Road Map foR SucceSS - Santa Gertrudis Breeders International

2013-2017Road Map for SuccessFellow SGBI members,It is with great excitement that I reveal to you the Santa Gertrudis Breeders International’s (SGBIs) 2013-2017 “RoadMap for Success” and Long Range Plan. The Road Map for Success is a culmination of two years of passionate work by theLong Range Planning Committee, industry professionals, Executive Director John Ford and most importantly you – themembers of SGBI.I would be remiss if I did not acknowledge the efforts of former Vice President of Long Range Planning and your currentSGBI President Charla Borchers-Leon in paving the way for our current Long Range Plan. She, along with the Long RangePlanning Committee, had the vision and leadership to realize you must plan to plan. Our previous Long Range Plan servedas a cornerstone to our association’s current and future success.It has been my honor and privilege to assist in the development of our Road Map for Success. Please know as we shift intoour new Road Map, the Long Range Planning Committee’s primary goal was to listen to you, the members, process that informationand create a plan that best serves the SGBI membership and their customers. As I have come to expect from ourmembership, you all gave above and beyond expectations. The response and participation in the questionnaires and focusgroups was honest, intuitive and very inspiring.The most challenging segment of the process was condensing the many great thoughts and ideas provided by the membershipinto a focused plan that will guide our organization for the next five years. Great effort was made to compile theinformation contained in the Road Map into a user-friendly format that remains flexible enough to allow for ever-changingindustry shifts. Please understand the plan is by no means an exhaustive list of fail-proof ways to secure the success of ourgreat breed of cattle. However, I promise you there is strength in a common goal and this Road Map can be that commongoal for our association.Organizations do not become great by accident. Organizations become great when their members take an active role andcommit themselves to the success of the organization. I encourage every member of our association to invest the time toread the information contained in the Road Map and take ownership of it. Get involved in a committee of interest or anaffiliate and help our association reach our strategic objectives. Our strength is in the unity of our membership.There is one thing I am most certain of: If you are reading this, you share with me and the Long Range Planning Committeea devotion and passion to Santa Gertrudis cattle. I encourage you to get involved and share your passion for SantaGertrudis cattle every opportunity you get. It is an exciting time to be a part of SGBI and on the horizon is our Road Mapfor Success!Wes McDanielVice President of Long Range Planning

Dear SGBI members,The nation’s cowherd is at a 60-year low and beef cow numbers have dipped below the 30-million-head mark. A smallercommercial cowherd has resulted in the need for fewer bulls and fewer replacement females. It is obvious that theincreased competition among breeds for a share of the shrinking commercial market is redefining the traditional seedstockbusiness structure. Which breeds will be major seedstock suppliers to the commercial sector moving forward? Theanswer is simple: those breeds that create value for their customers.In this new paradigm, breed associations must meet the challenge of developing cost effective programs and servicesthat ensure membership can and will capture a significant share of the commercial market. These programs and servicesmust be innovative and focused on creating value for all industry sectors. Simply put, the notion that breed associationscan merely focus on traditional activities and be all things to all people no longer holds true. To remain viable over thelong term, SGBI must understand that industry change is inevitable, and growth hinges on the economic success of itsmembers and their commercial customers. We have arrived at a crossroad. Seedstock producers are expecting more fromtheir association membership, commercial customers are expecting more from their seedstock suppliers, and both wantto ensure their sustainability now and into the future.The 2013-2017 SGBI Long Range Plan provides a well-designed and well-developed blueprint for action that assuresorganizational growth and creates product value for members and their commercial customers. The SGBI Road Mapfor Success is the result of two years of work by the Long Range Planning Committee with invaluable assistance fromDr. Ryan Rhoades, Texas A&M University-Kingsville, and the King Ranch Institute for Ranch Management. Memberinput, solicited through a survey, listening sessions and focus groups, serves as the foundation for the plan. With therealization that the industry is constantly evolving, the plan is a fluid, living document designed to address emergingissues without losing sight of the association’s goal of improving member and customer profitability, sustainability andsatisfaction.John Ford, Executive DirectorSanta Gertrudis Breeders InternationalcontentsI. Identifying Priorities for SGBI...................... 4II. SGBI Breeder Demographics....................6III. Overview of Survey Results.......................7IV. Balanced Scorecard Approach............ 11V. Conclusion................................................14road map for success | 2013-2017 PAGE 3

