During the 2018 Innovation in Food and Agribusiness Forum (IFAF) Professor of Entrepreneurship Alex Maritz provided insights into disruptive innovation and technology, using entrepreneurship tools to facilitate commercialisation and transformation.
The National Farmers’ Federation (NFF) wants to grow agriculture to $100 billion in farm gate output by 2030. Reaching that goal requires new ideas to accelerate the industry’s growth. The NFF identified five pillars to focus on:
- Customers and the value chain
- Growing sustainability
- Unlocking innovation
- People and communities
- Capital and risk management
Unlocking innovation means that by 2030, Australia is a world leader in innovation efficiency, cutting edge science and technology that improves the quality of products and reduces their cost of production. Digital technology, and particularly the internet of things (IoT) will have transformed farming, unlocking significant on-farm revenue and savings. Hence, every Australian farm will have access to infrastructure and skills to connect to the Internet of Things.
The NFF also lists some 2030 megatrends, with one being disruptive technology: “Digital and genetic technologies promise to unlock new waves of productivity growth across the sector. Automation will continue to improve quality of life for farmers, while reshaping the sector’s skills needs” (2030 Roadmap, 2018, p.9).
Recent years already have seen a rapid increase in development of technology in agribusiness, often referred to as agtech. The technologies create solutions for many common problems for farmers such as yield information, reduction of waste or spoilage and forecasting. According to Forbes (2018), agtech funding through investment or acquisition increased 32% to $2.6 billion, and half of the top 20 deals in the space exceeded $50 million in 2017 alone.
Using entrepreneurship tools
In his workshop, Alex discussed how entrepreneurship tools, such as the lean start-up, design thinking and the business model canvas, could facilitate the transformation required by agribusinesses because of disruptive innovation and technology. These tools are not only suitable for start-ups, but as Alex points out, the tools work for any dynamic organisation wishing to transform methods of operation, create customer solutions and value propositions to achieve high growth imperatives.
A lean start-up is a business strategy that strives to eliminate wasteful practices and increase value-producing practices during the earliest phases of a business so that it has a better chance of success without requiring large amounts of outside funding, an elaborate business plan, or a perfect product (Ries, 2011). Important lean start-up principles include eliminating uncertainty, working smarter (not harder), validating learning and developing a minimum viable product. Prototyping while developing customers is a way that entrepreneurs fail successfully – success arises from the learning that happens while interacting with prospective customers who are experiencing use of the product.
An example of a company who used the lean methodology is Blue River technology, a weeding robot manufacturer. They started off with a robotic lawn mower, but through the lean start-up process pivoted to the agricultural sector, raised over US$30 million and have developed successfully smart farm machines such as the Lettuce Bot and See & Spray that aim to make farming more sustainable through robotics and computer vision (Trice, 2016).
Business model canvas
The business model canvas is a strategic management tool that was first proposed in 2004 by Alexander Osterwalder in his dissertation “The Business Model Ontology: A Proposition in a Design Science Approach”. The business model canvas is a visual chart, outlining nine segments which form the building blocks for start-ups and allows the business to test hypotheses about their business idea. There are four segments that focus on the customer (customer segments, customer relationships, channels, and revenue streams) and four segments that focus supply side of the business (key activities, key resources, key partners and cost structure). Completion of the customer blocks and the supply side blocks lead to the formation of a value proposition for the business – “the bundle of benefits the company offers its customers” (Osterwalder & Pigneur, 2010, p.22).
Farms are not usually start-ups, but disruptive technologies mean that acting like a start-up is a meaningful way to model the business (Brown, Mugge & Grainger, 2017). An example of a company that used the business model canvas is Freight Farms, who saw a need for urban agriculture and is now the world leading manufacturer of container farming technology. Their system is a complete hydroponic growing system that sits entirely inside a shipping container. The vertical farming delivers fresh and local food 365 days a year, while using no soil and using 98% less water than traditional farming.