AGRIBUSINESS CASE STUDY
John Deere has created go-to platform for the agricultural industry to compete with lower cost manufacturers and Ag Tech entrants.
This 179-year-old company has created a platform for the agricultural industry, allowing it to compete against both other farm equipment manufacturers as well as new Ag Tech entrants. John Deere is the leading farm equipment manufacturer in the world with 2016 worldwide revenues of $26.6B.
In 2012 John Deere created an digital platform called MyJohnDeere. It is an information system to help agricultural producers optimize the management of production data, equipment information and farm operations. This would enable a shift from supply to a demand-driven industry where farmers have to react quickly to consumer demand changes through more open communication between members of the agribusiness community. According to the company these collaborations would greatly benefit our customers by expanding the choices they have to improve productivity, efficiency and yield.
The Platform is free for customers who purchase John Deere equipment, for 3rd party developers who would develop and integrate applications on their platform (with approval only, by John Deere). The platform strategically borrows a page from other open systems in winning in a first mover platform to garner competitive advantage and increased hardware purchases.
John Deere, like most OECD manufacturers, has seen competition from low-cost competitors, but by integrating a software platform into its products, it can lock customers in and also provide a reason for customers to pay more for its hardware.
John Deere is not stopping in their quest for agricultural platform dominance. A big trend in any industry today is whoever owns the data wins. Big Data itself can become a revenue generator and John Deere is likely thinking about how it can utilize the vast data it is gathering in the future.
Source: Cassie Perlman, HBS ’17, HBS Digital Initiative, May 15, 2017