I. Identifying Priorities for Sana GertrudisBreeders InternationalThe OpportunityThe beef industry is a complex system from the initial cow-calf production decision tosatisfying consumer demand and developing a profit-maximizing marketing opportunity.As a rancher, you probably recognized significant change in structure and theenvironment in recent years. This new environment can be described by increasingcost/volatility in the commodity and cattle markets, and extreme variance in climaticconditions, which has left you exposed to a great deal of production and financial risk.With increasing capital requirements for land/inputs and compressing operating margins,these risks are becoming more intense. However, advances in technology are rapidlyoccurring and change oftentimes presents opportunity. An understanding of how theindustry structure and environment is changing (i.e. technology, consolidation andproduction systems) and charting a long-term strategy to capitalize on opportunities thatarise is necessary because change is critical to any organization’s success in the comingyears.PAGE 4The Santa Gertrudis Breeders International

More specifically, the declining cow herd in the U.S. meansthe number of commercial bulls needed each year is alsodeclining. Meanwhile, reported Santa Gertrudis bull salesto commercial bull buyers have not increased in a numberof years. Concurrently, participation in Total PerformanceRecords (TPR) among Santa Gertrudis breedershas decreased, which limits the availability of performancedata to 1) improve the Santa Gertrudis breeders’ geneticswithin herd and 2) provide commercial bull buyers with anobjective selection tool. A large percentage (70 percent) ofcommercial bull buyers use some form of data to make purchasingdecisions. As competition to sell bulls in a shrinkingmarket increases, technology and information could be asource of competitive advantage in your breeding program.This is a prime example of a dynamic that is changing ourenvironment and presenting an opportunity.Additionally, breed associations are facing new and demandingchallenges. SGBI’s primary goal is to provide progressiveleadership, services, programs and technology to promoteand broaden the long-term profitability of Santa Gertrudisinfluence within the beef industry by being member-drivenand consumer-focused. The vision is to become the preferredAmerican breed used by cattlemen. However, it isdifficult for associations such as SGBI to design productsand services for such a diverse membership. SGBI needs todetermine what role they will play with their members inthe coming years. Due to increased competition and marketingefforts by other breeds, market share will be increasinglydifficult to obtain. Therefore, priorities, direction anda plan need to be determined and implemented.The intent of this report is to establish the basis for prioritizingSGBI’s services and resources by soliciting feedbackdirectly from the membership and developing a strategicplanning tool using the balanced scorecard approach. Thiswill allow SGBI to provide its members with a more targeteddirection and focus that could lead to increased demandin the marketplace and help sustain the long-term viabilityof the breed. This is the opportunity.The Objectives Determine SGBI membership characteristics, ranchinghabits and association service preferences. Identify strategy options, rank strategic initiatives, anddevelop measures of success according to membership’sperceived challenges and service preferences. Provide a “road map” for SGBI that communicates thestrategy, prioritizes new program initiatives and monitorsprogress toward proposed targets in a clear, conciseformat.The Process1. SGBI Membership SurveyA membership survey was designed to discover the perceptions,current practices and other characteristics thatcurrent Santa Gertrudis breeders across all regions of thecountry have regarding the use of performance data, breedstrengths/challenges, marketing opportunities and associationservices. A pilot test of the survey instrumentwas conducted among key stakeholders to solicit feedbackbefore the final survey was delivered to all SGBI members.Input and feedback was solicited from all active membersof SGBI. In total, 282 active SGBI members returnedcompleted surveys. Approximately 53 percent of the totalcompleted surveys (i.e. 282) were returned by mail and 47percent by e-mail. A test was conducted to determine thevalidity of the survey results; this survey scored an 87.7 percentfor reliability. This represents a very high reliability fora survey instrument. The high reliability for this survey wasa result of the feedback gained during the focus group andpilot test efforts.2. SGBI Member Focus GroupsFocus group sessions were conducted during the 2012 SGBIAnnual Meeting in Chattanooga, Tenn. These sessions weredesigned to develop specific objectives for the new SGBILong Range Plan. Moderators facilitated discussions basedon priorities determined in the membership survey. Focusgroups were developed from a diverse cross-section of SGBImembers for association services in the areas of marketing,membership/outreach and research/education.3. Strategic Planning SessionsSGBI’s Long Range Planning Committee, along with otherassociation and industry leaders, participated in a two-daystrategic planning workshop during the summer of 2012.The goal of this workshop was to develop specific contentfor a suite of strategic planning tools (i.e. Strategy Map,Strategic Initiatives and Balanced Scorecard). These toolswill serve as an excellent communication device for internaland external audiences and provide SGBI leaders and memberswith a roadmap to help focus energy and resources overthe next five years.Determine SGBImembershipcharacteristics, ranchinghabits and associationservice preferences.road map for success | 2013-2017 PAGE 5

