The Interaction Field: The Revolutionary New Way to Create Shared Value for Businesses, Customers, and Society
Erich Joachimsthaler
240 pages, PublicAffairs, 2020
The future of business is about creating value for everyone—not just shareholders. In my new book The Interaction Field: The Revolutionary New Way to Create Shared Value for Businesses, Customers, and Society, I present a new business model and operating model for the future—one that creates shared value for all. Companies that embrace this new model—called interaction field companies—generate, facilitate, and benefit from interactions and data exchanges among multiple people and groups—from customers and stakeholders, but also from those you wouldn’t expect to be in the mix, like suppliers, software developers, regulators, and even competitors. And everyone in the field works together to solve big, industry-wide, or complex and unpredictable societal problems.
Interaction fields change the way you look at the concept of value. In the end, what matters most is how and to what extent the interaction field company improves the quality of life for its participants and society as a whole. It comes down to two fundamental questions: Does the company create value primarily for itself, or does it create shared value, prosperity, and wealth for other participants? And does it change how well companies, industries, and even countries solve the most difficult and intractable challenges of our society today and in the future?
In the following excerpt, I explore how the model can be deployed in a major, established industry: agriculture. It’s harder for a legacy company—especially a large enterprise and, above all, a traditional value-chain one—to create an interaction field. They have so much already in place: infrastructure, hierarchy, tradition, process, brand identity, products, networks, and culture. But it can be done, and, when it is done successfully, the results can be amazing. The $30 billion agricultural equipment firm John Deere has done it.—Erich Joachimsthaler
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Founded in 1837, John Deere’s core technology is electronically enhanced agricultural equipment. These are expensive items—a fully loaded, brand-new, high-end harvesting combine can run upward of $600,000. Even a basic used tractor can set you back $20,000 or more.
We are now in the age of precision agriculture. Every aspect of farm management has been transformed, starting with planting. Consider a typical American farming family, the Millers. Their farm is 1,900 acres in Illinois, and they grow corn and soybeans—the United States’ two major crops. The Millers plant between twenty thousand and thirty thousand seeds per acre. If they were to plant only corn, that could amount to as many as fifty million seeds, planted over almost two thousand acres. But the farmer also has to think about the macro level: planting so as to achieve the greatest possible yield from the entire acreage. To do that, he wants to set the seeds at the best distance from each other and the rows at the right width. He wants to plant as much as possible but avoid overlapping rows. He needs to conserve time. He wants to minimize the number of turns he has to make on his tractor and to complete the work of seeding in the shortest amount of time possible. He needs to take advantage of the best growing period and ensure that the plants are ready for harvesting at the right time.
All of this is made more complex because of variations in soil conditions throughout the farm. In some areas the soil is rock-hard, while in others it’s soft and crumbly. It some places the soil forms into large clods that will not provide good seed contact and need to be broken up. In other spots, the soil is fine-grain. The soil may be wet in some areas and dryer in others, affecting the amount of inputs required. While some acres are relatively level, others have a grade. And add another variable: conditions change from year to year. The actions that produce a robust crop one year may not have the same results the next.
To get the best results requires precise management of the farm equipment during the seeding process, so that seeds can be inserted into the soil at exactly the right depth and distance from each other.
To do this requires data. The Millers configure their Deere equipment with a variety of add-on sensing devices that monitor and collect real-time readings about the various functions of each machine—from ground speed to material flow—as well as environmental factors, such as air temperature and soil conditions. The operator can monitor the information in the cab and make adjustments to the equipment as he works. He can control, for example, the “down-pressure” of the seed-setting gear to adjust the depth of insertion, depending on the soil conditions. To do this manually, the operator would have to stop the seeder, climb down from the cab, and adjust the equipment by hand to the required pressure and depth. Deere claims that each adjustment could take as long as twenty minutes. Using the in-cab electronic control, the farmer makes the adjustment in six seconds or so. Plus, the increments are much finer and more accurate—as small as one-tenth of an inch. Changes in downpressure range from zero to nine hundred pounds per square inch (PSI).
This is “precision tillage,” as Deere calls it, on the level of the single machine. In the perfect scenario, every single seed would be planted in exactly the right place, with the right nutrients and soil conditions and at the best possible moment. That is the goal of both the farmer and John Deere.
Now, let’s look at the bigger picture of the Millers’ farm management over time. They do more than gather data to control machine functions; they collect and aggregate it to manage machine fleets, plan field usage, evaluate productivity, and fine-tune processes. Using telematics (vehicle telecommunications software) offered by Deere, the information collected by the sensors in the field is transmitted to a centralized farm-management system, called FarmSight. This enables the Millers to monitor the data, and, using GPS-enabled guidance systems, control multiple machines in the field. Only the lead machine needs to be driven by a human operator. The operator provides information to the management system such that, with “supervised autonomy,” another machine can track along behind and beside the leader. The system remotely controls the path of the machine, the planting of the seeds, and the application of water and pesticides.
John Deere is the pioneering company that invested in autonomous or self-driving tractors, having begun their investment in the technology nearly twenty years ago. Within a few years, the Miller family members expect they will be spending zero time in the cab—all their tractors will operate autonomously. With the help of Deere technology, they expect to be able to drastically cut the time required to harvest thirty-two acres— from one day to one hour. Over time, precision tillage has become the more holistic “precision agriculture”—remotely managed planting, harvesting, yield mapping, soil sampling, and fleet management. Of the total of 320 million farmable acres in the United States and Canada, John Deere products work on over 100 million.
But Deere is not simply technology-savvy value-chain company. Deere is an interaction field company because it enables interactions in all three elements of the model: the nucleus, the ecosystem, and the market makers. Deere designs these interactions to solve farmers’ immediate issues—such as farm productivity, yield, and profit per acre—while also solving the broader challenges of agriculture as an industry and society at large.
