A little over a year ago, John Deere went through one of the most significant reorganizations the company has seen in years. Not only did it involve reevaluating how Deere unlocks value for its customers, but it also examined how it viewed those customers.

“Our focus is to help drive profitable, sustainable operations, enabling growers to pass their operations on to the next generation,” says Joel Dawson, manager of production and precision ag marketing at John Deere. “We needed to take a more comprehensive look at how we prioritize our work and the products we develop. At the same time, we were focused on revolutionizing the industry by bringing new technologies to market more rapidly.”

Dawson shares how the company’s new smart industrial organizational structure, which centers around production systems, technology stack, and lifecycle solutions, is purposely aimed at helping customers easily adopt technology that is right for their operation.

SF: We’ve been talking about the challenges of adopting technology for several years. Why is now the right time to put a more concerted effort into helping farmers move along faster in that adoption journey?

JD: On a macro level, it’s all about the expectations we have on global population. It’s going to increase to 10 billion by 2050, and it means a 60% to 70% greater demand for food. We need to feed that growing world. Technology is the way to get there. It’s the premise to all of this. We must be able to increase yield. We must be able to better manage costs and inputs, and we need to do it on the same or less arable land. Our mission in this space is focused on the economic and environmental sustainability of the grower.

Look at what’s happened over time with technology adoption. I’ll start with AutoTrac, which was introduced in the market about 2002. For guidance to reach a majority, or a greater than 50% adoption, it took 10 years. It is very tangible because you know you save time, reduce overlap, and feel better at the end of the day. 

In 2018, we launched combine automation. While that technology improves yield and the effectiveness of the operator, it’s more intangible. You don’ necessarily see it visually in the grain tank. It’s quantified in the user interface. Yet, as soon as we opened the order program for combine automation, we saw a large majority adopt it.

In around 15 years, we’ve seen growers’ willingness to adopt increase exponentially. We think there’s a need from a feed the world perspective, as well as a ripe opportunity from a grower adoption perspective, to bring these types of innovations to bare, and make a big difference for our higher purpose.

SF: Is Deere focused more on optimizing the existing technology farmers already have or is it about bringing them along in the journey with new technologies like See & Spray Ultimate?

JD: I would categorize it into a couple of buckets. We want to ensure farmers utilize the technology they currently have invested in effectively, which doesn’t always happen. Some operators are all over technology and understand how to use it. Others are indifferent about it.

As we look at the potential go-to-market models for more advanced technology, we must evaluate what will rapidly change and add different levels of value to an operation. For example, See & Spray Ultimate, which is essentially facial recognition for weeds at 12 mph across the field, is using image models that get updated regularly.

The first year you operate that machine, it executes just as we’ve designed it to execute with the efficacy we’ve designed in. When you operate that machine next year, it will have the experience from the other machines in the market the prior year. It will be able to build upon all its learnings and add additional incremental value in the coming year. How do we best position for that? How do we best position for the investments that will need to be made along the way to update and keep things current to ensure the capabilities continue to perform well?

SF: What has changed in the way John Deere brings new products to market?

JD: In the past, we would bring a massive offering to the market and scale immediately. However, it caused us to be a little slower in our development because we needed to be prepared to scale.

When we launch a new product now, it’s more iterative. The purpose of working iteratively is to allow more flexibility for changes. We can bring a high-value solution to the field, understand it with a customer, and then scale it from there. 

Our recent acquisitions, like Bear Flag Robotics and Blue River Technology, are good examples of those iterative launches working well. It has helped us improve the speed of decision and thinking about how we prioritize the greatest value delivered to the customer differently than we were able to do before. 

SF: You mention bringing products to market faster. How fast is fast enough?

JD: We never get fast enough, but I’d say you look at a traditional development program that would have taken place in the past. It’s certainly a multiyear development effort, especially when you’re looking at very large projects like our recently introduced X9 combine. It was a complete revolution in capacity and efficiency. We spent a lot of time and focus over many years bringing that to market.

Some of the newer offerings that create what I call “grower economic headroom” are products we can leverage the current foundation, that has been in place in some cases for 20 years, to add value quickly. We do that by looking at grower economic headroom, and we figure out what the impact is to the grower of a potential product or solution we want to bring to market.

