“Advocacy versus Inquiry” GPVEC November 6, 2008 Clay Center, NE

1. “Advocacy versus Inquiry” GPVECNovember 6, 2008Clay Center, NE Barry Dunn Executive Director King Ranch Institute of Ranch Management Texas A&M Kingsville

2. “Advocacy vs. Inquiry” • Examples: • Decline in “Choice” cattle caused by X, Y, and Z! • Ethanol is good energy policy! • Inter-enterprise transfers should be at market because of opportunity cost. • Shouldn’t calve in the ________. • Genomics are better than EPD’s. • Manure samples are a good predictor of diet quality and can be used in determining supplementation program • ? • ?

3. “Advocacy vs. Inquiry” • Where we see it: • Advocating Status Quo • Enterprise analysis vs. managerial accounting • Production systems • Advocating self interest • $ • Status • Career • Misuse of information • Stupidity • Negligence • Strategic

4. “Advocacy vs. Inquiry” • Insidious problem in management! • Why: • Nature of who we are: • Bold • Decisive • Information age: • Lots of it! • Wide skill set needed to interpret. • Reward systems value decisive leaders who can support decision with data

5. “Advocacy vs. Inquiry”Story #1 Factors that affect % of choice cattle in the market place.

12. “Advocacy vs. Inquiry”Problem #1 Inadequate understanding of statistics!

13. “Advocacy vs. Inquiry”Story #2 I know the best time to calve the cows!

21. “Advocacy vs. Inquiry”Problem #2 We don’t analyze deep enough!

22. “Advocacy vs. Inquiry”Story #3 Cow Efficiency: Big cows are less efficient than little cows!

23. Cow Efficiency High Bio Prod Cows Efficiency Low Bio Prod Cows Energy Jenkins and Ferrill, JAS 1993

24. Problem #3 Don’t know and understand the literature!

25. Story #4 Cow productivity is increasing! My cow’s calves weaning weights are going up!

26. Reality Check! • Avg. Weaning Weights of South Dakota Calves: • Data collected from 497 ranches, 1978-79= 484lbs Dooley et al., 1982 • 8 years of Farm Mgt. data, 1986-93 = 496 lbs.Hoyt & Odekoven, 1994 • 45 SPA herds 1996-99 = 487 lbs.Dunn, 2000

27. “Advocacy vs. Inquiry”Problem #4 Anecdotes form foundation of our beliefs leading to inappropriate (and irrelevant) conclusions!

28. Problems • Don’t know and understand principles of statistics • If you are going to give a “Mean,” you better give the “Range” and “Variance”! • If you say two numbers are different, better know the confidence interval! • Don’t dig deep! • Don’t know literature! • Based on anecdotes, opinions become facts!

29. So What? Other than who’s right, what’s the problem?

30. Advocacy without w/o appropriate inquiry leads to failure in management! • Problem #1, Misuse of statistics • Misunderstand reality • Problem #2, Not going deep • Draw misleading conclusions • Problem #3, Don’t know the literature • Repeat past mistakes • Problem #4, Anecdotes • Incomplete info leads to wrong path

31. Failure in management results in: • Inappropriate investment of scarce resources. • Inappropriate communication throughout “system” (company). • Irresponsible decisions. • Failure (in ag, long delays mask responsibility)

32. Ladder of Inference Senge et al, 1994 Take action Adopt beliefs Draw Conclusions Make assumptions Add meaning from background Select data from what we observe Observable data and experience

33. Ladder of Inference Senge et al, 1994 Take action Adopt beliefs Draw Conclusions Make assumptions Add meaning from background Our beliefs affect the data we select and reinforces our belief systems and biases Select data from what we observe Observable data and experience

34. Adopted from Senge et al, 1994 Assert ADVOCACY Discuss By-Standing Explain Politicking LOW HIGH

35. Adopted from Senge et al, 1994 HIGH Literature Statistics Test Trends Sensing Stories Anecdotes LOW INQUIRY

36. Adopted from Senge et al, 1994 HIGH Literature Statistics Test Trends Assert Discuss ADVOCACY By-Standing Explain Politicking LOW HIGH Sensing Stories Anecdotes LOW INQUIRY

37. Adopted from Senge et al, 1994 HIGH Literature Statistics Test Trends Discuss Assert Sensing ADVOCACY By-Standing Explain Politicking LOW HIGH Stories Anecdotes LOW INQUIRY

38. Tools for Understanding • Literature • Statistics • Evaluation tools • Systems thinking • Systems dynamics

39. Let’s have a discussion!

40. Successful Ranching in the 21st Century: Putting the Puzzle Together”

41. Modern Times

43. Overview Dollars and Cents Strategic Mgt. Strategic Planning Scenario Planning Balanced Scorecard Why should you use them How do they work • Investment • Marketing • Production • Expenses • Pts of Diminishing Returns

44. Dollars and Cents!

45. Production Investment Expenses Marketing

46. SPA Comparison Dunn, 2000

47. Summary What are the Characteristics of High Profit Producers? • Large operators • Older • Inherited wealth • Operate on Federal land • Retain ownership • Operated in the western rangelands X

48. Summary • When compared to Low or Medium, High profit enterprises have: • Higher weaning % • No differences in: • Weaning weight • Death loss • Pregnancy % • Replacement rate • Calving distribution • No differences in size of operation or region.

49. Summary • High profit ranches have: • Lower Investment (High & Low vs. Medium) • Lower Total costs • Lower Vet Med (High & Medium vs. Low) • Lower Depreciation • Lower Inventory Adjustments (High & Medium vs. Low) • Lower Breakeven (UCOP) • Greater Revenue • Greater Net Income

50. Profit is a Set of Relationships Investment in assets (Land, Cattle, Equipment) Production System Annual Expenses Value in the Market Place