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Beef Up Your Competitive Position For Leaner Times Ahead

There’s a tremendous amount of justified optimism about the future of the industry. However, the irony is that this optimism tends to lead to short-term thinking from a management perspective. Of course, capturing the opportunities that exist is good business, and no one would blame anyone for focusing the X’s and 0’s of implementation and execution when there are unprecedented profit opportunities to be realized.

The difficulty of short-term profit maximization, however, is that there’s little impetus to think farther down the road and to make the changes necessary to prepare an operation for the future. History illustrates that such a mindset can be problematic. The influx of capital and profits will lead to increased competition and narrowing margins at some point, and that means that innovation should be as big of a priority, if not a bigger priority, today than when profits are nonexistent.

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What I’ve always found interesting is that many in this industry are pretty open to innovative ideas when results are not good. That’s not surprising, as business case studies are legion with examples of companies that failed to innovate at the peak of their success and paid dearly for it later. While IBM is one that came roaring back, there are many others that have become just footnotes in history. 

One thing we can be certain of is that what we are producing today won’t be sufficient for tomorrow. I liken the situation to the Sony Walkman. In its heyday, it represented the pinnacle of portable technology, but it is difficult today to even find a cassette to play in one, if you still had a Walkman that worked. People, of course, still listen to music on the go, but there are much smaller, more capable and more convenient ways to do it today. The iPod came along and raised the bar, the latest progression from vinyl recording to digital.

Similarly, people want a great eating experience. They seek one   that is healthy and produced in an economic and environmentally friendly way. As ranchers, we’ll always be trying to produce tasteful beef in a profitable manner, but our management scheme and business environment will undoubtedly be totally different in 10-20 years.

Through the use of DNA and other new technologies, as well as new pricing structures and marketing opportunities, what we are producing today likely will be unusable a decade from now. And those who are behind today, but still being rewarded for producing inferior-to-average cattle, will likely find themselves facing a marketplace in 10 years that will reward them accordingly.

Does anyone remember how we sold our product before the advent of futures, contracts, branded beef, grids, etc.? The rate of change isn’t slowing, it’s accelerating; it’s simply not as noticeable.  

Record margins will accelerate margins. Our jobs as managers will be to identify as best we can how different our business will be in 10 years and position our operations for it. Admittedly, the seedstock business is evolving at an unprecedented rate, and the artificial insemination and seedstock businesses will be almost unrecognizable in 10 years.

Even the most mundane things are changing. Take a typical bull sale, for instance. We still retain the chant of the auctioneer, but the typical bull sale auction is much different today than a decade ago.

As managers, we should revel in the rewards we can expect over the next five-plus years, but we also need to prepare for what promises to be a radically different industry down the road. 


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