Continuing the topic of the previous post, I want to talk about the development strategy or the strategic roadmap of the association which can be established in order to stimulate the development of the agriculture sector. Again, my thinking process has been engaged by the appropriate question from the Ukrainian entrepreneur. It’s the general roadmap. It must be treated respectively and must be refined in order to create the relevant strategic roadmap of the industry development.
So, here we go. I was asked to suggest the answer to the question: “What do we want?” To answer this question, we need to decompose it in order to come up with the itemized roadmap. The main thing to remember is that we have to think global but act local. We have to hurry slowly. We have to proceed with well-regulated movements, fixing each milestone.
Everything starts from “Who we are?” Like I said, I assume establishing of the association of entrepreneurs and business owners. So, we are the association. Now we have to answer the question “What we are?” To put in other words: what is our mission?
That could be, for example “The development of the agriculture sector of the Ukraine and the improvement of its competitiveness by means of”:
- The restructuring, modernization and creation of the modern competitive environment;
- The integration and adaptation of the modern and advanced practices of doing business;
- The stimulation of innovations and the facilitation of their integration and commercialization;
- The development and integration of modern models of the individual enterprises and farms pooling, to improve their competitiveness, reduce operating expenses, increase profitability, improve products’ quality and allow for creating the positioned brands;
- The attraction of foreign investments in the industry to allow for the modernization, expansion and improvement of the existing production capacities; to allow for the development of new business lines and segments;
- The improvement of the quality control system.
Now we can try to answer the question: “What do we want?” To put in other words: what are our goals?
Based on the aforementioned mission, that could be as follows:
- Environment:
- The development of trustworthy and reliable relationships with ministries and government authorities to allow for the creation of the transparent tax and legal base, which will incorporate world practices and standards;
- The development of trustworthy and reliable relationships with foreign associations and organizations to allow for the collaboration on the legal and trade matters;
- The creation of the trade exchange with the set of standard trade contracts and the quality control and counterparty protection system to allow for the single point of entry and control;
- The creation of rules of the fair competition and the protection of business from unfair competitors and raiders’ attacks.
- Education and training:
- The establishment of the center of excellence of the industry, to allow for the accumulation of the knowledge and expertise, which will provide entrepreneurs and business owners with the consultancy on the legal, tax, financial and investment issues;
- The creation of the knowledge base with the world expertise and knowledge in doing and developing the agribusiness to allow for their adaptation and implementation locally;
- The creation of the central data base of the industry with information about companies and products;
- The organization of periodical exhibitions and seminars of the theme;
- The improvement of qualification of business owners and entrepreneurs in the subject of doing business in the modern competition environment.
- Technologies and innovations:
- The creation of new and modernization of existing laboratories to allow for the improvement of the quality control and R&D;
- The creation of target development R&D programs to allow for the quality improvement of products and the development of new business lines;
- The creation of target programs to allow for the commercialization of the R&D products;
- The creation of the legal base to allow for the intellectual property protection;
- The creation of research groups attached to chairs of the appropriate universities and R&D centers to allow for the stimulation and attraction of young people to the innovation activities.
- Finances and investments:
- The development of target investment programs to allow for the modernization of production capacities;
- The development of target investment programs to allow for the expansion and creation of new production capacities;
- Ensuring investors and entrepreneurs with the support on all stages of the investment project development, from the inception to the go-live;
- The creation of the central knowledge base with the information about investment projects;
- The development of trustworthy and reliable relationships with financial institutions and banks to allow for a smooth crediting of the industry and to secure a reliable trade financing;
- Clients:
- The improvement of the legal and regulatory base and of the quality control and consumer protection system;
- The establishment of the center of excellence and consumer protection to provide consumers, private and corporate clients with the consultancy on the appropriate issues.
- Organization:
- The creation of the investments committee to allow for the development, approval and control of the target investment programs;
- The creation of the supervising committee to allow for the accountability of the association;
- The creation of the competition committee to allow for the elaboration of the code of fair competition and negotiation of the legal, tax and regulatory issues.