II. SGBI Breeder DemographicsLocation-RegionBreeders responded to several demographicquestions designed to identifykey characteristics. The figure belowoutlines members’ age category, whichillustrates the largest portion of themembership is above 45 years old.Only 21 percent of SGBI membersare under 44 years old. Similar to theoverall trend in agriculture, the averageage of an SGBI breeder is greater than55 years old. This finding supportsthe need to emphasize the continueddevelopment of strong leaders for thenext generation.WEST2.5%SOUTHWEST55%MIDWEST10%SOUTH30%NORTHEAST2.5%Breeder herd size is a demographicthat can be used to better understandrisk levels and operational needs ofproducers. The figure below providesthe membership’s reported herd size.As illustrated, 50 percent of the respondentsare classified as small operationshaving less than 50-head capacity,while the remaining 50 percentrepresent a wide range from 50-headto greater than 500-head capacity.Similar to the overall trend in the beefindustry, the average size of an SGBIbreeder operation is less than 50 headcapacity. This finding supports theneed for continued association servicesin the areas of marketing and education.The definition of operation type is animportant demographic as an indicationof individual farm or ranchgoals. Cattle operations fit into fourbasic categories, including seedstock,commercial, stocker and show exhibition.The figure below illustrates thepercentage of breeders by operationtype. The largest percentage of breedersrepresents seedstock operations(52.3 percent), which are defined asoperations that produce replacementbreeding stock for other operations.Commercial operations (30.9 percent)sell calves at weaning, while exhibition/show operations (13.7percent) raiselivestock for competition purposes.Stocker operations (3.1 percent) utilizeforage resources to grow from weaningto the finishing phase. This findinghighlights the diversity among membershipand the challenge to create aconsistent message for the breed.The percentage of net income derivedfrom farming or ranching operationscan be an indicator of profit motivationregardless of the operation’s size. Asshown in the figure below, 86 percentof SGBI membership derives less than40 percent (“Low”) of their annualincome from their farming or ranchingoperation. The largest respondentgroup (65.9 percent) derives less than20 percent of their income from theiroperation, while only 14 percent ofSGBI membership derives a “High”level of their annual income fromfarming and ranching. This findinghighlights the need to identify and designalternative incentives for produceradoption.PAGE 6The Santa Gertrudis Breeders International

III. Overview of Survey ResultsSummary of Key FindingsMarketing & InformationPerformance DataBreed Strengths &Opportunities for GrowthSGBI member Services• Peer-to-peer relationships are highly influential.• 70 percent of the membership will wait to adopt new technologies.• Private treaty, livestock auction markets and purebred sales are theprimary marketing channels.• There is relatively low utilization and importance scores for all datatypes.• There is opportunity to increase importance of expected progenydifferences (EPDs) through education and to increase utilizationthrough value proposition.• There are several barriers to increase participation in TPR:paperwork, lack of education, time and cost.• Maternal ability and performance metrics (gain and efficiency) arebreed strengths.• Marketing, research and customer satisfaction will be importantopportunities to capitalize on in the coming years.• Top priorities include increasing commercial sales and developinga specific market for Santa Gertrudis genetics.• A number of other potential services were rated important.1. Marketing & InformationWhere do you get information? SGBI memberswere asked to rank industry information sources used. Theywere asked to rank only their top five, with the first choicebeing their most commonly used method to acquire information.Producers seek advice and information to help themmake better decisions. We generally seek advice or informationfrom sources we consider trustworthy and of quality.What advice and information sources are viewed as trustworthyand of quality can help an organization target promotionaland educational materials. As shown in the figurebelow, an average of 241 (85 percent of survey respondents)SGBI breeders selected peer-to-peer (i.e. other producers)and the SGBI magazine as the most commonly used informationsources. Additionally, an average of 194 (69 percentof survey respondents) breeders selected websites and otherindustry related magazines as important sources of information.This result highlights the opportunity that exists forSGBI to enhance various communication channels to itsmembership. For example, peer-to-peer relationships couldbe influenced through an enhanced affiliate presence.road map for success | 2013-2017 PAGE 7

