Resolving Value Proposition Dilemmas of an Agri-Tech Entrepreneur

by Dr Vijayender Nalla

Entrepreneurs that have covered distance on their value creation journey will tell you how difficult it is to get the value proposition right.

Getting the value proposition right is the most (if not only) critical component of scaling a business, and agri-tech is no exception to this. Here, we share the dilemmas of an agri-tech entrepreneur and the approach he has taken in resolving them to finalize their value proposition blueprint for scale.

By reading through these, we are sure that you can relate your dilemmass and can take away meaningful learning to get through to creating your own value proposition blueprint.

Before we come to the dilemmas, here is the context of the problem that the entrepreneur wanted to tackle:

Indian farmers method to irrigate crops lacked a measured approach. This resulted in:

1. Sub-optimal water supply to the crop affecting their yields
2. Increased agri-input costs such as fertilizers, weedicides and energy
3. Increased labor costs

The technology entrepreneur quickly realized that a sensor based approach that can auto-trigger watering by measuring the moisture content in the soil should address the above defined inefficiencies and create value (reduced inputs costs and higher income realization through increased yields). While the technical solution was made feasible by the entrepreneur and his team, two dilemmas emerged as they were trying to design their value proposition.

Dilemma One: What would be the most appropriate target segment to focus on?

While creating the solution they were working with different farmer types (farmers with 2-20 hectares of horticulture crops using different irrigation methods to cereal crops like paddy/rice). The product/solution development team understood very early that the technology solution needed for each of these target segments would be different, as was the value each of these segments would derive out of an automated solution.

With the above approach they realized that horticulture growers using drip and sprinkler irrigation (both open and protected cultivation) with 2–20 hectares would benefit and value the solution they would be able to develop. At this stage, they intensified the product development.

For the entrepreneur and their team, it would almost always be difficult to get to the right target segment, as they would have a bias towards what a solution would look like and would hence ignore interesting clues that one can receive. Too often we hear entrepreneurs saying that their solution is relevant for every farmer.

It is a big risk to leave resolving this dilemma for a later stage. The sooner you get to do it, the less expensive the product development process is.

Dilemma 2: Which competitive value drivers/attributes would the target segment care and pay for ?

A product attribute/feature becomes a value driver if it motivates the target customers to pay for the product or service, and the business has the core to continuously get better at innovating on these value drivers (in essence, the business is going to strategically invest in these value drivers).

Now this is not as easy as it sounds, as a technology solution addressing a reasonably good problem in agri-tech can connect to a lot of value drivers. Choosing value drivers that offer a competitive edge and resonate the most with the target group is not always obvious.

In the case of this specific agri-tech company, the obvious drivers were cost reduction and yield improvement. However, the team discovered that these are not real differentiators from a business continuity and community building perspective and hence defined their key value drivers as below:

1. Affordability
2. Service
3. Data analytics for better decisions

They have quickly decided to leave out the functional features of watering, savings in agri-input costs and labor costs as they were not differentiating on them with competition but made sure that affordability, service and data analytics for better decisions attributes were way ahead of where the gap majorly was. By doing so they have structured their technology solution around creating deeper and longer engagement with the customers to innovate on real needs of the customers and out compete on a continuous basis.

One point worth mentioning here is that it was very difficult for them not to include yield improvements as the value driver. They had the courage to leave it out for their inability to validate it objectively, and for not being able to help this factor improve through their sensor based innovations. (After all, yield depended on a lot of other variables including seeds, fertilizers, soil fertility, and other agronomic practices adopted by the farmer.)

At the end of this exercise they had not only resolved the value proposition dilemmas but had a rough blueprint for an objective value proposition matrix. Agribusiness Academy domain expertise and talent solutions helped them navigate through this difficult step quite smoothly.

If you are an ambitious entrepreneur at any stage of the Agri-tech, Food-tech and Urban food business, Agribusiness Academy can help you navigate through value proposition dilemmas and come to the objective value proposition matrix too.