Then we can detail and decompose each goal to 5-6 sub-goals. Thereafter we can answer the question: “How will we realize it?” with laying down the appropriate programs and forming the appropriate implementation projects.
Recently I chatted with the entrepreneur, who’s about to start his enterprise in the Ukraine with the group of like-minded entrepreneurs. They have the bold goal. We talked about the relevant opportunities and touched the subject, which has direct influence on their goal. The subject is the development of the agriculture sector in the Ukraine as a whole.
It is the hot topic and I decided to share my vision and thoughts on this subject with you, my honored readers. Here’s what I have got (let alone legal puzzles – I’m not good in that legal stuff):
- The complex requires defragmentation and restructuring. In my opinion, we cannot refer to the today’s agriculture complex in the Ukraine as to the agribusiness. It is the agrichaos or the disordered bazaar. If entrepreneurs and business owners want to compete with foreign businesses, successfully penetrate into and protect themselves on the foreign markets, do business like true businessmen, then they must rid themselves from the model of business-chaos with thousands of disorganized small farms and enterprises. The strength is in the unity and order. The complex requires defragmentation in order to unite fragmented small enterprises and farms and form big production enterprises which will be able to create brands and position them well, both locally and global. Small enterprises and private farms can satisfy the demand of some bounded geographic territory. At the present time, the Ukrainian agribazaar is very fragmented with thousands of small farms and enterprises which are barely known. All of the problems stems from the fragmentation: quality control, risk and contract management, etc. That’s why the fragmented agrichaos of the Ukraine is treated by developed and organized businesses like the agriappendage, not like the strong business competitor. Thus the task number one is the defragmentation and restructuring of the agriculture sector (I hope Ukrainian readers will comprehend the wording “defragmentation and restructuring” properly, because I truly know what does it mean in the Ukrainian practice);
- The complex requires the organized market. The complex requires organized trade exchange with a set of standardized contracts, with the comprehensive quality control, risk mitigation and counterparty protection system. Even if there are so-called exchanges in the Ukraine they are so insignificant in the economic aspect and their business models are so primitive and obsolete, that I won’t dare compare them with foreign trade exchanges. What we have to comprehend, the absence of the organized trade exchange in the economy of the country, where the agriculture sector plays the vital role, is a rank ignorance. The agribusiness in such country is nothing but a disordered bazaar with thousands of street-stalls and hawkers. It is good to satisfy your immediate needs but it is not good to do the true business. How can a buyer find a well-deserved supplier? How can we ensure against risks in the chaos? How we can assure ourselves of the product quality? There must be a central counterparty. The market must be organized, of course if the Ukraine wants to protect its businesses, comply with world standards of doing business and compete successfully with foreign businesses;
- The complex requires the modernization of enterprises and farms. It concerns both the production base and the business models and thinking. The Ukraine must gradually move forward and evolve from obsolete, legacy business models, if any. The Ukrainian business must learn and gradually adapt foreign business models and develop true entrepreneurial thinking. If Ukraine’s businesses want to compete and fight with foreign businesses as an equal, they must, first of all, become more organized and use accumulated world experience. They must adopt modern approaches and models of doing business to enhance the Ukrainian agribusiness and raise it to a new level of the modern competition. I want to emphasize that here we are talking about the modernization of both the production base and the entrepreneurial thinking. The result will be insignificant, till each thinks only about own benefits – “I produce, they buy, I get paid – that’s enough”, till there are no unity of thinking between the entrepreneurs and business owners, till there is no comprehension that only together they represent the true business power, not just another agriappendage, till they apply some efforts to modernize their thinking and business models. The relevant business models can be elaborated and implemented, which will allow for the relative independence of individual enterprises and farms, but all of them will be subdued to the general business rules and principles. The strength is in the unity. We have to understand that the task of creating the business-order out of the business-chaos, the agrichaos in this case, is hard to accomplish, unless entrepreneurs and business owners first change themselves and their way of thinking.
