“You get more of what you measure” – a common phrase in business best followed by, “Be careful what you measure.” What can this mean on the farm? One of the easiest things we can measure on our path to building our farm is number of acres.
Ask most successful farmers if they are interested in growing their farm and the immediate response is “Yes!” When asked how, the immediate answer is often “more land!” There’s no doubt that continually increasing the land base is an important aspect of any growth strategy. However, focusing only on the number of acres can keep us from a bigger picture view of business growth.
Too often we have seen the consequences of what I call a top-heavy growth strategy (growth for its own sake): cash shortages, strained relationships, poor farming practices, chronic stress and bankruptcy. When the strategy is only about growth, there is no structure being built to support the demands that growth will bring.
Recently, a client reinforced my thinking about this. He shared how he used to measure growth only by the number of acres he was able to add each year – but he found that on his farm, more acres didn’t always lead to more success. He encountered efficiency issues, labor challenges, land competition and more headaches. The farmer stepped back. He shifted his growth measurement to include efficiency measures and profitability per field. He also expanded his focus on premium crops and developed key advisor relationships to shore up skills he felt he lacked.
Traditionally, businesses measure success financially (think about publicly traded companies’ focus on return to shareholders). However, in the 1980s, business consultants Kaplan and Norton recognized that a focus on financials only (for farmers – acres only) can be too narrow of a focus that leads to short-term thinking. They introduced a new approach to measurement called the Balanced Scorecard.
The Balanced Scorecard starts with the Vision and Strategy of the company. To measure progress they use four separate areas: Financials, Customers, Internal Processes and Learning/Growth. Within each area there are goals and measures that help the business leader track progress in each area, keeping them focused on the things that matter most.
The Balanced Scorecard approach can be adapted to fit the farm’s vision and situation. Perhaps it’s financial (what measures matter most?), customers (elevators? landlords?), processes (how do I know we operate efficiently?), skills (which advisors do I need? what do I need to know?).
Assignment
Here are some questions to get you thinking about your farm’s measurements: