Sell tractors, fix them, collect the money and innovate.

Farm equipment dealerships are not considered the most innovative industry, although remarkable innovations occur there on nearly a daily basis. 

With accelerating change, a commitment to innovate will propel thriving dealers into the 2nd machine age. 

By embracing the technological shift with the product innovations from your OEM, and operational and customer solution innovations at your business and your customers’, your business model will remain relevant and sustainable well into the 2020s and beyond.

Keep Peddling – Left, Right, Left, Right

In Part 1 of this series “Execute & Innovate,” we explored the vital link between the two as analogous to the pedals on a bicycle: left pedal = execution, right pedal = innovation. Used together, they’ll propel your bike (and business) forward, particularly when driven through the first sprocket of process consistency. But when that sprocket is a motor, your progress leaps forward. Then what? 

To better understand how dealers can adapt their business to rapid advances in product innovations, look no further than the e-bike industry.

Just 10 years ago, e-bikes were a strange anomaly, shunned by most conventional cyclists.  Today, even the most austere bike shops offer some form of electric bikes. While the more innovative products may have led the way, bicycle dealers responded in kind with operational (demo areas, recharge stations), and customer solution (service plans, financing) innovations. The opportunity to innovate is no different in the equipment world. 

3 Types of Innovation at the Dealership

Three types of innovation define the 2nd machine age dealer: product innovation, operational innovation and customer-solution innovation. Here’s how you influence all three.

1. Product innovations are driven primarily by the OEM. The impetus behind these innovations includes public policy (for example, emissions regulation), customer needs (productivity improvements) and technological leaps (autonomous guidance). You might be thinking there’s no way you can influence product innovations, but you’d be wrong. Involvement is key. Engage with your legislator, directly or via your trade associations on matters of public policy that impact your business. Your OEMs value the “Voice of the Customer” and as the intermediary, you’re uniquely positioned to connect both parties. Commit to learning about emerging technologies in other industries (like e-bikes), and you’ll be informed when they inevitably pop up on the equipment world.   
2. Operational innovations/OI — not to be confused with operational excellence/OE — is the consistent and profitable execution of a dealer’s business strategy using existing processes and procedures. OI means coming up with new ways of doing things. It means rethinking how you run your business internally, and how you engage your customers externally. For example, years ago it would have been inconceivable to sell a tractor via text messaging. Today it’s nearly the norm. This type of OI not only improves your internal efficiency and cost, but it also makes it easier for your customers to do business with you.
3. Customer solution innovations help your customers run their business more efficiently and profitably. For example, to fully benefit from advancements in robotic and autonomous technologies, your customers will need plenty of training and support. How will you help them? What infrastructure improvements will they need to undertake to support rapid charging of their electric machines? Today, a best practice at many dealerships is to employ agronomists to provide farmers with operational advice and analysis from seed to harvest. Tomorrow, the 2nd machine age dealer may take a similar role to enable customers to fully benefit from the plethora of burgeoning machine, biological and information technologies on the farm.

Innovate How You Innovate

In addition to recognizing the different types of innovation and how to approach each, it’s equally important to innovate how you innovate.  

Consider the pace which innovation occurs in our industry. A big change is happening. Innovation has historically materialized as some form of continuous or linear improvement. That is, incremental change drives marginal gains. Anticipating these incremental changes has usually been enough to keep high-performing dealers ahead of the competition.  

But if you want to become a 2nd machine age dealer, a different approach is needed. Changes now occur exponentially and at an accelerating pace. Staying competitive requires agility and foresight to stay ahead of faster changes.

One approach is to “think big” and create an “Innovation Council.” A mainstay of high-tech for decades, Innovation Councils are tasked with thinking about the future and what might be. 

A great start at the dealer level is to set up small team with folks from your dealership and a few customers (target 12 people or less in total) and brainstorm about the next big thing in customer solution innovations for the next 3, 5 and 10 years.  

It’s clear where our industry is headed. Stay relevant and thrive by embracing innovation on your journey to become a 2nd machine age dealer.