Flourish with flexibility - The Dutch Horticulture in 2030

2012 – INSCOPE – Research for Innovation, Erasmus University was approached by Rabobank to research the Dutch horticulture industry and its recent and upcoming developments. The research led by Prof. dr. Henk Volberda also analyzed the degree of organizational flexibility of the horticulture companies in the industry to investigate whether the companies addressed the environmental turbulence adequately. 880 horticulture companies participated in the set out research survey and were further categorized in eight subsectors, including: fruit, open-ground vegetables, greenhouse vegetables, mushrooms, bulbs, cut flowers, pot and beddingplants and tree nursery.

In the research report several different environments are described and distinguished based on the degree of environmental turbulence, the industry trends and developments. Consequently the most adequate organizational structures for companies are presented by the researchers to appropriately address the industry characteristics in terms of dynamism, complexity and predictability. For instance, it is suggested by the researchers that a plan- and routine-based organizational structure is more appropriate in a relatively stable environment. Contrarily, a more flexible structure is deemed to perform more optimally in a hyper turbulent environment. The research findings show that the majority of the companies in the horticulture do not adequately adapt their organization to its environment. Only the sub-sector fruit showed an relatively appropriate degree of organizational flexibility according to the research report. The sub-sectors greenhouse vegetables, cut flowers, pot and bedding plants, bulbs and mushrooms operate in a relatively turbulent environment, but have a relatively rigid organization whereas a flexible organization is suggested to be more fitting by the researchers. Contrarily a more rigid organization is suggested for the sub-sectors open-ground vegetables and tree nursery due to the experienced turbulence in their environment. The research report therefore offers elaborate recommendations on how several dimensions of social innovation can increase the fit between the company’s organizational flexibility and their environment. 

Adjusting a rigid organization to a hyperturbulent environment

Hyperturbulent environments are characterised by strong competiveness and frequent though unpredictable disruptions. The reseach suggests that companies with a high degree of organizational flexibility are the most adequate in such an environment. It is for instance suggested by the researchers that people from disciplines and cultures can find each other more easily in a flexible organization. Furthermore, such companies tend to share more knowledge and be more open and entrepreneurial as well. Ultimately this results in more development of new ideas and an increase in temporary alliances that can enhance radical innovation (the exploration of new clients and/or markets) within a company. Moreover, such an organization enhances the employees’ opportunities to actively network within and outside the company or even become a specialist with an extensive knowledge base. 

As mentioned earlier however, not all companies aligned their organization adequately with the enviroment they are operating in according to the research findings. Consequently, the researchers recommend that the sub-sectors greenhouse vegetables, cut flowers, pot and bedding plants, bubls and mushrooms increase their organizational flexibility to align better with the experienced hyperturbulent environment. Companies can, for example, increase their dynamic capabilities by reducing management layers, implementing self-managing teams, increasing transparency or stimulaiting creativity and knowledge-sharing. Initiating  such measures enhances the employee’s sense of responsiblity and trust, ultimately leading to a better overall working environment. By stimulating knowledge-sharing more internal and external can be absorbed  among colleagues, value chain partners, knowledge institutes and consumers. Due to the obtained information from all the different perspectives, a company can anticipate better on the hyper turbulent developments in the industry, and if necessary, innovate promptly.

In addition to increasing the company’s organizational flexibility, it is suggested by the researchers that the management of companies in the mushrooms sub-sector become more flexible as well. That is, to break with status quo as the management of a company and stimulating employees to think more ‘outside-the-box’ and become less afraid of change. The management can broaden their perspectives and knowledge-base, and hence, realize more commercially succesful innovations by optimalizing the knowledge-sharing internally and externally or by outsouring certain activities that can be done more effectively by specialists.

Stable environment

According to the research, changes occur rather gradually in a relatively stable environment. In such environments it is therefore more optimal to have a more rigid, systematical, organization. The competition is based on adding value and not just discounts. New product-market combinations can be realized by close cooperation and frequent dialogues with each other in the industry, instead of seeing eah other as potential competitors. By setting up a franchise-format together for instance, companies can collectively come up with new concepts and the production and sales of these new innovations. Due to  this close cooperation economies of scale and scope can be realized as each partners can focus on their own specific responsibility. Also,  arrangements can be made with the partners in the value chain on what and how to cultivate, against what price. By cooperating with international partners it can also be ensured that the offered product become less season dependent. Furthermore, by hiring employees from abroad the shortage of laborers can be reduced while the knowledge-base can be broadened at the same time. Moreover, a concensus culture prevails in such organizations, as well as transparency, a multilateral meeting structures and horizontal and vertical partnerships. A potential downside of such an organization is however the lengthy decision-making process that comes with a consensus-culture. Issues are solved relatively late due to the extensive discussions before an agreement can be reached and a solution is put on the table. It is also often the case that only a few entrepreneurs take lead and that the majority just follows their lead without being very pro-active themself. Innovation in such a rigid companies is therefore being realized slowly but gradually. 

Adjusting a flexible organization to a stable environment

Despite the fact that the companies in sub-sector fruit is already adequately aligned their organizational flexibilty with their environment according to the research findings. The researchers recommend to optimilize their capabilities even further by focussing on profit enhancements. That is for instance by scrutinizing their operations more extensively and find the most optimal economies of scale. 

Lastly, the research report also indicates that the companies in the sub-sectors open-ground vegetables and tree nursery are inefficiently flexible seeing the enviroment they operate in. It is therefore recommended for the companies in these two sub-sectors to focus less on innovation and flexibility investments, and put more emphasis on standardization and efficiency. Not only can cost reductions realized by routines, process and risk management for example, it can also lead to more steady and balanced organization. 

Reference

Volberda, H.W. & Van der Weerdt, N.P., (2012), Flourish with flexibility – The Dutch Horticulture in 2030, Rabobank Nederland. The research report (pdf) is enclosed in the attachment. [In Dutch] 

Theme: flexible organization

Industry: Agrofood

Source type: Research report

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