John Deere CEO: Farming's Future, Autonomous Tractors and AI in the Field
00:00I have a farm myself and I bail hay.And the quality of the bail 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 bailing it.I'm listening for things.I'm looking at the computer.But the end product is going to be as only as good as I am.Hi, everybody.
00:35I'm Nicola Tangian, the CEO of the Norwegian Soverealth 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 a 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 Deer,
01:03and now he is trying to turn the maker of farm machines into a real technology company.John, warm welcome.Thank you. It's great to be here, and thanks for including me on your podcast.Fantastic.Now, John, you became CEO in 2019, and then very quickly after that, you launched what youcalled Smart Industrial Strategy.What is that?Well, really what we wanted to do is get more focused on the customer itself and the
01:32jobs that our customer do.You know, 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 realign the customer around production systems and then really invested heavily in technology that would make our customers more productive, more profitable and more sustainable.And how is it different from how dare you used to run?In the past, we didn't focus on necessarily the biggest challenge.that our customer had.So for example, when you're planting,
02:12your biggest expense is actually the seed,the cost of the seed.So the importance of getting seed placedexactly in the proper spot at the proper depthensures the highest yield and helps our customers manage their costs.So we really focused on understandingwhat are our customers' biggest pain pointsand what's the biggest cost to them
02:35and how can we help them reduce their costs?their costs. So you say that the goal is to help customers to do more with less. You'd rather helpthe farmer plant better than to sell the best planter. Why is that important? Yeah, let me give youan example, and I'll talk about spraying. So everywhere around the world, after the crop comes upand it's standing crop, one of the biggest challenges is managing weeds, managing pests. And if youcan't manage those weeds, they take the valuable nutrients away from the healthy plant, and thehealthy 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
03:23between a healthy plant and a weed and only spray the weed versus spraying the entirefield. That reduced herbicide application by 60%. Huge savings to our customer and they get a betteroutcome in the end. You say that you want more of the revenue to be recurring and also have moresubscriptions. It's tough to change the business model of a 190 year old company, right? Yeah.Why is it so tough? What is a tough part of it? Well, you know, first of all, we have multiplebusiness models that we'll offer to our customer.And really, what we saw as 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
04:17across more acres.We have big, large farmers that can capitalize their entire business by the latest andgreatest 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.But in the past, the farmers bought a tractor, now they have to pay a monthly fee.Are they willing to do this?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.
04:56We're seeing right now take rates double from last year on the use of the technology.Really, you know, 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.And that's our strategy. We want to make them more profitable and more productive.What are some of the other areas where you integrate technology and AI into machines?Another great example in a very expensive cost to our growers is application of fertilizers, like nitrogen as an example.In the past, we didn't have the ability as we're planting the crop, planting corn, to target the nitrogen application just to the seed, because that's the only part of the field that needs the application.Technology in the past allowed us just to free flow nitrogen into the trench.
05:53By using computer vision, we can see exactly where that seed is and only dose the seed with nitrogen.And that allows our customers to save two-thirds of the nitrogen costs that they would have spent in the past.And it has a sustainability impact because it's putting the fertilizer only where it needs to go.How difficult is it to develop this technology?I mean, how difficult is it to tell a week?from a crop. Well, you know, I tell our engineers, it can't be that hard. Let's go fast and get it to themarket, but of course, they disagree with me. It's very difficult. How we really got into this is we boughta company that was focused on computer vision and advanced algorithm and AI, but not necessarily
06:38in the segments that we wanted to, that were we compete. And we took that technology and appliedit to agriculture. So if you think about self-driving cars and robotaxies, that industry was developingthis technology, but we saw a use for it within our industry. And really for a totally differentoutcome, instead of just steering the vehicle, it's all about having precise location of the plants,precise location of where we need to put pesticides, herbicides, etc. So existing tech apply to our industry.One of the implications for like the land, the soil, the water around the farm?Well, the more we can get precise, the more we can leverage advanced sensors like artificialintelligence, like computer vision, we can reduce all of the inputs that are going into the
07:34field. And the great news is it has a sustainability impact, but the really positive news to ourcustomer is their expense, their total expense goes down for those inputs and they're more profitable.So it's a great win-win for sustainability and for profitability for our grower.I believe you launched driverless tractors back in 2022 and this year fully autonomous battery electric.pretty incredible.How, tell me, how do you approach this?So, again, we leverage computer vision as well as some other sensor technology.And we believe it's the window for farming is so short because of weather.
