The Insight Is the Edge: How Insights Drive Agribusiness Performance
Editor’s note: In a recent issue of Upstream Ag Professional, agribusiness analyst Shane Thomas dives into what an insight is, why they matter in agribusiness, why they need to be contrarian while also sharing examples from out of agriculture, within agriculture and approaches for identifying them. Here’s a summary of that article:
In January 2024, my article “The Insight is the Edge: Why CNH Struggles to Keep Up” highlights the importance of having unique insights for business success. Using CNH as an example, the article emphasized that world-class companies lead their customers based on unique insights, and following the herd or waiting for customer demand often results in being too late or competing in low-margin markets.
Insights, defined as the capacity to gain an accurate and deep intuitive understanding of a person or thing, are crucial for establishing a thriving business. They can pertain to customers, technology, or markets and are core to having a unique strategy. Michael Porter, in his book “Competitive Strategy,” states that achieving competitive advantage requires a firm to make strategic choices and avoid the error of trying to pursue multiple strategies simultaneously.
A unique insight differentiates a business and is central to its strategy. For instance, a founder once remarked that even if competitors had their roadmap, they would still win due to their superior understanding of customer problems and market dynamics, coupled with a bias for action.
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There are several examples of successful companies outside of agriculture that leverage unique insights, including:
- Amazon: Jeff Bezos started Amazon after recognizing the rapid growth of web usage and focusing on unchanging customer desires for more selection, faster shipping, and lower prices.
- Google: Sergey Brin and Larry Page developed a search algorithm based on back-links, which improved with the internet’s exponential growth.
- Apple: Steve Jobs aligned the incentives of the music industry with the launch of the Apple Music Store, based on his insight into the industry’s needs.
In agriculture, companies like Solinftec, Meristem Crop Performance, and Bushel are thriving due to their unique insights:
- Solinftec: CEO Britaldo Hernandez saw the need for a field-based asset to close the sensing-to-action gap.
- Meristem Crop Performance: CEO Mitch Eviston identified the high cost of traditional channels and devised a novel go-to-market strategy.
- Bushel: CEO Jake Joraanstad digitized the grain scale ticket to streamline various industry aspects.
Howard Marks, founder of Oaktree Capital, emphasizes the importance of unconventional and superior judgments in achieving above-average performance. Similarly, in business, insights that are contrarian and right are essential for success. Insights often come from careful observation, understanding human needs, and leveraging technological breakthroughs. Techniques like working backwards, inverting, pattern matching, and reasoning from first principles can help uncover these insights.
Differentiated insights are rare and require unique thinking and courage to act upon. While human tendencies favor conformity for safety, in business, adopting industry standards often ensures mediocrity. Real differentiation comes from recognizing and acting on unique insights, even in the face of skepticism. For those in retail, entrepreneurship, or corporate roles, leading with unique insights is essential to avoid being too late and competing in low-margin markets.
For more in-depth coverage, visit Upstream Ag.
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