By Nikhil Menon
He may be fit for 58, but Samuel R Allen, Chairman and CEO of Deere & Co, is perspiring freely as he bends over a field, cutting down green stalks of corn with a sickle. Though he maintains a smile for a photographer’s camera (with the flash being held by the farmer’s eager son), he is clearly no spring chicken.
His knees ache from squatting and he says he forgot to take his allergy medicine. But that’s no reason to slack off; Allen knows he’s got a point to prove to his team from the States and India and more importantly, the villagers sitting in the shade of a nearby tree and watching his every move. “When I started my career, I didn’t think big. But as chairman, I have to step up in all aspects and be seen as 100% committed by my team,” he says.
In the hot fields of Relmangra, 80 km north of Udaipur, the man who according to BusinessWeek magazine made $13 million in compensation in 2010, has certainly led by example. And Allen has had good reason to. In the last few years, Deere & Co, one of the world’s largest manufacturers of agricultural equipment, has revised its strategy.
The American giant has gone beyond selling machines; it is now equipped with a new vocabulary that includes terms like ‘world hunger’, ‘sustainability’ and ‘subsistence farmers’. The John Deere Foundation, the group’s corporate social responsibility arm, has a $20 million annual budget, with half the amount mandated to fight hunger and improve the lot of marginal farmers around the world.
“As a result of the need to double world food output by 2050, agriculture has become a high-growth opportunity for us. We’re focusing on how we can contribute to increasing agricultural output in a sustainable fashion,” he says. Deere & Co. hopes that its vigorous tackling of such issues, as also its focus on emerging markets in Eastern Europe and Central and South Asia, will help it double its current size to $50 billion by 2018.
Over the one week that Allen and his team of 8 managers from the company’s American office – along with 12 from India – have spent in Udaipur, they have performed a range of activities, such as cutting crops, segregating them into bundles and building a manger for the cattle. “A lot of the villagers who came to watch thought we were here just for a photo session,” chuckles Allen, adding, “But over the past week, they saw we genuinely wanted to help – though I doubt they know why.”
The real question, however, is ‘Why India?’ It all began when Dr. Suman Singh, who heads the Home Sciences department at Maharana Pratap University of Agriculture & Technology, did an award-winning project for the International Ergonomics Association called ‘Mitigating Occupational Health Hazards of Women Farmers through Educational and Technological Interventions’. The project found its way to a member of the Deere management, which directed its Pune manufacturing unit to get in touch with her. “I was overwhelmed when they said they wanted to work alongside marginal farmers here. I didn’t know if they would actually do it – but they have,” says Dr Singh.
For Deere, this project was a first. For Allen as well, this was his first time working with owners of small-plot farms. “I came here from Kazakhstan, where I met a farmer with a 1.2 million hectare farm,” he says, “Here the plot sizes tend to be a millionth of that.” And while the timing of the exercise is clearly geared towards making the October 31 close of Deere’s financial year, Allen realises he won’t be selling any equipment to the farmers. “We’re talking not about equipment (here) but trying to understand their daily lives and cropping practices. The money from the foundation is going into sickle knives and building mangers,” he explains.
Make no mistake; Deere is extremely bullish on reaping revenues from India’s growth story. In 1997, the company – a relatively late entrant in a tractor market teeming with long-time players like M&M, TAFE and New Holland – began work on a JV to start a tractor manufacturing unit at Sanaswadi in Pune. Pune is also home to the John Deere Technology Center, which Allen says has ‘design leadership for under-50 HP tractors made by Deere & Co worldwide’.
In fact, the 36 and 41 HP ‘Krish’ tractor that was designed in India has become one of its best models in the country. Deere exports tractors from India to 70 countries today, including the US. The company that has strong American roots says that the ‘Made in India’ tag doesn’t make a difference to its buyers. “If you have first class design and facility and you teach people then you’re going to get a first class product- regardless where you make it,” Allen says.
One of Deere’s key strategies going forward is the establishment of a financial services company in India. The group already has a large financial services division with a $28 billion loan portfolio and the Indian venture will support dealers and customers in buying John Deere agricultural equipment. “Since we didn’t find the right partner, we decided to go it alone. The plan is to hit the ground by spring of 2012,” reveals Allen. Besides setting up a new tractor manufacturing unit to cope with demand, Deere also has big plans for John Deere Water, its Vadodara-based irrigation company, and a new combine-manufacturing facility in Punjab. Its long-dormant construction vehicle manufacturing JV with Ashok Leyland is ‘ready to go into production’ as well.
“The reason we’re investing here is not just the cost – there are countries cheaper to operate in. But the caliber of talent we can acquire here is relatively much better.” Allen, who, over his 36 years with Deere & Co has also been in charge of Human Resources, says that the company is learning to deal with its new, multicultural avatar. “If we’re going to double sales by 2018, a lot of that will be outside the US market, in developing markets. Our management team has to look like and represent those areas in the world. So we’re focused on developing talent in India and other markets,” he says. The main talent he looks for in a potential employee? The ability to lead change. “Change is very rapid today. Some can adapt and help others see it, while others become inflexible in their ways. We want the first kind to work with us,” he says.
As he goes back to his piece of sun-baked earth in the pastoral surroundings of Relmangra, the ninth chairman in Deere’s 170-year history is probably unaware that he is leading a significant bit of the change the company today finds itself going through.
(The author was in Udaipur/Relmangra at the invitation of Deere & Co)