Connecting the Nucleus
To add greater value to its agricultural equipment, Deere has created an online presence and digital network called MyJohnDeere. Farmers agree to share data they collect through sensors on equipment with the John Deere Operations Center. Thousands of farmers connect to the Deere platform to contribute productivity data about their farms and activities. Deere then collects, aggregates, and augments the data with historical geographic data and environmental data such as the weather, analyzes the information, and makes it available to all the farmers in the nucleus. The farmer has an online window into the center, so he can review the information. He can use a variety of diagnostic and analytic tools to create agronomic reports about inputs and outputs. This enables him to fine-tune the performance of the tractors and make the farm more productive.
Now the farmer has a much broader understanding of his own industry: What the current conditions are. How others are managing. What results they’re getting. Not only is the data available on Deere’s platform, the company also makes it available through independent information providers such as Farmers Business Network (FBN), which, as of this writing, connects eight thousand farms and links to multiple information sources.
This is a dramatic step. Rather than jealously guarding its valuable data, Deere shares it beyond the immediate nucleus to other elements of the interaction field, such as market makers. FBN is like a massive sophisticated chat room, where the online users share information about their crops, planting patterns, and the prices they pay for goods and services, although the sources remain anonymous. With FBN, farmers can compare results by region, check on best prices, and get the kind of peer-to-peer information they would get at the local coffee shop, but in greater detail, with better analysis, and on a much larger scale.3 FBN also offers low-cost corn seed and sells it directly to farmers. It can cut the farmer’s annual cost of seed by more than half. This is particularly important since the cost of seed has been rising: US farmers spent $22 billion on seeds in 2018, an increase of 35 percent since 2010.4
It is the nucleus of participants connecting on the John Deere open platform—as much as the technology-enhanced tractors themselves—that enables Deere to help farmers achieve their particular goals: improving yield, cutting costs, realizing profits, reducing resource consumption, and freeing up time. It creates shared business value in the nucleus.
Engaging the Ecosystem
Deere further leverages its platform to bring in participants that are not members of the nucleus.
In 2013, Deere opened up its Operations Center, an open data platform, to a number of third-party providers. These include seed and fertilizer makers such as Bayer, Syngenta, DuPont, and BASF; software developers; independent retailers; and a variety of specialists such as experts in the science of soil management and crop production, known as agronomists.
Third-party suppliers offer seeds, fertilizers and sprays, equipment, software solutions, and knowledge to maximize yields. AgJunction, for example, is a software provider that creates guidance and auto-steering solutions specifically for agricultural equipment. Agricultural drone companies provide farmers with tools to monitor their crop conditions, identify weeds, and precisely spray herbicides on them, reducing herbicide use by 90 percent.
Third-party software developers—such as Granular and Ag Connections—use Deere’s knowledge to develop applications that create specifications for seed density, depth, and fertilization.
Seed producers Bayer and Syngenta, as well as fertilizer developers such as BASF, DuPont, and Sinopec, have built their own ecosystem in which John Deere participates. It is called the Climate Corporation, and it is wholly owned by Bayer. It combines detailed data from farmers on yields, fertilizer use, crop rotation, rainfall, and dozens of other metrics. The Climate Corporation then sells the data back to farmers as a subscription service.5 It also answers questions and makes recommendations to maximize yield and improve productivity.
Through its nucleus of farmers and its ecosystem of farmers, collaborating companies, suppliers, and partners, Deere enables a complex interaction field that achieves new levels of farm productivity and creates new shared value for all its participants. It helps Bayer and the other big agriculture companies better price their products and services and better serve farmers, all while minimizing the environmental impact of seeding, fertilizing, and spraying fields.
Reaching the Market Makers
Deere reaches out beyond the nucleus and beyond the ecosystem of connected partners and suppliers to an even wider range of participants: the market makers.
Deere connects, for example, with competitors such as New Holland and Kubota. Deere offers software, such as Microsoft’s FarmBeats project, which develops solutions to collect information and manage the operation of a range of farm equipment using sensors, drones, and vision and machine-learning algorithms.6
Deere brings institutes and leading academic research centers for agriculture and food into its interaction field. Technology incubators, accelerators, and investors are also Deere market makers—for example, Farm Animal Investment Risk and Return, an investor network that advocates for sustainable animal farming. Market makers also include global agencies, such as the Food and Agriculture Organization of the United Nations, and local government agencies, such as the USDA.
Market makers can add to shared value by facilitating network effects, but their contribution is more about influence and can be quite long-term. For example, Deere can provide data to the USDA. The agency may then use the data to inform policy or set objectives that eventually affect farmers through regulations or subsidies. The USDA has adopted total-factor productivity measures that include the devastating and negative climate impact of agriculture, which can range from 20 to 25 percent of global annual emissions. By changing its funding policy based on better data from the field, the USDA strongly influences shared value creation across the entire interaction field.
So what Deere has accomplished—and, more important, what it has the potential to accomplish—goes far beyond the benefit to its nucleus, its ecosystem participants, or the market makers it touches. By building an interaction field that serves all three parts, Deere has put itself in a position to solve even bigger needs and create much greater value to the larger society. It can contribute to addressing such issues as worldwide farm productivity, the reduction of resource waste, and how to meet an increase in global food demand—which is expected to double as the global population grows to about 9.6 billion people by 2050.
Adapted from The Interaction Field: The Revolutionary New Way to Create Shared Value for Businesses, Customers, and Society by Erich Joachimsthaler. Copyright © 2020. Available from PublicAffairs, an imprint of Hachette Book Group, Inc.