- Interactive Strategic Management Method
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- Farm Strategy Step by Step
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Why do I need a strategy?
Growing importance of entrepreneurship and strategic management in agriculture
In earlier times, farmers only needed to be healthy strong people who could work hard for many hours. Labour and craftsmanship were important for being a successful farmer. On large farms, the ability to manage large groups of labourers was also required.
In recent decades, entrepreneurship has become an (or is probably the most) important aspect of farming and will increasingly be so in the near future. Developments in the market (globalisation, certification, food safety requirements etc.), in agricultural policy (reform of the Common Agricultural Policy of the EU, WTO negotiations etc.) and in society in general (e.g. growing concern for the environment, nature, biodiversity, landscape, animal welfare, natural resources but also the financial crisis that influences market and policy) call for higher levels of entrepreneurship.
Entrepreneurship means undertaking an enterprise, e.g. a farm. It comprises activities such as gathering information, communicating with supply chain partners, market orientation and strategic decision making.
Entrepreneurship deals more with strategic issues than management, which focuses more on operational and tactical decisions. Craftsmanship and management can be learned more easily than entrepreneurship; the first two aspects have a more technical or procedural character, whereas entrepreneurship involves a lot of ‘special’ skills of the farmer like communication and risk management, and competencies like leadership, taking initiatives, openness to signals from society, vision, creativity, self-reflection, and so on (De Lauwere et al., 2004). The entrepreneur is the one who makes decisions and his attitude and behaviour are therefore crucial to the success or failure of his business.
It is not easy to make good strategic decisions. And it is perhaps even more difficult for farmers. In bigger companies a director or board is responsible for strategic decision making, it is one of the main tasks of their job. Farmers spend by far most of their time on operational issues, taking care of the cows and crops. And most farmers are not trained to make strategic plans.
Strategic decisions are important decisions. They often include (large) investments. This usually means one cannot afford to make mistakes. Strategic decisions are also complicated decisions. Many things have to be taken into account. What are the developments in the market? What is happening in national and EU policy? What are the local developments? Is it possible to obtain a permit to expand a farm? How is the farm performing? Is it performing better than those of colleagues or competitors? Is there room to invest? What are the farmer’s personal ambitions? Is he striving for a high performance (e.g. high milk yields per cow) or for developing a large-scale farm? Which strategies are possible?
An entrepreneur (thus including a farmer) must be aware that the situation keeps changing. Once a strategy and a plan have been developed, the situation will change again. This means that a new plan has to be developed or at least the current plan should be adapted.
In short, farmers are not used to developing a strategy for their own farm, taking all of the mentioned aspects into account. It is also possible for a farmer to hire an expert to prepare a strategic plan. This has certain major disadvantages. The main one is that there is no ownership. It is not the farmer’s own strategy. It is not his personal analysis of the environment or of his farm’s performance. And does it take account of the farmer’s personal skills and ambitions? The key question concerning a strategy developed by an expert is whether it truly fits with the individual situation of the farm and the farmer and whether it will actually lead to steps and actions being taken by the farmer. One of the key elements of Interactive Strategic Management is that the farmer develops the strategy himself.