Keys to Innovation

While it’s important to take a close look at the mechanics of your business, to keep improving you also need to be aware of what’s going on in the industries around you and how to improve your foothold in the marketplace. Barry Urquhart shows us some keys to innovation, even offering lessons on what businesses can learn from Australian farmers

There is a certain measure of logic in the current trend for entities, big and small, to progressively look introspectively to their own unique cultures before focusing on the external marketplace.

However, the answer to achieving optimum market penetration, revenue, margins, profits and customer satisfaction may not necessarily lie with internal or external forces alone.

The Australian agriculture sector presents a significant and intriguing case study that casts light on the reality of numerous other industry and commerce groupings.

Prospects in the intermediate to longer term for beef, sheep, pork and similar products look exceptional. Demand for protein (primarily meat) is forecast to double in the ensuing 10 years, driven largely by increases in the middle class populations of India and China. The numbers are impressive. Some 200 million people in each country will enter and begin exhibiting the buying preferences and habits of the international middle class. Interestingly, the growth in the middle class of the Middle East cannot be overlooked.

Many marketers and business analysts will salivate at the boundless opportunities, particularly given the efficiency of Australian farmers who are rated among the most astute in the world. That is what dry climate and marginal land farming does to a nation’s professionals, who, during the past 100 years have increased production rates some 400 to 500 percent on the same land holdings.

Even with all of those favourable variables, together with a general lowering of debt and an increase in off farm investments to complement seasonal and volatile cash flows, success for Australia is not assured. The nation remains geographically the most isolated in the world. That situation is exacerbated by inadequate port facilities and increasing shipping costs.

Should Brazil and Argentina ever lift their performance levels to something comparable to Australia, Aussie farmers will be vulnerable.

A similar scenario will arise with the market forces necessary to satisfy increases in demand for lamb (the USA is a key market). The New Zealanders tend to have a competitive edge. Such is the nature of globalisation.

The past tendency to look to government support and finances may be futile. Since 1901 when Australia was the richest nation per capita, the percentage that the agriculture sector represents of the nation’s international trade has fallen from 70 percent to 13 percent. The political power that the rural population once exercised has to some considerable extent evaporated, and that is not because of the drought or climate change.

Future success for Australian farmers will be determined to some considerable degree by the impact they are able to collectively make through effective supply chain management, branding and clustering efforts in specific products and to defined, targeted markets.

It is a message worthy of contemplation by business owners and leaders in the small business sector, or ideally, in business generally.

Twelve consecutive years of booming international, national and local economies has fostered a prevailing sense among many of being comfortable. The recognised or perceived need to change is not widespread.

Some leaders, farmers included, have stated the absence of any need for immediate change and innovation. Rather, they have pointed to the need to recognise and respond when ‘the tipping point’ has arrived. Unfortunately, making do until you are forced to change is fraught with danger.