John Deere CEO: Farming's Future, Autonomous Tractors and AI in the Field

**John May** (0:00)
I have a farm myself, and I bale hay.
And the quality of the bale that I can produce is only as good as my experience set. So, you know, when I think the hay is at a point where it can be harvested, I get in the MoCo, I cut it, and then I sit in the tractor and I'm baling it, I'm listening for things, I'm looking at the computer, but the end product is gonna be as only as good as I am.

**Nicolai Tangen** (0:35)
Hi everybody, I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund, and today I'm joined by John May, the CEO of John Deere. Now, when you think of John Deere, you may think of green tractors, and indeed there is a green tractor standing behind John here on the screen. But the company has become one of the most advanced technology companies in farming.
Tractors that drive themselves, AI that tells a weed from a crop, and John is the man behind the shift. He spent almost his entire career at Deere, and now he is trying to turn the maker of farm machines into a real technology company. John, warm welcome.

**John May** (1:09)
Thank you. It's great to be here, and thanks for including me on your podcast.

**Nicolai Tangen** (1:13)
Fantastic. Now, John, you became CEO in 2019, and then very quickly after that, you launched what you call Smart Industrial Strategy.
What is that?

**John May** (1:25)
Well, really what we wanted to do is get more focused on the customer itself and the jobs that our customer do. In the past, what we would do is focus on building the best planter, and we wanted to shift to helping our customers plant better than they ever had in the past by leveraging technology. So we realigned the customer around production systems, and then really invested heavily in technology that would make our customers more productive, more profitable, and more sustainable.

**Nicolai Tangen** (1:58)
How is it different from how Deere used to run?

**John May** (2:02)
In the past, we didn't focus on necessarily the biggest challenges that our customer had. So for example, when you're planting, your biggest expense is actually the seed, the cost of the seed.
So the importance of getting seed placed exactly in the proper spot, at the proper depth, ensures the highest yield and helps our customers manage their costs. So we really focused on understanding what are our customers' biggest pain points, and what's the biggest cost to them, and how can we help them reduce their costs.

**Nicolai Tangen** (2:38)
So you say that the goal is to help customers to do more with less. You'd rather help the farmer plant better than to sell the best planter. Why is that important?

**John May** (2:48)
Yeah, let me give you an example, and I'll talk about spraying. So everywhere around the world, after the crop comes up, and it's standing crop, one of the biggest challenges is managing weeds, managing pests. And if you can't manage those weeds, they take the valuable nutrients away from the healthy plant, and the healthy plant produces less.
So we invested heavily in a technology that was not used in agriculture, computer vision, and we created, using artificial intelligence, the ability to see the difference between a healthy plant and a weed, and only spray the weed versus spraying the entire field. That reduced herbicide application by 60 percent. Huge savings to our customer, and they get a better outcome in the end.

**Nicolai Tangen** (3:40)
You say that you want more of the revenue to be recurring, and also have more subscriptions. It's tough to change the business model of a 190-year-old company, right?

**John May** (3:53)
Yeah.

**Nicolai Tangen** (3:54)
Why is it so tough? What is a tough part of it?

**John May** (3:56)
Well, first of all, we have multiple business models that we'll offer to our customer.
Really, what we saw is the opportunity to shift and allow our customers, if they want to, to pay by the acre or pay by the application, allowed us to spread a very expensive technology across more acres. We have big, large farmers that can capitalize their entire business by the latest and greatest technology, but we have others that can't afford that. And by coming up with a pay as you go or a SaaS model, it allows us to get this tech on more acres and help more customers.

**Nicolai Tangen** (4:37)
But in the past, the farmers bought a tractor, now they have to pay a monthly fee. Are they willing to do this?

**John May** (4:42)
Yeah. And in some cases, they might just buy the complete solution and not necessarily the tech that has the pay as you go. They're very interested in it. We're seeing right now take rates double from last year on the use of the technology. Really, what makes the difference is if you can demonstrate true value, value that hits their income statement, their bottom line, they're willing to invest in the technology.