We identify how many dollars per acre we can deliver, how much cost savings we can deliver, or how much yield improvement we can deliver. We then prioritize projects based on that. Rather than look at it as a single job, our smart industrial approach enables us to look at it across the entire production system. When we step back and look at the whole process, we can make a bigger impact.

SF: Talk about what the process involves when prioritizing ideas.

JD: We must first understand the impact the idea will have on the customer and their economic headroom. We also look at the impact to Deere, strategically and from a profitability perspective, as well as how it will affect our dealers.

We then work from the top down on our R&D budget, prioritizing what will have the greatest impact and then get our teams to start the development process. It’s a process that begins and ends with the farmer. It doesn't happen inside the four walls of Deere in a vacuum. It's done in the field with customers as we evaluate projects and prioritize them. It then ends with the farmer getting the equipment.

SF: What are the top priorities on the list?

JD: There have been a lot of reveals and product launches recently. We have refreshed all our equipment over the last 24 months. An all-new lineup, with technology embedded within those machines. 

Our most recent reveal of an autonomous tractor using machine learning technology is a big down payment on where we're going with autonomy. We will continue to expand that offering.

Last year we introduced See & Spray Select. This year we came right behind it with See & Spray Ultimate, a highly precise computer vision, machine-learning-enabled sprayer. It is one of the biggest revolutions our industry has seen in a long time. You can expect to see more of that.

We're also going to continue to bring cutting edge technology to market rapidly, leveraging the foundation of what is already in the market. 

For example, the autonomous tillage machine uses AR currently in the market as well as our StarFire 2 RTK guidance system, our displays, our receivers, and our auto trac. We're essentially taking all those products broadly adopted at a very high level and adding a sensor package and machine learning that will allow us to essentially remove the operator from the cab. A year ago, that same machine was basically driving itself but had someone in the cab. Automation is at a point to where we can make the final step toward autonomy. It’s our down payment on autonomy. As we look to the future, we're going to go there in a big way.

SF: When it comes to technology-enabled solutions, what can farmers expect to see in the coming years?

JD: I think you're going to see some changes on advanced technologies in the way we go to market. We're currently investigating and testing how we do that with growers in U.S. and Canada, as well as areas around the globe. We’re really trying to understand how much incremental value is being created. What do we need to do differently to ensure we come to market with broad and rapid adoption, not just for large farmers, but for all farmers? How do we remove the barriers to entry and ensure it's available to more growers, so technology can be leveraged on more acres?

I'll give you a couple of examples and what to expect. A few years ago, we brought our Gen 4 displays into the market. It's the primary display that's executing precision ag today in the bulk of John Deere equipment as well as many other colors of equipment. This universal model was an initial investment in hardware, and then it had a recurring licensing fee that has been around for quite some time. What we are trying to do is add incremental value each year with rapid technology integration efforts, and you are going to see more of our display technology move into a model like that.

I also think you'll see it in the See & Spray space and eventually at some level in the automation space. Should it be as we've done in the past, which is pretty much everything is transacted on a per machine or a time-based perspective? Or should it be done per acre or per pass? Should it be different for each crop? Where is the most value added? What would lower those barriers to entry and ensure the technology delivers more value to an operation? We’re in a learning mode. I think the next generation of displays will continue its trajectory while the See & Spray and autonomy go to market will likely have a little bit different look.

SF: What will the business model be for technology like See & Spray? 

JD: Today, you can buy, rent, or lease a sprayer and you will continue to be able to do that in the future as well.

What I expect to see more of in the future is a similar investment in equipment and hardware. This is a very sophisticated machine, which means they are not cheap machines. You'll have the opportunity to continue to buy those in a transactional way as we have in the past. Where I think we'll see changes is in that recurring license opportunity (subscription) that provide access to advanced capabilities. Because every field is unique, you may choose to use those capabilities on many acres, or you may choose not to. You may have a certain crop where there is more significant value in having that capability, or you may have differing levels of weed pressure and want to take a different approach. 