08:18And because of, you know, rain, heat, when, you know, when does the soil get warm?So farmers really need to move quickly and leverage every hour that they have.And we saw an opportunity to make equipment fully autonomous and allow it to do the job better than the grower can by themselves and run this equipment 24 hours a day without having to have an operator in the cap.So last year was the first year we launched a commercial fully autonomous tillage solution for sale.And we've had great adoption and great results as a result of it.We plan to take that technology and roll it across every production step that our growers dobecause that tech stack that we developed is portable across a tractor, a combine, a sprayer.So it's going to have, it's going to lock a lot of value for our customers.
09:13How much of farming do you think will be autonomous in five years' time?Well, our goal is our ambition period is by 2030.We want to have the corn production system growing,corn in the U.S. fully autonomous. That's our goal. Everything from tillage, planting, spraying,and harvesting the crop without an operator engaging at all. So we believe by 2030, if we canprove it out in corn, we'll then roll it across all other crops. So it's really exciting.It is incredible. What's going to be the role of humans in farming them?You know, if you think about the role of a farmer, they have tremendous amounts of knowledge.
09:55You know, they've been doing it for 30, 40 years.I have a farm myself, and I bail hay.And the quality of the bail 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 bailing it.I'm listening for things.I'm looking at the computer, but the end product is going to be as only as good as I am.So what we want to do is we want to get the farmer out of the cab and have them work on higher
10:30value jobs, more planning, monitoring more machines, going to the field and looking at theenvironment that the machines are operating in and then making small tweaks to optimize themachine. That knowledge set of the farmer is better used outside of the cab, maybe in front of acomputer, doing planning and monitoring than sitting in the cab of the vehicle.John, what's the coolest John Dare machine or you have on your farm?I would say the coolest machine that I have is a planter, you know, because if you don't do that jobright, if you don't get that crop spaced right at the right depth and put it in the ground at the righttime you're not you may not have a crop but you sure won't have a high quality crop and what's a cool
11:18when you see it when you go and kind of say hi to your machine what's uh what's kind of what's the coolwhy is it so cool so five six years ago it used to be a machine that that used hydraulics tocontrol the seed all the way to the trench we've gotten rid of all the hydroly hydraulics we useelectric motors now, we can control every individual row unit independently and adjust the actualplanting of the crop based on the soil fertility and put maybe in one row 30,000 seeds and the other24,000 because of the differences, the microdifferences in the field. It's incredible the opportunityto shift from managing a field to managing every individual plant that's out there.And that's how you'll get the maximum yield.
12:10And that's how we'll feed the world going forward.I have to say when you talk about these machines, I want to become a farmer.But farm income is down, right?And it's tough times for farmers.Why is that?Well, you know, we've had obviously a lot of disruption on the trade side of grains.So when certain markets are no longer actually purchasing grains from a country,then the overall trade flows get disrupted and it causes just anxiety.
12:46Now, the great thing is supply and demand are pretty well matched.You know, the supply for crop, what farmers produce and the demand from consumers,people that are eating, feeding families around the world are well matched.But when we get disruption and trade flows, it really causes a bit of anxiety.pause on where is my crop going to go?So this is a, you know, if you look at other times when farm income is down,typically it's one specific country and it's related normally to a big weather event,like you have a drought in Australia.
13:23And all of a sudden now we're short of crop and markets have to adjust to serve Australia.This is a global issue.We're seeing all markets right now disrupted, whether you're talking about Australia,Argentina, Europe. We're seeing disruption around the world. I mean, we have markets that have comecompletely out of growing crops like Russia, as an example. We had operations there. We were focused ongrowing small grains with producers. We're no longer in that market. You have markets like the Ukrainethat are disrupted right now, as well as the war that we're seeing in Iran and the effect thatthat's having on fertilizer, the flow of fertilizer, as well as fuel. So lots of uncertainty right
14:12now that's causing that. You called 2026 the bottom of this cycle. How can you be so sure about that?Well, the reason we believe it's the bottom is all of the stuff that we can control, we've controlled.So, for example, what causes a slowdown in the purchase of new equipment is when you start to seeoverall used volumes go up. Or you just came off a period where there was lots of sales and thatinventory is now trading and you need to find a second home for it. So we've worked really hard to getour used inventories in the appropriate level that the markets need around the world. And how we dothat is we intentionally underproduce retail demand. By underproducing retail demand,you allow customers to purchase used equipment and then you get stability back in the market.
