link to the outside world. He needs to spend as much time thinking about the effect of externalities such as changes in the economic, political, and social environment as he does about managing day-to-day operations.

9. They see change and challenges as opportunities and don't tend to view themselves as victims. If things weren't changing they would be bored. They realize that change can create windows of opportunity for those who are prepared to act. While they don't enjoy adversity, they recognize that setbacks are a part of life and are less likely to get bogged down in self-pity, wasting time complaining or blaming someone or something for their problems. They learn from their experience, make adjustments, and go on.

10. They see themselves more as the head coach than as the boss. They tend to lead rather than drive people. A major part of their job is to develop and motivate people so that the team is greater than the sum of its parts. As important as incentives are, they often accomplish as much or more by concentrating on finding ways to remove barriers and impediments to performance and communicating to everyone in the organization how what they do relates to other parts of the business and how it affects the overall performance of the business.

11. Their approach to management is more balanced between key performance areas. The most successful executives are those who build a management team and develop a management philosophy that emphasizes being good across the board. This includes production, finance, personnel, and marketing (both buying and selling). In the short run and under specific conditions, there are often high payoffs to being exceptional in one or two areas. But staying power and long-term success tends to reward balance and continuous improvement.

12. They spend more time on monitoring and analyzing performance. They recognize that most major difficulties occur not because problems or opportunities aren't recognized, but because they are recognized or acted on too late. Spending time on diagnosing problems and analyzing successes also assures that they are treating the cause and not a symptom of the problem. This approach gets things done right the first time and avoids wasting time and money readdressing recurrent problems. It also leads to the adoption of behaviors and procedures that are more likely to lead to repeating successes.

13. Their decisions are based more on reason and judgment and less on emotion. This doesn't mean they aren't emotional, but rather that they have the ability to separate emotion from reason when it comes to making business decisions. Moreover, not letting their thinking be clouded by emotions doesn't mean not relying on their intuition. Intuition and emotion are two very different things. Intuition relates to insight and inspiration, while emotion describes a psychological reaction.

14. They are more creative and innovative in their approach to business. In particular, they are better able to grasp the key elements of one situation and see how it could be adapted or applied to other situations. They actually seem to seek out situations which challenge their thinking and force them to think outside the box.

One of my biggest frustrations is people who believe that if an example isn't put in terms of their specific enterprise or their specific geographic region then it isn't relevant to their situation. Many of the best ideas and opportunities will often come from outside your own environment and from outside agriculture, for that matter.

15. Finally, they work harder at communication. They realize that one of the biggest roadblocks to progress in most businesses is secrecy. Without a clear understanding of what is going on, a shared vision and a sense of ownership, it is almost impossible to get commitment and a total team effort.

Employees and family members want and need to know what they are expected to do, why they are doing it, and how they are doing. Top executives also recognize that good communication is a two-way street. All the good ideas and knowledge don't necessarily flow from the top down. Those who know a job best and what could be done to improve performance are frequently those doing the job.

It's important to recognize that the time you need to be most concerned about what changes need to be made is when things are going well. That's when you have the time and resources. It's also the time when complacency is most likely to set in. Remember, what was isn't any more and what is won't be for long.

Danny A. Klinefelter is Professor and Extension Economist at Texas A&M University, specializing in agricultural finance and management development. He is the director of The Executive Program for Agricultural Producers (TEPAP), co-director of the Texas A&M Family and Owner-Managed Business Program, and co-director of the Texas A&M: Texas Tech Agricultural Lending School.

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