The Top Things I've Learned from 25 Years of TEPAP presented by Danny Klinefelter at FCS Financial Commercial Farmer Symposium.

1. The Top Things I’ve
Learned from 25 Years
of TEPAP Participants
Danny Klinefelter
Honor Professor, Regents Fellow
and Extension Economist
Texas A&M AgriLife Extension
Texas A&M University

2. It is an economic reality that for your
business to succeed and continue
successfully beyond you,
management must learn, adapt and
continuously improve at the rate set
by the leading edge of the
competition and not by your comfort
zone.

3. The Top Things I’ve Learned in
25 Years of TEPAP
1. There are four patterns that consistently emerge when you look at the most successful
managers.
O They anticipate and adapt to the changing needs of their markets. Recognize the future
will always belong to those who see the possibilities before they become obvious to the
average producer.
O They are open to exploring new ideas and considering different points of view.
O They operate more as resource managers than as producers.
O They recognize the importance of networking and developing alliances across the value
chain.

4. The Top Things I’ve Learned in
25 Years of TEPAP
2. The importance of communication.
Peter Drucker said that 60 percent of all management problems are communication problems.
Between managers, between management and employees, between family members (inside and
outside the business), between current CEO - successor candidates - the rest of the team.
Communication problems stems from several common behaviors: secrecy, when someone can’t
admit being wrong, dictatorship, unresolved conflict and unfair fighting. Employees and family
members need to know clearly and on a regular basis:
O What are they expected to do and how?
O Why are they doing it?
O How are they doing?
O How can they improve?
O Where is the business headed, i.e., vision?
O How does it plan to get there?
O What is their role?
O What’s in it for them?
If a leader can’t get a message across clearly and motivate others to act on it then having a
message doesn’t matter.

5. The Top Things I’ve Learned in
25 Years of TEPAP
3. The best managers are strategic managers.
Strategic management is the ability to anticipate, adapt to, drive (create) and
capitalize on change. The only truly sustainable competitive advantage is the
ability to learn and adapt faster than your competition. Therefore, the most
successful businesses are learning organizations. This involves recognizing that
someone, somewhere (often outside agriculture) has a better way of doing
things and everyone in the business needs to be driven to find it, learn it, adapt
it, and continually improve on it. That is why the best are intentional
networkers, inside and outside agriculture. The objective isn’t just to meet
people and make contacts, but to learn. It’s why they see the advantages of
peer advisory groups, TEPAP, AAPEX and Top Producer/DTN/Farm Futures
conferences. The future will always belong to those who see the possibilities
before the average producer. This requires being open to exploring need ideas
and considering different points of view, even those that may be discomforting
or conflict with your basic beliefs and biases in terms of how you think things
should be. Each of us see things through filters. Their objective is to make sure
yours aren’t creating too many blind spots.

6. The Top Things I’ve Learned in
25 Years of TEPAP
4. The Importance of Recognizing and Acknowledging the Contributions of the
People who Work for You
They’re moved past the point of view that employees are just hired hands whose
job is just to do what they’re told. They recognize the strength of any
organization is its people. The best team is made up of people with different
skills who don’t always think alike but have learned to work together to make
the whole greater than the sum of its parts. As Jim Collins said in Good to Great,
the best businesses get the right people on the bus, in the right seats and the
wrong people off the bus.
5. The Importance of Seeing Change and Challenges as Opportunities, and
voiding the Victim Mentality
Everyone has problems. The best learn from them, make adjustments and
move on. They don’t get bogged down in the coffee shop syndrome of self pity,
complaining or blaming someone else for their problems. They have learned
that problems and change create opportunities for those who figure out how to
deal with them and are prepared to act. Mistakes are seen as learning
opportunities. The difficulty doesn’t lie so much in developing new ideas as it
does in escaping from the old ones.

7. The Top Things I’ve Learned in
25 Years of TEPAP
6. The main difference between the top 10 percent
and rest of the top 25 percent is their timing.
This is in terms of when to enter, expand, cut back, or
get out and redeploy; whether it’s an investment, a
marketing decision or a business activity. The best
organizations spend as much time analyzing what
they need to stop doing as they do evaluating new
opportunities. Unfortunately, the average producer
tends to change or act only when they feel the heat,
rather than because they see the light.

