Ranching has always been a complex business. But with more and more uncertainty, ranching beyond your comfort zone is a fact of business.
“If it was easy, you’d of already done it.”
If there’s a way to boil down the present set of dynamics in the ranching business to one statement, perhaps the observation above might be it. Indeed, it’s likely all the easy decisions on running your ranch were made long ago. Going forward into that great unknown called the future, while never easy, will be even tougher in the years ahead, says Clay Mathis. That’s because it may well mean stepping beyond your managerial comfort zone to squeeze even more out of the ranch’s potential.
Or, said another way, “Most of us probably didn’t get into the ranching industry because we wanted to do performance evaluations.”
Mathis, director of the King Ranch Institute for Ranch Management at Texas A&M-Kingsville, says an idyllic picture for most ranchers in the arid Southwest is a set of good cows at a windmill with a tank full of water, grass under their bellies, and a healthy mixture of range plants that provide a good home for not just the cattle, but the wildlife as well.
That, he says, is the comfort zone that most ranchers prefer to operate in. “But the picture is bigger than that. It’s not about the things that are in our comfort zone – the grass, the water, the cows and the wildlife – but how we deal with the complexities and all the other issues that are also very important to the ranch and what we can and can’t do with the ranch.”
Success in the future, he says, will depend on finding leverage points and using them to make good decisions for the ranch as a whole, not just the elements in your comfort zone. “So we have to figure out how we’re going to deal with the interconnectedness of all those things, how we’re going to find those leverage points.”
Mathis defines leverage points as the few things in the operation that, if changed, will make a difference.
To get started on finding those leverage points in your operation, Mathis suggests the idea of creative destruction, a concept he learned from Charles Koch, head of Koch Industries. “Every seven years, every operation should go through the process of re-creating their business entity,” Koch says. “Put the whole thing on the table and rebuild it – creatively destroy the whole model and then creatively build a more modern approach.”
That does not mean, however, that you should throw the baby out with the bathwater, as the old saying goes. “Can we completely destroy a ranch business model and rebuild from scratch?” Mathis asks. Of course not. If you run cows, you will probably still have cows eating grass. “Some of these things are going to be the same no matter what.”
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Nor is he suggesting that you ignore your ranching heritage and the culture of the industry. “But it’s good to take a deep look at how things are going in the organization and how it functions, from how people are managed to what enterprises the ranch is engaged in.”
So, he says, look creatively at how you’re managing those cows now and ask yourself if there’s a better, more efficient, more profitable way of managing and protecting the core of your business.
“A lot of things we may do may be done differently and maybe you can build a system within reason that better positions you to manage for the trends,” he says. “Sit back and think, ‘are we really doing things right to be prepared for tomorrow?’”
Michael Swanson, ag economist with Wells Fargo, says it’s not the well adapted who will thrive, but the adaptable. What that means, Mathis says, is you have done the right things to make your operation successful to this point. And many of those things won’t change.
But some will. “Will it be the same things in the future that will keep your operation successful? Some of them will probably be different because we have a different environment we’re dealing with,” he says.
“So how are you going to think, what are you going to do, about your future? Will you do things like you always have? Probably not.”
Editor’s note: Next week, “Part Two – A Systems Approach To Strategic Thinking.”