Having a plan or strategy for your business is instrumental in achieving future success. However, the ability to change the course when things don’t go as planned is also imperative.
“Strategy is very important. But when we move into challenging times, you constantly need to reassess your strategy,” said agricultural economics professor Michael Langemeier during the Purdue Top Farmer Conference. “Ask yourself ‘Where am I at, and where do I need to be to compete over the next five years?’”
Langemeier talked about strategic risk, which refers to internal and external factors that make it difficult for a business to meet its objectives and goals. Internal changes could include additional employees, resource availability, and the addition of technology.
External forces that could present strategic risk are government policy changes, changes in consumer preferences, shifting weather patterns, and technological uncertainties. These are all factors that might require a farm to reassess its strategy, Langemeier noted.
Resilience is a farm’s ability to anticipate, absorb, accommodate, or recover from effects of shocks or stress in a timely manner. Langemeier shared two ways farmers can show resilience against strategic risk.
The first is absorption capacity. This is a farm’s ability to withstand shocks from strategic risks. “Can you take a licking and still tick? Langemeier asked rhetorically.
The second is agility, which is a farm’s ability to quickly identify new trends and capture business opportunities. An agile farm looks for opportunities that new enterprises may provide.
Stepping into a farmer’s shoes for a moment, Langemeier asked this question: “Here are the resources we have; how can we respond to these opportunities and position ourselves in this new environment?”
As the prevalence of strategic risk continues to grow, the ability to be agile will be critical for farmers and beyond. “This is important to any business,” Langemeier emphasized.