For an organization, selecting which business ecosystem to participate in carries weighty consequences. It can shape the core of your identity and lead to a leap in competitiveness if you do it well.
Consider Max Loessl, who decided at a young age to commit his life to food and went on to cofound Agrilution. As a German child living in China, while his parents were doing development work in the rural countryside, he witnessed the stark contrast between those who had plentiful food and those who did not. He returned home to Germany with the nagging question growing in his ear: “Can I do something good for society?”
He began reading books about food and development. Years later, as a volunteer for Greenpeace in New Zealand, he came to appreciate the interconnection between agriculture and human development. Advances in societal evolution—like the leaps from small tribes to large cities to states—parallel advances in agriculture.
Could another leap in agriculture facilitate another step in human development? Max hoped so.
Vertical farming right where you eat
Industrialized farming helped lift billions of people out of poverty but it came at the expense of the environment, biodiversity, and nutrition. Max began to study vertical farming as a potential antidote to these negative effects.
A book by Dickson Despommier called The Vertical Farm: Feeding the World in the 21st Century became Max’s guide and convinced him that if we could move food production from far-away mass farms closer to where it is consumed—not only closer to cities or restaurants or grocery stores, but actually into the kitchens of homes where people eat—it would represent the potential to evolve humanity to a more sustainable and healthy state.
- Reduce transport and its associated pollution
- Remove the need for packaging
- Enable people to eat food at the peak level of ripeness
- Eliminate food waste because food not consumed can be simply left to grow longer
- Require 90% less water
- Require less fertilizer and pesticides
His vision was a vertical farm the size of a kitchen appliance that would sit alongside your refrigerator or dishwasher.
Figuring out the mechanics was complicated, but achievable. After six years of development, Agrilution launched its product into the market.
Making at-home vertical farming affordable
However, the product was expensive. At several thousand euro, it was accessible only as a premium product for high-end consumers who cared intensely about sustainability and fresh produce. The company had to figure out how to bring the cost down.
The Agrilution team began working with manufacturers of vertical farm components to develop the parts needed to create an affordable, small-scale farm. However, the pumps, LED lights, and compresses vertical farms needed were designed for large farms the size of shipping containers and warehouses. Customizing them for a kitchen-sized farm drove up their costs.
Then the team had an insight, a shift in perspective, that led them to reconceive their product and thereby cut its cost by 80%.
Leveraging the appliance ecosystem
Until this time, they thought of the product as a farm and so naturally were operating from within the vertical farm ecosystem, dealing with suppliers and technologies for vertical farms. But it occurred to them that because what they were building would fit next to appliances like dishwashers, it was in some ways more like an appliance than an agricultural machine.
They reconceived their vertical farm. They bought appliances and took them apart, looking for parts they could use. They found a water pump for a dishwasher that was the right size for their needs, for example. They hired people with appliance experience and relationships. They agreed to be acquired by the German appliance maker Miele, which funds Agrilution but leaves them with considerable autonomy, meaning Max and his team can focus on building their technology without the distraction of constant fundraising.
By plugging into this new appliance ecosystem and reconceiving their business, they were able to bring down the cost of an in-home vertical from 3,000 euro to just 790 euro. The farm’s two-layer model enables it to grow up to 18 different plants at a time, from herbs and leafy greens to chili peppers and strawberries.
If their calculations are correct, this new price point can crack open an entirely new market. Their first higher-cost product limited them to high-net-worth individuals looking for a luxury item that would be installed into a new kitchen. But their lower-cost stand-alone product appeals to a more diverse customer base of 30- to 40-year-old conscious consumers who are not necessarily building an entire new kitchen.
When SpaceX decided to substantially unplug from the ecosystem of manufacturers of rocket parts, they dramatically cut down costs. Similarly, by switching from the vertical farm to the appliance ecosystem, Agrilution cut its price point by nearly 75%.
To revolutionize the potential of your existing product or service, consider:
- What ecosystem are you competing in today?
- What alternative ecosystems might you operate in?
- What might be possible if you switched?