One does not normally think of technological innovation and agriculture. But I recently came across an article in PwC’s Strategy & Business on “The fourth industrial revolution in agriculture” from a couple of years ago. The authors, Sebastiaan Nijhuis and Iris Herrmann, describe how technologically sophisticated agriculture has become and how agribusiness is going about implementing new technologies. These technologies range from AI to track and better manage cows for more efficient milk production to the use of drones and IoT sensors to improve crop yields.
However, what really struck me about the article was not the new technologies. Rather it was their argument on the need for organizational and strategic change to better utilize the technologies. And, in turn on how the development of these technologies will force those changes in ways we might not expect. For example:
“One firm is developing a swarm of miniature autonomous robots that can plant seeds. Controlled by a farmer’s handheld tablet, which is operated with the help of satellites and cloud-based software, the swarm will be able to put each seed in the right place with greater precision than current approaches can. Not incidentally, the technology will eliminate the need for planter bars, tractors, and tractor operators.”
They go on to note that:
“The most common response of companies has been to plug new technology into old business models, with the hope of enhancing those models with smarter tools and more data. But that tactic is flawed. Making old models work better isn’t enough — not when technologies are enabling all-new models that can render the old ones obsolete.
Many pesticide and fertilizer companies, for example, are using 4IR [4th Industrial Revolution] technologies to provide better products and roll them out faster than before. That might sound like a success story, but precision farming — which uses IoT sensors, high-resolution 3D aerial imagery from drones, and AI-powered analytics to analyze the characteristics of soil and the behavior of crops down to the square inch — may soon significantly reduce the need for fertilizers and pesticides altogether.
A better approach for those manufacturing companies is to discover and develop these new business models, creating new markets along the way. Instead of looking for a better product, companies should look for better solutions for the problems that their customers face, whether those customers are farmers, agricultural suppliers, or end consumers. Many successful solutions will bring together products and services from multiple companies, rather than just using products manufactured by the solution provider.”
Good advice in general – not just for agribusiness.