8. The Top Things I’ve Learned in
25 Years of TEPAP
7. The Importance of Operating in a Continuous Improvement Mode
Continuous improvement requires implementing management systems,
mapping (understanding) processes, developing standard operating
procedures (SOPs), having appropriate incentives, delegating responsibility
and authority, and demanding accountability. One of the biggest problems
most people have is implementation, follow through and follow up. I’ve
observed that people can go to conferences and schools like TEPAP and
come away with a lot of ideas, but never act on them. It’s one of the
reasons I’ve become such a strong proponent of peer advisory groups.
They offer encouragement, increase accountability, help overcome
implementation problems, identify alternatives, and not only provide good
ideas but help weed out the bad ones. Peer advisory groups also help in
terms of learning from mistakes and successes, both from your own
experience but also those of other members of the group. Most success
comes from continuously looking for ways to do 20 things 1 percent better
than seeking ways to do 1 thing 100 percent better.

9. The Top Things I’ve Learned in
25 Years of TEPAP
8. The Importance of Understanding Macro Issues, Domestic and Global, and Their Potential Impact
on the Business
This includes economic, political, social, cultural and weather issues. They’re also interested in
identifying and understanding leading indicators that can help them spot changes that are likely to
occur in time to react. They’ve also learned that most major changes occur not just because of one
thing but as the result of the convergence of several forces.
9. Most College Undergraduates are Not Taking or Being Taught Many of the Subjects That Are Going
to be Important after they Graduate
O Human resource management and development
O Operations management and process improvement
O Alternative business arrangements
O Entrepreneurship
O Macro-domestic and global (geo-politics)
O How the political process actually works and the ability to separate reality from rhetoric
O Practical cost/managerial accounting
O Negotiation skills
O Risk management strategies and decision tools
O Creative thinking and innovation

10. The Top Things I’ve Learned in
25 Years of TEPAP
10. Everyone exists in four states of knowledge:
O What they know they know
O What they know they don’t know
O What they don’t know they don’t know
O What they think they know that just isn’t so
“Human beings, who are almost unique in have the ability to learn from the experiences
of others, are also remarkable for their apparent disinclination to do so.” Douglas Adams
quote.
The best managers tend to be more aware of their strengths and weaknesses, and work
harder at identifying, filling in or compensating for the gaps. They try to eliminate biases
and blind spots. Many are members of peer advisory groups.
11. The Importance of “what if” scenarios and developing contingency plans.
They think about what could happen and what they would do if it did. Just like those
most successful coaches and generals. They don’t limit themselves to most likely, best
case and worst case scenarios. This process forms the basis for evaluating risk
management options so that their risk management strategy is more calculated. Being
prepared and having options is half the battle.

11. The Top Things I’ve Learned in
25 Years of TEPAP
12. The need to spend more time on monitoring, analysis and controls.
Their objective is to identify causes so they’re not treating symptoms, to
correct problems before they grow, to capitalize on windows of
opportunity and to adjust future plans in light of new information and
changes in the basis for their initial assumptions. Monitoring and controls
also serve to reduce variability in quantity, quality and timing. They also
seek out ways to use technology to gather information real time and to
integrate information from different sources. The objective is to identify
better metrics, cause and effect relationships, and more effective use of
information.
The best managers always used two analytical skills in identifying causes
and solving problems. The first is perspective - they look at
interrelationships and multiple frames of reference. Second, they always
look for the heart of the issue. They’ve learned to rely on their gut, but
they don’t jump to conclusions, because they’ve learned that every
complex problem has at least one solution which is simple, obvious and
wrong.

12. The Top Things I’ve Learned in
25 Years of TEPAP
13. The importance of prioritizing their time, effort, dollars and
priorities.
Everyone is familiar with the 80:20 rule, but few consciously and
systematically apply it. Most people never achieve their long term
objectives because they are usually doing second things first, e.g., what
they like to do, know how to do, can be completed quickly, or is most
urgent. The best have learned not just to prioritize, but to prioritize
priorities, to delegate, to outsource or to form alliances.
14. The Importance of Being a Successful Negotiator and
Understanding What Win:Win Actually Means
The ability to negotiate affects almost every facet of a business,
whether its dealing with suppliers, buyers, employees, or working with
family members. The success of negotiations affects prices paid and
received, the acquisition of resources, relationships and terms of
arrangements.