We're testing and working with growers to understand how best to position it, how best to price it, and how they want to transact or pay for it over time. Our customers are not shy, and they have a ton of innovative ideas. We've been listening, modifying as we go, and feel pretty good about how it's progressing.

SF: What are some of the new ways Deere is working with a farmer to help him calculate ROI, which can be difficult with some of these technologies? 

JD: A lot of it comes down to how well you understand your inputs. How well do you understand your variables? How well can you model that with accurate sensing? There are a couple of ways we're looking at it. One is our work in the digital space with Operations Center and creating some financial interfaces for third party APIs, as well as some bureau offerings. It’s that macro level of farm profitability. 

When it comes to understanding what is going on with a specific job, we're building into the programs we're testing with farmers the ability to quantify that benefit. As we come to market with new offerings, our marketing materials are going to demonstrate that specific economic outcome-based quantified benefit. You'll see that with See & Spray Ultimate and the calculators we will bring to market. 

With its efficiency, fuel savings, and capacity, customers saw it with our X9 combine, along with supporting third party data that validates our assumptions as we went through development. That study is probably the best example of a side-by-side comparison that validates the test data we had. It resonates with customers when they can see an independent third party validate results from an OEM.

As adoption continues to grow, once we hit a super majority or a good portion of customers adopting a technology, we move it into base equipment. In the past, you had to try to piece it together from a variety of offerings. The more we bake in technology, the more it helps growers experience the benefits across the entire production system. We can then take that view and figure out where we can add value from one step to the next. The more value we deliver to the grower the higher level of adoption we’ll see in the field, which has been playing out well for us.

SF: How does John Deere gauge success?

JD: We look at it in a few ways. First is ensuring growers have the results we designed the equipment and technology to deliver. Because the customer is our primary focus, that's the table stakes. If the equipment or technology can't do the job you signed up for it to do at the level of performance you signed up to do it, then we didn't earn the right for the next sale.

We also focus on our performance metrics in the market – how are we doing from a market share perspective? What is the technology take rate on this equipment? What is the renewal rate for those seeing value from our advanced recurring licenses and choosing to renew that each year? Those are very high. 

I remember putting AutoTrac in a grower's planter years ago. He operated with it for a day or two. When I tried to take it away, there was no way he was letting it go.

The same thing is true with automation technology. Automation is where you'll see agriculture go in the short term. It's an effort to get to autonomy. While the two words automation and autonomy may sound the same, before you can get to autonomy, you must automate everything a human does in a machine. That's where I think high adoption take rates, the grower utilization of the technology, is paving the way for the future in ag in a way we've never seen before.

SF: Are there any expectations on adoption rate for newer technologies like See & Spray Ultimate?

JD: We don't have any specific goals, but I would expect you're going to see a very iterative approach. You're going to see volumes out in the field this coming year that will be substantial. Then we'll continue to grow those products over time. I would anticipate, though, that it will be a rapidly adopted offering if we get the business model and the value proposition right. When we do those two things right, we also win on the equipment with the grower, our digital interface, and dealer support, it will take off. If any one of those things are out of balance, we'll know about it in very short order, and we will adjust. When it comes to sprayers, we see it as a way to improve sustainability of the application. A 70% reduction in overall chemical is substantial.

We are bullish on where this technology will go. Today, it's around weeds but in the future computer vision, machine learning capabilities will move into other applications like fungicide as well as insect capabilities.

SF: Look five to 10 years down the road. What’s next for John Deere?

JD: I think you'll continue to see us bring technology to market very quickly and iterate with customers. I also think you will see the automation and autonomy journey continue when it’s the right application, like tillage. You'll continue to see investments in planter automation, sprayer automation, harvesting automation, and tractors, which are essentially the Swiss Army knives of the farm.

Good data, documentation, farm management and planning are going to be critical steps along the way, because it’s all necessary to get to that autonomous end game. We know it may not be the right end game for everything, but when it is, that’s where we will head.

© 2022 Meredith Corporation. All Rights Reserved.

All https://www.barchart.com/solutions/ is provided by Barchart Solutions.

Futures: at least 10 minute delayed. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see https://www.barchart.com/solutions/terms.