Adapting Dairy to Thrive in a Constrained World

This report is written for decision makers who are trying to design future strategy for the sector. I define my research problem as “how do we adapt and organise ourselves to succeed, add value and thrive in this new constrained world”. I will provide frameworks to:

1. better understand the challenge
2. look at what can be learnt from groups who have already begun to adapt, and
3. discuss what we need to do to set ourselves up to succeed in the future.

“We need to move our thinking from infinite growth in a world of finite resources to a world of infinite ability to adapt within a world of finite resources”.

Dairy farmers in New Zealand are increasingly under pressure to make changes to their businesses. In addition, the system around them of how success is measured is changing. Measures of success are moving from purely financial to include environmental and social impact of businesses. There are multiple stakeholders with various views of the world and we currently have no clear framework to understand what is going on around us. A better understanding of how we need to adapt and organise ourselves, will better position leaders
to make changes.

“We are undergoing systems change, to do this well we need to get closer to and interact more with all our stakeholders”.

We have come through a period of three decades of largely unconstrained growth in dairy. The New Zealand grass-fed, pasture based system where cows live outdoors in nature has been replicated, scaled and adapted in all regions across the country. Individuals and groups have experienced huge financial rewards through development, from operational excellence and by capital gains. Increasing economic return has been the primary aim.

The last decade has seen the New Zealand dairy sector begin to respond, adapt and deliver better ‘environmental’, ‘social’ and ‘economic’ returns for business and communities. For Maori agri-business ‘cultural’ outcomes have also been important and a 4 ‘pou’ (or pillar) approach is used which includes environmental, economic, social and cultural outcomes.

Internationally, development of the ‘Sustainable Development Goals (SDG’s) by the United Nations, is creating increased expectations on minimum well-being provisions and has influenced community expectations of farmers. This combined with increasing pressure on planetary boundaries and availability of resources has impacted producers social licence to operate.

Natural advantages plus IQ or intelligence quotient (good science and expertise) has helped us get to where we are today. EQ or emotional intelligence has helped us communicate and interact with people within our markets and businesses. SQ or social intelligence will help us be better connected to stakeholders including consumers, government, civil society, Maori/iwi and local communities. Going forward, AQ or adaptability intelligence will help us adapt our systems and collaboratively innovate with stakeholders in a way that redefines our problems and how we tackle them.

As dairy farmers we are part of a complex adaptive system which can be better understood through the ‘Three Horizons Model’ which is a tool to help us think about the future and understand ‘transformative’ change. We are currently in Horizon 2 or the transition phase which is the area that will us move towards the future depending on how we respond. We have a choice to prolong the status quo by making H2- innovations (to keep the existing system keep functioning) or move towards the future by making H2+ innovations (which allow people to adapt).

“More and more leaders will not be remembered for the profits or the growth of their businesses … they will be remembered for the impact they have on society”.

(Paul Polman – former CEO, Unilever).

My report will take you on a journey to help you understand how we as individuals and leaders need to adapt and behave differently to thrive in the future. This is just the start of a bigger, wider journey we need to take as a sector.

The key recommendations of this report are:

1. Increase the dairy sectors contribution to society’s minimum social foundation and better articulate this contribution.
2. Include the right people with the right skills to problem solve in a way that is truly collaborative and co-creative.
3. Identify and empower innovation super spreaders and systems where people can share ideas easily, work together and motivate one another towards a common mission.
4. Solutions to complex problems can’t be replicated, instead we need to adapt components or processes and apply in regional or local contexts.
5. Grow further farmer and sector capability within the AQ adaptability intelligence & SQ social intelligence competencies.
6. Leverage information, capability and thought leadership that is available already in a way that is better coordinated and has more impact.
7. Grow farmers understanding of change and toolbox of mental and emotional skills to be able to cope with, manage and implement change.