13. The Top Things I’ve Learned in
25 Years of TEPAP
15. Every successful operator I’ve met is growth oriented; but, they define what growth and
success are.
O Technology and economies of scale
O Competitive - driven to be the best
O Ability to bid for resources
O Ability to access capital and manage people
O The ability to differentiate and brand themselves and their businesses.
Growth isn’t just about size, it is just as much about growing knowledge and adopting best
management practices. Not all large operators are successful. Size alone doesn’t denote success.
But, from a number’s standpoint more have exited agriculture because of insufficient size to afford
or attract a successor, lack of management ability in areas of emerging importance, and
obsolescence.
16. The unwillingness or inability to work with others, including family, has and will be the
downfall of many producers.
In order to remain independent will increasingly require interdependence. Agriculture is moving
toward coordinated supply chains and qualified suppliers. Canada’s study of leading farmers found
that 66 percent of the top 10 percent were involved in a formal relationship with processors
and/or retailers, while only 13 percent of all farmers were doing so. The same is true in the U.S.

14. The Top Things I’ve Learned in
25 Years of TEPAP
17. The most satisfied and successful enjoy and take pride in developing the business’s future
leaders.
Succession is one of the key responsibilities of leadership. Yet it is one that the fewest leaders
seemed to have learned. Many businesses have flourished under one manager and floundered or
failed under the next because the new management was not properly prepared or the wrong person
was selected as the next CEO.
Family farms that have been successful over time have several common characteristics. First, they
don’t take the interests and the desires of the next generation for granted. Too many business
failures and personal tragedies have occurred because the next generation come into the business or
assumed management responsibility simply to avoid disappointing their parents, a path of least
resistance, or to avoid being disinherited.
Second, these businesses have established a clear basis for successor selection. This includes the
future needs of the business, the type and style of management needed, the necessary skills and
attributes, and a performance evaluation process which provides the ongoing feedback and
assessment needed.
Finally, they develop a plan for what the current CEO will do next and what the opportunities will
be for those not selected to assume the top management role. Without something meaningful to go
to, many incumbent managers either can’t or won’t leave their position. It’s also important that the
business doesn’t lose the talents and experience of unsuccessful successor candidates, that
relationship problems not develop, and that those who stay don’t lose their motivation.

15. The Top Things I’ve Learned in
25 Years of TEPAP
18. The best managers reject the status quo
They know that someone, somewhere has a better idea or way of
doing things. This may mean totally changing the direction of their
business, i.e., moving from producing standard commodities to
producing differentiated products, building total traceability
systems, adopting and building documentation/verification of
sustainability guidelines/practices, going from open market
production to contract production or for a differentiated niche
market. They have learned to face reality as it is, not as it was or
they wish it to be. They also know that any differentiated product
with a market premium will be commoditized if enough people
copy what they are doing and the market segment becomes
saturated.

16. Wittman Consulting Survey of TEPAP
Graduates 3 Years After Completing Program
Administrative and Personnel Management Proficiencies Pre- Post-TEPAP
Mission, vision and core values defines 8% 63%
History of business documented 9% 53%
Goals and objectives defined 9% 59%
Operating plans are prepared & put into budget 20% 70%
Strategic plans are developed for the business 0% 43%
Responsibilities are defined; job descriptions are written 3% 37%
Personnel policies written and communicated 8% 40%
Standard operating procedures documented 3% 18%
Compensation approach matches pay to market rates 15% 65%
Performance appraisals are done for key employees 3% 35%
Regular meetings held for investors, managers, and spouses 9% 61%
Technical tools used to access information 14% 76%
Critical agreements documented (buyouts, wills, etc.) 8% 54%

17. Financial Management Proficiencies Pre- Post-TEPAP
Financial records circulated to owners & employees 24% 60%
Balance sheets are prepared annually on fiscal year-end 92% 100%
Balance sheets include cost, market value and deferred tax 31% 73%
Income statements are done on a tax & accrual basis 39% 86%
Audits systems assure financial statement integrity 26% 84%
Enterprise profitability & cost centers tracked annually 26% 68%
Cashflow budgets prepared, variances analyzed regularly 21% 58%
Field and livestock production records maintained 47% 74%
Ratio Analysis performed at least annually 11% 44%
Policies for investment/withdrawal of capital in place 14% 25%
Policy exist for dividing earnings among owners & management 26% 50%
Capital investment analysis is used to optimize decisions 21% 59%
Partial budgeting analysis tools used for strategic shifts 26% 59%

18. Marketing and Risk Management Proficiencies Pre- Post-TEPAP
Products to market are projected in advance of production 53% 86%
Marketing ties to identified cost of production & cashflow 26% 68%
Diverse marketing tools used (futures, contracting, etc.) 53% 83%
Crop insurance utilizes balance of all-risk programs 76% 86%
Liability insurance comprehensively covers owners, management 71% 97%