The committed innovator: A conversation with Neal Gutterson of Corteva

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This episode of the Inside the Strategy Room podcast explores innovation in the agriculture sector. Erik Roth, leader of McKinsey’s innovation work globally, talks with Neal Gutterson, who recently retired as CTO of agricultural chemical and seed company Corteva. Gutterson explains the transformation he led following a spinoff from DowDuPont to bring together disparate R&D organizations into one cohesive engine of innovation. This is the sixth episode in our ongoing series, The Committed Innovator. It is an edited transcript of the podcast, which was originally recorded in December 2020 prior to Neal’s retirement. For more conversations on the strategy issues that matter, subscribe to the series on Apple Podcasts or Google Play.
Erik Roth: Neal, you have had a long career as both an entrepreneur and a senior executive in large companies. Can you give us a little of your background?Neal Gutterson: Sure. I am a scientist by training. It has been a while since I was a practicing scientist but I still think like one. When I finished grad school in the early 1980s, biotech was just starting in agriculture and I gravitated to that. Until six and a half years ago my career was in small, largely tech-oriented, entrepreneurial companies trying to make a difference in agriculture. From 2007 to 2014, I was CEO of Mendel Biotechnology, where we also worked on biofuels. Then I came to one of Corteva’s legacy businesses, the seed company Pioneer Hi-Bred, and later helped create Corteva from three different R&D organizations. It has been fun to go from thinking about attacking incumbents to defending an incumbent from attackers.

We are the only public company dedicated to agriculture, a pure-play ag company. We wake up every day thinking about farmers and the consumers they serve. We sell seed and crop protection products to farmers and try to make a farmer’s life better, more profitable, and more sustainable.

Erik Roth: What has been the major difference between leading a small organization and working in a big one that’s trying to innovate like a small organization?

Neal Gutterson: I think units of 100 people are the ideal size to work as a group; get much above that and it gets tough. One of the interesting things about being in a small company is that you wear a lot of hats. You are very close to fundamental strategic choices.

Another key difference is the nature of risk. When you are a large incumbent, you have so much to protect that the risk appetite is much lower than at a start-up, which does not have much downside risk. That creates a different mindset.

Erik Roth: Small companies tend to dynamically reallocate resources because they have to, while large companies struggle with that, as you alluded, because they feel they need them to protect the core business. Is it hard to get the best people to the right places in a large company?

Neal Gutterson: Yeah, and to get the capital to the right places, too. At a small company, the first CEO, who may be the founder, is probably not the right leader after a few years. Everyone around the boardroom table knows that at the start so, in a way, a small company is always thinking about the pivot, the change that has to come. This is the opposite of a large company, where efficiency and getting better at what you do are the goals.

Being adaptive is another challenge. At a big company, you think you know what the market wants and you focus on development stages and delivery. Small companies inherently strive to figure out what the market wants and so are much more open to the cycle of adapting and learning.

Big companies think they know what the market wants and focus on development. Small companies inherently strive to figure out what the market wants and so are much more open to adapting.

Erik Roth: Can you give us some context around agriculture today?

Neal Gutterson: Well, we all eat so we all have a vested interested in the food system. I believe our food system is the safest that it has ever been. It is very affordable, even in a global context. But interestingly, the average consumer is more risk-averse than 100 years ago, when you had to worry much more about where your food came from. People today have incredibly high expectations of how their food is produced. They care a lot about the agricultural system and its sustainability.

In some ways, conventional agriculture is under attack. Huge farms with thousands of animals, if they produce beef, seem wrong to people; small seems more appealing. But agriculture, even in the US, is mostly pursued on family farms. Consequently, there is a tension between what you need to do to serve a growing population and the myths some people have about how food should be produced.

Another aspect is the evolution in farmers’ expectations of companies like Corteva. Digital tools help absorb some of the complexity and assist in the decisions they make. Market demands are fundamentally changing, which is why I think a disruption may be in the offing.

Erik Roth: The core of disruption is business-model change. New economic models, usually enabled by technological advancement, allow different entrants to monetize a market in new ways. Where do you see that playing out in agriculture today?

Neal Gutterson: Thinking about new business models is critical but it is not the easiest thing for us. We think of ourselves as farmers’ trusted partner, and the direction we are going in is to help farmers make better choices—a more integrated business model that allows for more solution-based delivery.

One example is a pilot that addresses an underserved market in pasture and land management for rearing cattle. If you control weeds on your pasture, you can get a higher return on the beef or dairy, but if you have a 10,000-acre pasture, it’s hard to figure out where the problems are. Using satellite imaging, we can now analyze where the weeds are and the right time to treat them with weed-control solutions. So rather than selling a rancher a herbicide to treat the field, we are offering a service, a decision-support tool. To your earlier point, it is a business-model change based on new artificial intelligence tools that translate images of a farm into an understanding of how to improve the value of pasture.

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