How do you typically adopt new technology?SGBI breeders were asked which of the following bestdescribes you: Innovator = often the first to adopt in myarea; Early Adopter = wait until someone else has adoptedfirst; Late Adopter = wait until new technology is proven;and Avoid = don’t adopt new technology all together. Newtechnology can be viewed as risky and everyone has a slightlydifferent risk tolerance. Based on your inherent risk tolerance,you will be more or less motivated to adopt an emergingtechnology. People are even motivated in different wayswhen it comes to new technology adoption (i.e. status,professional gain or cost/profit). Technology creates forwardmovement and how individual people within an organizationadopt it can have a significant impact on progress asa whole. In the figure below, 50 percent of SGBI breedersconsider themselves innovators and early adopters of technology,while 50 percent will wait until proven or avoid it.Given the advancements in technology and rapidly changingtimes in our industry, this finding represents a huge opportunityfor SGBI to deliver and educate breeders willing toadopt new technologies and practices.Where do you market your cattle? Respondentswere asked to individually rate the marketingoutlets listed in the figure below for how often thatparticular outlet is used to market their cattle. Themean rating score represents the average responseamong SGBI breeders (1 = Never; 2 = Rarely; 3 =Often; and 4 = Almost Always). There are a numberof marketing alternatives available to producers.Marketing can take time and be expensive. In today’smarket it can be frustrating as price gaps exist basedon hide color and percieved quality. Bottom line: Theextra effort is often worth it. How you market yourcattle significantly impacts your profitability. SGBI memberresults suggest private treaty sales are used most oftenat a mean rating score of 3.1, followed by livestock auctionmarkets and purebred auction sales at 2.6 and 2.5, respectively.Although retained ownership can be an effective riskmanagement option and video/internet sales are gainingpopularity, SGBI breeders rarely use these methods in theircurrent marketing programs.2. Performance DataWhat type of performance data do you utilizeand value the most? SGBI breeders were asked atwo-part question to identify potential gaps between: 1)How often you utilize different types of performance data(1 = Never; 2 = Rarely; 3 = Often; and 4 = Almost Always)?And 2) The level of importance you place on each type ofperformance data in your operation (1 = Unimportant; 2 =Somewhat Important; 3 = Important; and 4 = ExtremelyImportant)? Technology is rapidly changing. There are toolsavailable that could potentially make your operation moreefficient and profitable. EPDs and other types of performancedata can assist a breeder with selection decisions andprovide a potential customer with an objective assessmentmeasure. Survey results indicate EPDs had the highestmean rating score for both utilization (3.1) and importance(2.9), while written/verbal comments were rated the lowest(2.5). Interestingly, only 75 percent of the membership ratedEPDs as utilized “often” (3.0) or above and consider them“important” (3.0) or above. A large gap between utilizationand importance would indicate an opportunity for increasedadoption. For example, if a producer views a technology asPAGE 8The Santa Gertrudis Breeders International

“extremely important,” but “rarely” utilizes it, they are morelikely to eventually adopt it. Although not significant, thelargest gap was reported for genetic markers, indicating thisdata type is perhaps more important than currently beingutilized. A smaller gap exists for EPDs suggesting it is usedsimilarly to its perceived importance. However, greaterutilization of EPDs as a management and marketing tool tomake quicker genetic improvement and to increase commercialdemand may be needed by SGBI breeders.What are the potential barriers to collecting andreporting performance information? Respondentswere asked to rate the list of potential barriers in the figurebelow for their level of agreement that the factor is a barrierfor using TPR. The mean rating score represents the averageresponse among SGBI breeders (1 = Strongly Disagree;2 = Disagree; 3 = Agree; and 4 = Strongly Agree). Participationamong SGBI membership in TPR is very low. Adoptionof technologies such as EPDs will be important to thelong-term success and improvement of the breed. However,processes like TPR can have barriers that prohibit useradoption. These barriers are often unknown to thoseadministering them. This question was designed toreveal any potential barriers during the TPR process.While no individual factors were rated as a “strong”(3.0) barrier, several, including paperwork, lack ofbreeder education, time and cost seem to surface asgreater challenges. The association should considerthese when developing strategies to increase theutilization of TPR among breeders. A focused effortto engage and educate membership about TPR mayincrease the perceived importance and, subsequently,the utilization of performance data.Survey results indicateEPDs had the highestmean rating score forboth utilization andimportance.road map for success | 2013-2017 PAGE 9

