The Power of Constraints 2.0: What Ag Retail Can Learn from Switzerland

farmInverting Constraints

Constraints can be powerful for innovation and success in business.

Constraints tend to be framed as a reason for not excelling or an excuse not to try new things. There is plenty of research that shows inverting this mindset can have a meaningful impact on people and businesses. Constraints can empower us to think in novel ways, focus differently, and be more creative.

David vs. Goliath

I was first introduced to the concept of constraints by Malcolm Gladwell in reading David and Goliath: Underdogs, Misfits, and the Art of Battling Giants in 2014. In the book Gladwell brought up the examples of wildly successful entrepreneurs who had dyslexia, an obvious constraint to overcome for anyone wishing to educate themselves, let alone build a successful business.

Interestingly, a much larger percentage of successful entrepreneurs are dyslexic than in the general population: Richard Branson, Paul Orfalea, Charles Schwab, John Chambers at Cisco, David Neeleman at JetBlue as a few examples.

In the book, he explains that these individuals don't think they succeeded in spite of their disability. They think they succeeded because of it. From here Gladwell brings up the fact that because these individuals knew they were with challenged reading that they focused more on learning to read people or publicly speak with conviction. Important skills for anyone wanting to build multi-million or billion dollar companies.

In these individuals minds, those specific skills would not have been built up had they had the fortuity of being able to more easily read.

Why Switzerland?

Switzerland has always been a fascinating country to me. As much as I love chocolate, cheese, mountainous views and fancy watches, that’s not what has driven my interest in the country.

It stems from their economic strength. On a per capita basis Switzerland has the 9th largest GDP per capita and the 20th largest GDP in totality across the globe.

On the surface, it’s not that impressive.

But consider the fact that out of the twenty largest economies by GDP, Switzerland is the only one that is land locked. Meaning no direct access to ports. And it is the only one in the top 10 GDP per capita that is land locked and has a population above ~500,000. Exports beyond immediate countries therefore are more challenging.

They also have few natural resources, outside some salt mines and water. Every other one of the highest GDP nations are resource rich.

Plus, they have a mountainous and unforgiving terrain making it a challenge to develop infrastructure and where they do develop tends to be on some of the most productive farm land that they do have.

These are significant constraints to a thriving GDP. But Switzerland has not only overcame them, they have thrived in spite of them. These constraints forced Switzerland to carve it’s own path.

I look at ag retail in much the same way.

Some of the constraints in ag retail are acute, while others are chronic.

For example, most often, retails do not have a proprietary product or differentiated pipeline to go to the market.

Their market is generally geographically constrained and sometimes the environment is unforgiving, whether prone to drought or prone to flooding, these are chronic challenges. There are numerous acute contraints to deal with too, such as product shortages or HR issues week to week or year to year.

I think there is a lot that can be learned from what has made Switzerland a prosperous country and applied as a framework for ag retailers, or other businesses, to thrive.

What is Switzerland’s Secret Sauce?

1. Education & Innovation

2. Widely Established Trust

3. Long Time Horizons

4. Collaboration: Externally and Internally

Prioritize Education and Innovation

Switzerland’s education system and research industry has been the foundation of 47 Nobel Prize winners, resulting in a per capita rate of Nobel Prize wins far above that of the U.S., the U.K. or any Scandinavian country.

This has fueled innovation in the country. Switzerland has topped the Global Innovation Index for ten consecutive years.

This leads to value added outputs.

The country’s most valuable exports are pharmaceuticals, then gems followed by organic chemicals and machinery (their famous watches come in 5th).

This may seem obvious: They don’t have access to natural resources.

But it is difficult to gain a competitive advantage globally in the value added and manufacturing space. Switzerland has done well because they have focused on a strong education system. Their primary exports rely heavily on innovation and a highly skilled work force. 

On top, they got very good in specific areas: pharmaceuticals and watches for example are goods that Switzerland is known for across the globe.

The Ag Retail Take Away: Educate and Plant a Flag

Education as a system and cultural differentiator.

Subscribe to Upstream Ag Professional to read the rest.