Agricultural businesses face a volatile mix of rising costs, intense competition for markets, populist politics, activists and false news that travels faster than the truth. You would expect the role and value of industry organisations to be on the rise, but for many, the reverse is their reality.
Businesses from across value chains are opting out of membership of traditional peak bodies, leaving them potentially unrepresentative of the majority of industry business - by number and/or value of production.
Businesses are also questioning the value for money from their investments in services such as industry R&D and marketing. Today, performance with industry services is under intense scrutiny from agricultural businesses of all types and scale.
Industry service organisations (ISOs) are important. They enable industries to adapt faster and become more profitable, more sustainable and more valued by customers, governments and communities.
Their external services create value in critical areas where it's difficult for individual businesses to succeed. For example, with better access to markets, less red tape or safeguarding the reputation of the industry and its products with the community and governments.
Unfortunately, the reality is that traditional ISOs have generally proven immune to the same forces that triggered the restructuring, consolidation and new business models adopted by modern firms over the past two decades. In comparison to the private sector, the pace of change by most ISOs has been glacial.
The innovation process for ISOs seems to be trapped in a 'doom loop' of repeated and expensive reviews of industry arrangements that yield little or no real change. Major reviews are underway again now in the red meat and dairy industries. Agricultural businesses have heard it all before.
These issues are explained in a new report 'Creating 21st Century Industry Services Organisations - don't tinker, transform'.
It reveals that declining business participation is not due to a slump in demand for industry services. In fact, these services are more important than ever. The real problem is a lack of urgency and ability for industry organisations to innovate faster and modernise their business models and services to meet the needs of 21st Century businesses. They keep choosing incremental change over transformation and it is costing businesses across Australia's food and fibre value chains.
The consequences of ineffective industry bodies for industries are serious. It can mean that no action is taken when it's vital to act; action taken is not as effective as it needs to be; or the wrong actions are taken for the industry as a whole.
In comparison to the private sector, the pace of change by most ISOs has been glacial.
A less obvious cost is that languishing peak bodies create a leadership void that is filled by interest groups, activists and organised vocal minorities. When that happens, industry businesses lose out in the contest to shape and inform policy or regulatory decisions by governments and major value chain firms on the direction and priorities for their industry.
The good news is that strong business leadership can and is accelerating innovation with industry organisations.
The competition is world class and success on the 21st Century policy and commercial 'competition track' will take more than cosmetic improvement of traditional ISOs. Business leaders can and must demand transformation to create new organisations that face the industry mainstream, create demand for their services and produce dramatic impact and value for modern businesses.
Brian Ramsay is the Managing Director of Inovact Consulting and an Adjunct Professor at the University of Canberra. He advises on strategy and innovation and was the inaugural CEO of Australian Pork Ltd.
The story Industry service organisations choose 'incremental change over transformation' first appeared on Farm Online.