Ten short years ago, food and agricultural pundits were feverishly creating vivid descriptions of a dramatically altered food system under which we would operate in the 21st century — the result of a technology revolution in agriculture. Major shifts in value creation and value capture would shift the balance of power because of new products and practices. Technologies would enhance margins through improved efficiencies and differentiated products. Partnerships across the system would forever alter the way in which business would be conducted. Industry participants across the system proclaimed a “new age” of prosperity.

But…the revolution never happened.

Four revolution technologies — biotechnology, e-commerce, precision agriculture and identity-preserved crops — were the major drivers behind this expected revolution. These highly anticipated technologies were introduced to the food system in varying degrees of completeness, but their impact was modest in terms of lasting structural change. Many of these technologies resulted only in the creation of niche markets. Poor new product introductions and business failures were common.

Failure to understand the complexity of the food system was a major factor contributing to lackluster results common to all four revolution technologies. The food system is mature and well established. Many firms expecting to extend their presence found that developing strategy for industry participation beyond their realm of experience was difficult, and the system was unforgiving. In these attempts at technology commercialization with limited system understanding, the following areas of miscalculation were universal:

• Failure to identify competitive products or to correctly assess their technology's cost position.

• Imprecise benefit measurement. It was difficult for the market to place a value on these new products or services.

• Underestimation of customer education needs. The resources required to teach the end customer about the benefits of the technology were much more than expected.

While companies were trying to commercialize new technologies, industry consolidation was occurring at a torrid rate. Trying to accomplish both the integration of large, merged or acquired businesses and the commercialization of new technology became too big a burden on many firms.

In addition, declining prosperity at many food system firms during the 1990s resulted in reduced research and development resources vital to the commercialization of new technologies.

Any new technology that offers multiple benefits to multiple food system players requires a substantial and detailed analysis that accounts for all the differences in behaviors, preferences, expectations and requirements at each level of the system.

The Hale Group has developed a proven process model that carefully dissects each level of the system that may be impacted by the technology and begins to measure the potential value (and cost) at each step. Briefly, these steps are:

1. Define the value-adding functions or features of the technology for each participant in the system.

2. Determine the value of the product as it moves through the entire system.

3. Test the hypothesis with all potentially impacted system participants.

4. Develop a market-driven introduction strategy.

Our experience has shown that technology providers who focus their efforts on areas core to their current business, or very close to it, will improve their chance of success. The process is quite doable by combining the internal expertise of the technology company with outside expertise that can provide a fresh prospective and broad view of the marketplace and can ask the tough questions.

Bruce Yergler is principal and Michael Richard is associate principal of The Hale Group Ltd., which provides strategic counsel to the food and agribusiness industry (www.halegroup.com).

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© 2007 Penton Media, Inc.