Jumping the S Curve
Empty Your Closet of Shame by Understanding the Direction of Future Technology
By Barb Baylor Anderson
Soybean producers may or may not be willing to admit they have drones, sensors or other technologies out of commission or collecting dust. But the truth is, most producers have a “closet of shame;” broken, outdated or misunderstood equipment no longer in operation.
But there’s hope. By understanding how the “S Curve” works and a sense of where cutting-edge investors and companies are future-focused, producers can maximize technology use.
“When we speak with farmers, the conversation eventually gets to the ‘closet of shame,’” says Larry Page, principal, Lewis & Clark Partners. “As farmers find technologies that work and drive meaningful improvements, they should share those stories. We engage farmers when we explore technologies and learn as much from them telling us what did not work as what did.”
Lewis & Clark Partners’ fund was created to address consumer preferences driving disruption in the supply chain while new technologies enter the market. Their AgriFood Team has expertise ranging from traits and biotech, to on-farm technologies, processing and supply chain.
“The agrifood sector is undercapitalized. But increased investment in agriculture is bringing software and IoT to the farm, adding safety and security to the food supply chain, and creating layers of data that help food producers gain significant efficiencies,” he says.
“If you look at how technology has been adopted in agriculture compared to other sectors like healthcare or financial services, it has been slow,” adds Matt Plummer, principal with The Yield Lab, an ag tech venture capital firm specializing in investing and developing companies to commercial viability and long-term success. “But with ag companies going through mega mergers, there is big opportunity to use ag tech investment to throw wood on the R&D pipeline.”
Watch the S Curve
Determining where to invest includes gauging technologies along the S Curve – a widely accepted industry model that shows how innovations start out slow at the bottom of the curve, accelerate and slow at the top of the curve. New generations of technology jump to a new curve.
For example, Plummer places at the bottom of the ag tech S Curve such things as artificial intelligence, blockchain and IoT. The middle includes cannabis, probiotics, supply chain digital and payment platforms and spectral imaging. At the top are elements of precision agriculture.
“Recently there have been acquisitions of precision ag companies, not just by large players, but venture-backed companies. This seems to indicate the market is beginning to mature,” he says.
Page believes one of the most mature technologies on the S Curve is microclimate and weather prediction applications. “So many farmer decisions are driven by weather,” he says. “We feel we are in the slope up in technologies such as drone-based imagery, where the technology exists to get imagery, but the analytics are finally getting to a point where meaningful decisions can be made based on that imagery. But until the analytics catch up, imagery is of limited utility.”
Page believes agriculture is in the early S Curve days with potential long-lasting technologies such as CRISPR, blockchain and LoRaWAN for rural IoT connectivity.
Pass the Profitability Test
So where do producers fit into the S Curve conversation? Technology adoption. Research led by Brad Lubben, Extension associate professor and director of the North Central Extension Risk Management Education Center at the University of Nebraska-Lincoln, found adoption versus non-adoption is “positively and significantly” associated with higher profitability. However, he adds there is no way to be certain whether profitability drives adoption or adoption drives profitability. Likely, there is some of both, or at least an endogenous effect.
“Producers definitely look for improved profitability or efficiency from new technology. Whether it increases productivity, reduces resource use, eases operator burden, it is all focused on improving the bottom line,” he says. “Innovators and early adopters try new technology with just the hope of improved profitability. Later adopters are likely to wait to see evidence.”
Economics also plays a role. “It was easier to adopt new technology on the hope of improved profitability when crop returns were higher,” he adds. “With tight margins now, any investments are likely to be analyzed much more closely for demonstrated improvements in profitability.”
Empty the Closet
Producers can keep technology out of the scrap heap by becoming students of the S Curve.
“Farmers should get involved with innovative events or conferences,” says Plummer. “Go learn what’s opportunity to help solve problems. This gives you an ability to consult at a deeper level with retailers and agronomists. For groups like ours to accelerate technologies, we need support from groups like ISA to tinker with and optimize technologies and business models.”
Page share similar thoughts. “We make better decisions when we engage groups like ISA. Whether informally or more formally as members of our advisory board or attendees at our annual summit, voices from groups like ISA that represent farmers provide us with perspective of the most important influences in our portfolio companies' success: end users and beneficiaries of technologies,” he says. “We encourage farmers interested in our advisory board to contact us.”