I recently happen to read a book on Blue Ocean Strategy by Chan Kim & Renee Mauborgne. After reading this book I tried to analyse this for the perspective of agriculture sector. This sector is very different from other sectors in that its growth does not originate from the sectorial growths which we notice for other sectors. Each decade has seen different sector to dominate the world giving the respective industries to be labelled as industry leaders. The reality is that industry never stand still. They continuously evolve. Operations improve, markets expand, and players come and go. We can create new industries and re-create existing ones.
When it comes to agriculture, the economics highly complex and can refer the books on Handbook of Agriculture Economics series of 18 volumes. There have been many versions of agriculture explosion be introduction of new crop varieties or drought / pest resistant strains etc or the recent introduction of concepts of Precision Agriculture. The opportunities are immense, and market is wide and to be explored with innovative ideas and mindsets and the drives are being technological advances and substantial increase in productivity. However, from a study it is observed that the major product and service categories, brands are generally becoming more similar and as they are becoming more similar and people increasingly select based on price.
That is with the supply exceeding demand competing for a share of contracting markets, while necessary will not be enough to sustain high performance – that is what leads to strategy concept, which is about confronting an opponent and fighting over a given piece of land – which takes reference from military. However, for blue ocean strategy, It needs going beyond competing and create a new profit and growth opportunities. Differentiation and low cost are the main drivers of the strategy. However, differentiation is very difficult in crowded space. Now comes the question on how a company break out of red ocean of bloody competition and reach to the stage of blue ocean strategy for agriculture? This needs a careful analysis of strategic moves by the companies in agriculture sector for blue ocean creation, that is what consistently separate winners from losers in creating blue ocean was their approach to strategy and value innovation.
The major players need to create differentiation and value innovation. Value innovation occurs only when companies align innovation with utility, price and cost positions. These innovations can for example in agriculture sectors could be in terms of delivering Product Innovation, Process innovation, market innovation and finally organizational innovation. Those can be identified by looking at the guidelines by i. looking at the industries, strategic groups, look across buyer groups, look across complimentary products and services and other being emotional orientation.
So for product innovation delivering along with goods produced also services like assessment of existing soil conditions, nutrient management techniques, agriculture information systems for weather conditions, suggestion on which crop to be planted and their rotation scope or even system for storage of harvested crop or cold storage systems or even novel transportation support. It can even be mobile system-based support of easy identification pests or weeds or even training delivery on agriculture practices.
Process innovation in the way the goods are produced and delivered like direct B2C or online / retail strategy and its availability far reach. This can include the way germplasm is maintained by an organization and its accessibility and partnerships with relevant organizations or suppliers etc. It includes the use of techniques or methods to create novel varieties and their treatment for sustaining in harsh climates etc.
Marketing innovation like conditions for marketing the product like offering product mixes for a group of products together offering as a complete offering. Offering product-based services with a complete portfolio of services and creating value to the customers.
When it comes for organizational structure like the way partnership is planned and agreements with trade unions, government entities and private – public partnerships. It also included helping in the development of infrastructure facilities, platform for connecting various stakeholders and partners etc.
This need stopping the bench marking activity with competitors and choosing between differentiation and cost leadership. Using the available technological innovations, market scenarios and customer base using the four action like reducing, creating, raising or even eliminating values is needed not over-serving customers to gain the market entry. That is converting non customers into customers and commonalities in what buyer values. So looking this from the perspective of Buyer utility, pricing, cost, adoption has very good strategic sequence.
Finally, to conclude I understand that to come out with strategy for a multi billion dollars industry is more complex and it depends on other factors, but this book helps in analyzing the scenario and coming out with alternative thinking. In future I would like to study agriculture companies case studies and understanding their strategies in digital era and how it enabled blue ocean strategy by linking with the analytical tools and frameworks highlighted in the book like Strategy Canvas, actions framework, PMS map etc.