3. Breed Strengths & Opportunities forGrowthWhy are your customers buying Santa Gertrudisgenetics? SGBI breeders were asked to rate the breedtraits in the figure below for level of importance to theircustomers (1 = Unimportant; 2 = Somewhat Important; 3= Important; and 4 = Extremely Important). Developing abrand and creating differentiation in a highly competitivemarket is essential. Crafting marketing and promotionalmaterials that capitalize on genuine breed strengths giventhe diversity among operational goals can be difficult. Buildinga brand is about identifying those things your customersdesire and then continually delivering those thingsbetter than your competition. Membership is closest tothe customer base and can best gage consumer perception.Survey results suggest maternal ability had the highest meanrating score at 3.6 and 96 percent of respondents ratedthis “important” (3.0) or higher. Additionally, weight gain,disposition and efficiency were grouped in the next tier ofimportant breed traits with an average mean rating score ofgreater than 3.3. This finding may provide some insight intothe important breed attributes to highlight when developingmarketing and promotional materials.What major opportunities for growth exist? Respondentswere asked to rate the future opportunities listed inthe figure below for level of importance in order to growand compete in the beef industry over the next five years (1= Unimportant; 2 = Somewhat Important; 3 = Important; 4= Extremely Important). Numerous opportunities will arisein the coming years. This short list is by no means exhaustive.Membership deals directly with these opportunitiesfor growth and can provide valuable insight into which onesrepresent the greatest opportunity. These opportunities forgrowth need to be considered when developing a strategicplan for the entire breed. The results indicate that marketingthe breed outside of the current SGBI circle had thehighest mean rating score at 3.74. With exception to redin color and the SGBI logo, all other future opportunitieswere rated above a 3.0, meaning they represent “important”opportunities to the breed. Clearly, marketing, research andcustomer satisfaction will all be important opportunities tocapitalize on in the coming years.4. SGBI Association ServicesWhat services should SGBI provide in thecoming years? SGBI members had the opportunityto rate their level of importance for the list of potentialservices included in the figure below. These are servicesthat, if provided by SGBI, would contribute to the overallsuccess of the Santa Gertrudis breed in the next 10 years (1= Unimportant; 2 = Somewhat Important; 3 = Important;and 4 = Extremely Important). Associations like SGBI thathave a very diverse membership are faced with the challengeof developing programs that appeal to everyone’s interestsand motives. This can often lead to the development ofmultiple programs that have little impact on the breedas a whole. Ideally, an association needs to identify thehighest leverage points among its diverse membership. Thisquestion was designed to address this problem. The resultssuggest only increasing commercial sales and developinga specific market for Santa Gertrudis genetics had a meanrating score above 3.5 and had more than 90 percent of allrespondents classify it as “important” (3.0) or above. Withexception to enhancing international relations and showring participation, all other potential services were ratedabove 3.0, meaning they represent “important” servicesamong membership. Overall, a number of potential servicesare considered important by the membership, but thesefindings provided valuable insights when determining whereto focus resources and energy in the next Long Range Plan.PAGE 10The Santa Gertrudis Breeders International

