The New Management Playbook for Farmers, Ranchers, and Lenders - by Dr. David Kohl

2026 has already been a doozy for businesses and households throughout America. Trade and tariff disputes, geopolitical tensions, and ongoing warfare have created information overload, an erosion of trust, and a general sense of unsettledness. Price and cost volatility is compressing margins, more apparent in the grain and row crop enterprises than in diversified livestock enterprises. As the second quarter of the 21st Century arrives, a three-dimensional approach to management is emerging as a framework for success. The combination of business IQ, EQ, and AQ places the odds for success in both strategic and day-to-day decision-making. Each dimension is worth examining on its own terms, and that is what we will do in today's article.

Business IQ 

There are four pillars in the assessment of the business IQ. The first is production excellence, with efficiency that requires an assessment of the factors of production, including land, labor, capital, and information, to position the business for success.

The second pillar is cost management, focusing on the larger expense items. A word of caution here: there is a real danger in knowing the cost of everything but the value of nothing. In some situations, increasing costs is the right call when the short- and long-run benefit-to-cost value exceeds the investment.

Marketing and risk management round out the business IQ pillars. A recent assessment of the TEPAP group (The Executive Program for Agricultural Producers) at Texas A&M University this past winter, with participants from 24 states, six Canadian provinces, and Australia, found over 90 percent had developed and executed a risk management plan. Perhaps more surprisingly, over two-thirds also executed a formal marketing program, spanning both livestock and crop farmers. 

Financial efficiency is equally critical. The volatility of today’s environment demands prudent attention to financial, capital, and human resources. Equipment gathering rust and sitting idle needs to be scrutinized, and the productivity of the human side of the operation deserves the same honest attention. An unproductive or underutilized family member in a management role or an employee who is not well suited to their position, can be a drag on profits, productivity, and the overall health of the business culture.

EQ: Emotional Intelligence

A rising component of the three-dimensional approach to 21st Century management is emotional intelligence. Historically, farmers and ranchers were independent and often shied away from people management. Looking ahead, the ability to be interdependent and collaborate effectively with the human component of the business will be a genuine difference maker. This means interacting with employees, management, landlords, lenders, and the broader community, with the guiding theme being return on relationship over a purely transactional focus. That orientation often pays dividends to the bottom line over the longer run.

In building emotional intelligence, a strong business culture is often anchored in what I call the three A's: hire for attitude, train for aptitude, and hold people accountable. That includes family members. This philosophy translates well beyond the farm and ranch gate; it works in the boardroom and in virtually any organization in the community.

AQ: Assess, Adapt, and Seek Alternatives

The new kid in town, to borrow from the old Eagles song, is quickly becoming both the dealbreaker and perhaps the most challenging yet necessary component in today’s and tomorrow’s business environment. Do you have a business and decision-making culture that can objectively assess the situation? Are the people and resources positioned and willing to adapt, bringing a wide variety of alternatives to the table? Finally, and most importantly, are decision makers held accountable and evaluated against measured outcomes? A high AQ may require the willingness to seek alternatives that are ahead of the curve. Remember the business adage: fail small and fast, but also analyze and build upon success. Be mindful of chasing the next big thing or swinging for home runs that feed the ego. Slow, steady base hits following a calculated process can lead to sustainability, resiliency, and long-term success.

If the next generation is coming on board, an apprenticeship can be an important part of learning and developing AQ. This often requires room for experimentation and mistakes, where coaching and mentorship become critical for successful integration into the business. Control-oriented managers or owners often have difficulty adapting and can be heard saying “we have always done it this way” or “we already tried that and it failed.” A high AQ demands a mindset of willingness to be different, to be a maverick, and to try things others will not. Be careful of the copycat trap. Much like the NFL copying the NBA, when one model succeeds everybody follows. But one size does not fit all in the agricultural industry, and recognizing that is a sign of a high AQ.

Connecting the Dots

The three-dimensional approach to management, whether applied to an agricultural business, a bank, or any community organization, requires connecting the dots. Balancing this triple play of IQ, EQ, and AQ can bring success and fulfillment both in business and in life.