“We always discuss a lot about what to do, but little about how to do it, and almost nothing about why. The purpose of our work as businesspeople is to create wellbeing with dignity. That means developing people's abilities so they can be happy, healthy and feel solidarity.”
The words of some early 20th century paternalist capitalist? No - part of a speech given last month by Gustavo Grobocopatel, the CEO of an amazing, innovative Argentinian agricultural conglomerate called Los Grobo.
Grobocopatel has been described as a “philosopher-farmer” - and more often “the king of soya” for running an agricultural firm that specialises in the crop which has revenues of $1 billion a year. He is also head of a brilliant family business.
The story began in the early 20th century when Abraham Grobocopatel fled persecution in Bessarabia (now Moldova) and emigrated to Argentina. There his family were gifted 15 hectares of land by an aristocrat sympathetic to persecuted Jews.
The family continued farming and one of Abraham’s great-grandsons, 23-year-old Gustavo, had just graduated as an agricultural engineer when he came to work for his father’s then-3,500 acre farm in 1984. A year later his sister Andrea, with a degree in economics, joined, as did Gustavo’s wife Paula Marra, who he met at university.
As described in a Harvard Business School case-study about Los Grobo, Gustavo quickly initiated his first innovation - no-till farming, which was well-suited to the region’s soil. It worked extremely well and by 1994 they were farming 75,000 hectares under the system (it is now used on 70% of Argentina’s farmland). He also embraced genetically modified seeds.
More profound innovation was to come. His reading of management guru Peter Drucker led Gustavo to realise that farmers could be knowledge workers. A second revelation came from reading on the “theory of the firm” - why do businesses exist, and what should they do?
Gustavo decided that many things Los Grobo wanted to do could be outsourced - they now lease all land and machinery - and that the firm should sit at the centre of an extended network of partners. Its job, put simply, is to ensure quality: it was the first agricultural firm to be ISO 9001 certified, meaning that its quality management systems are recognised by international standards.
One of Los Grobo’s most extraordinary innovations is GroboSoft, a software programme that lets farmer input their GPS coordinates and recommends what seeds, fertiliser and other chemicals they should use. As well as farming, the company also provides consultancy and logistics, sells seeds, mills grain and offers hedging instruments to farmers for managing risk. Made wary by Argentina’s economic problems in the 1990s, in the 2000s Los Grobo expanded into Brazil and Uruguay, although it has since left Brazil.
In the past three years Los Grobo has reduced the amount of land it farms in Argentina from 120,000 to 50,000 hectares. High taxation and regulation are an issue, but this is also about embracing technology even more: it recently started a joint venture with a satellite company whose information, Gustavo hopes, can help farmers optimise seed density and fertiliser use and increase yields by 30%.
Gustavo is evangelistic about technology, and no romantic about nature. “A plant is a factory without a chimney,” he said in a recent Financial Times interview. “It doesn’t emit carbon dioxide but it consumes it; it is a factory that uses the light of the sun, or renewable energy; it is a factory which is in the countryside, reversing migration to cities back to the countryside; it is a clean factory that resolves problems of food security, the environment, geopolitics and rural poverty.”
His bird’s-eye view of agriculture is down to his being from a long line of farmers. “To do agriculture today one needs to understand seeds, agrochemicals, finance, risk, talent, knowledge training; that is to say, today it is more complex than our grandparents’ model,” he has said. Gustavo admits his father - who saw success in terms of hectares owned - was not entirely happy for “the first 15 years” of his revolution.
Gustavo also has views about the interaction of business and the state. Evidently influenced by his own business's fondness for using networks, he says that politicians can no longer expect to create policies without businesspeople. “A leader is no longer an enlightened person who understands where we are going, who communicates and thinks in a strategic way, but a person who must work with others because he doesn’t understand the whole,” he says.
Coming from someone who has found so much success with the idea, it's more than mere utopianism.