IV. Balanced Scorecard ApproachBalanced ScorecardApproachWhy was this approach chosen to develop SGBI’s LongRange Plan? Simple … it works! The balanced scorecard approachhelps us focus beyond financial measures of successby connecting the various “perspectives” of the organization.Financial objectives allow us to complete our goals, butwhat about developing human capital through learning andgrowth, making processes more effective and key stakeholderoutcomes that will ultimately determine success? Byconnecting the various “perspectives,” we avoid planning inpockets and creating a disconnect among different interestgroups. Success is also a function of its simplicity; the entirestrategic plan is synthesized on two sheets of paper. Theeffort required to keep the plan going and alive is reducedsubstantially and focus is crystal clear to everyone in theorganization. In the end, communication is critical to thesuccessful implementation of a strategic plan. This approachsimplifies this aspect.SGBI Strategy MapStep 1 was to develop a strategy map. Strategy maps definewhat the objectives are, provide a framework for building acommunication strategy, and force the organization to thinkabout cause and effect relationships. The process of creatinga strategy map ensures both consensus is reached over a setof interrelated strategic objectives, and outcomes and driversof future performance are identified to create a completepicture of the overall strategic direction.The strategy map built for SGBI will help promote the bigpicture focus and help visually communicate the relationshipamong strategic objectives. The results of both themembership survey and the member focus group discussionswere used to determine the strategic objectives withineach association “perspective” (i.e. stakeholder success,processes, learning and growth, and financial). The map wasbuilt from the top down, keeping in mind the No. 1 objective:“To improve Member/Customer Profitability, Sustainabilityand Satisfaction.” The plan is then powered fromthe bottom up starting with “Increase Revenue Flow,” andas you move up, each objective enables the success of thoseabove it.SGBI Balanced ScorecardStep 2 was to develop a balanced scorecard. The balancedscorecard builds upon the strategic objectives defined in thestrategy map. Essentially, it is a management tool to help theorganization make detailed strategic decisions and measurethe effectiveness of the strategic plan.Within each association “perspective,” several strategic initiativeswere created to help accomplish the strategic objectives.Strategic initiatives are designed to identify activitiesto accomplish objectives. Measures and targets were thenassigned to track success of those objectives. The intentwas not to measure everything, just the right things. Finally,specific SGBI association committees will be charged withdeveloping more detailed action items to achieve the desiredobjectives, initiatives and measures.road map for success | 2013-2017 PAGE 11

SGBI Strategy MapImprove Member/CustomerProfitability, Sustainability& SatisfactionSTAKEHOLDERSUCCESSIncrease Demand for SGGenetics by Adding Value toCommercial ProducerIncentivize Adoption of SoundScience & TechnologyAmong MembershipPROCESSDevelop & Deliver aConsistent MessageImprove Status &Value of SGBIBuild & EnhanceInternal & ExternalRelationshipsDevelop StrongLeaders & ActivistsStrengthen AffiliatePresenceLEARNING &GROWTHBuild Trust &Awareness withIndustry & CustomersCreate Change &Engage MembershipFINANCIALIncrease Revenue FlowPAGE 12The Santa Gertrudis Breeders International

SGBI Balanced Scorecardroad map for success | 2013-2017 PAGE 13

prepared by Ryan D. Rhoades, Ph.D., Assistant ProfessorKing Ranch ® Institute for Ranch ManagementRhoades was born in South Whitley, Ind. He received a bachelor’s degreein animal science from Oklahoma State University in 2001 and was employedby Express Ranches Limousin Cattle Division. Rhoades obtaineda master’s degree in meat science from Texas A&M University in 2004and earned his Ph.D. in beef cattle production at Texas A&M University,while concurrently working on an additional master’s degree in ag economics.Texas A&M University provided Rhoades with the opportunity towork on a wide range of projects designed to help producers make betterrisk management decisions throughout all segments of the beef industry.His Ph.D. research projects ranged in scope from determining the impactof dietary energy source on fat accretion to the use of ultrasound technologyin predicting a targeted compositional endpoint. These projects includedalternative ways to mitigate cost and value risk through process controlstrategies. Additionally, his economic training allowed him to explore thedynamics of the live cattle market and the opportunity to construct businessplans for private firms and formulate solutions for case studies usingforecasting and modeling techniques.As a faculty member at Texas A&M University-Kingsville and part ofthe King Ranch ® Institute, Rhoades’ research focus has been on ranchingproduction and management systems. He has also worked closely withseveral beef industry organizations to assist with strategic planning andthe development of producer training tools. Rhoades teaches agribusinessmanagement courses for undergraduate students. He also serves as advisorfor the National Agribusiness Marketing Association student group oncampus and is on a number of beef industry committees.Our Vision:Santa Gertrudis ...The PreferredAmerican BeefBreed.road map for success | 2013-2017 PAGE 15

LFLATTENED VERSIONAND WHITE VERSION2013-2017Road Mapfor SuccessPAGE 16The Santa Gertrudis Breeders International