15:05We're at levels right now that we believe are what we would see is at the bottom of the cycle.As well as I know you mentioned commodity prices are lower, but they're actually higher than they were a year ago.So we're starting to see markets stabilize and the overall revenue portion of our customers' business become stronger.So we believe 26 is the bottom and we'll start to see the overall industry start to cycle back to more of a normal market cycle.You had an issue where farmers said that you stopped them from fixing their own tractors and you settled this kind of right to repair, so-called right-to-repair fight.How do you win trust back after an episode like that?You know, our philosophy has always been, and it's part of our.values. It's part of our purpose is to put the customer first. And our intentions are to always
16:04serve the customer and make sure that they have access to the parts and the tools that they needto fix their equipment. So we were approached with some requests, for example, having our customershave the ability to diagnose their equipment on their own. We created an amazing artificialofficially backed tool now that's available to the customers where they can just like a dealer technicianplug into their equipment, diagnose what the failure rate is, we'll tell them what parts you need,how you fix the machine, and then they can make the decision on whether they don't want to fixit themselves, or they want to involve a John Deere dealer or an external dealer. So our intentalways is to make sure that we're serving the customers in the best way in leveraging technology to
16:56do that better each year.Can we move on to data?So you've got a million connected machines, 15 years of data.Just how do you use that data?Well, we use it in a couple different ways.So back in 2012, we made the decision to put a telematics gateway.Basically, think of that as a cellular connection that takes all the data,whether it's machine data or agronomic data that used to be locked on machines.
17:27and send it to a cloud-based system.We call that the operation center.So now our customers, if they choose to,have all of their agronomic and their machine datain a location where they can use it to make better decisions.We've tried to facilitate an ecosystemwhere we allow any company to connect to that data set.And if the farmer wants to share their data
17:54with, say, an agronomic provider that writes prescriptions, they can do that.And then that agronomic provider can create value and push it back to the customer or themachine to create more value for the customer.So really, we saw this opportunity where all this data that used to be locked on boardand was very hard for customers to use, if we could put in a safe, secure location that'svery accessible to our customers, we could allow them to make better decisions.What's the most valuable data out of all this incredible amount of data points?It's the agronomic data.
18:32It's knowing what seed you planted, what type of seed, what hybrid you planted, how much rainyou got during the season, when you applied fertilizers, when you applied pesticides, and thenwhen you actually harvested the crop, which fields performed the best based on those decisionsthat you made?And then you can compare those decisions and next year make different choices.And in the past, that was very, very hard to do.Now farmers have multiple years of data at their fingertips that are in the cloud,that we provide artificial intelligence tools for them to simply ask questions.
19:14You know, I planted this hybrid in this field.What if I would have planted this hybrid?What would I have likely have seen as a result?So much more analytics right at the fingertips of the growers.I think that's the most exciting thing right now that's going to change agriculture.How do you work with the crop protection industry?I mean, the buyer, the Syngenta of the world.We do a couple different things with them.
19:37Number one, they have products that they want to sell to the growers.Great example would be they want to see what yield did a farmer get in a certain field,you know, what are the soil types, what's fertility?And then if they have that data, they can write a better prescription for the next year'splanting decisions.So we'll connect, if the customer wants to, we'll connect those companies directly to thatdata.The agronomic, the input provider takes that data, writes a prescription and then sends it
20:17directly to the machine, directly to the planter, and we plant it automatically exactly how theywant it planted. What hybrid goes in? What's the seed volume? What's the spacing? And we can ensure thegrower that that exact prescription that was written by their seed company was exactly applied in thefield the way it was intended to by using automation, by using autonomy, by using artificialintelligence. That wasn't possible 10 years ago. How different is farming now in America compared to,let's say, Africa, Asia, Brazil? So farming in America is definitely the most advanced. But when I say that,there's pockets everywhere around the world. So in the United States, there tends to be moreprecision tools available to the growers. You know, Europe has the same sort of opportunity that the U.S. has.
21:15The next market that's really advancing at a rapid pace would be South America.But we don't stop at these big markets.We provide lower cost, incremental steps into precision agriculture, into markets all around the world,whether you're talking India and offering a cell phone-based solution that allows them to connect to their tractor through their cell phone and monitor productivity.or Africa or Asia, we have similar tools.But it's important to know that in those countries, in those regions,there are also very large farms that are using the most advanced technology,but not across the entire countries or continents.
22:03How big is the threat from Chinese equipment?I think Chinese equipment, we're going to see,we've had operations in China since the mid-year-old.70s. We still manufacture product there. I ran the country for three years from 2004, 2007,and lived there and ran all of our facilities. What I think is going to happen with the Chinesein agriculture is we're going to see them focus in more on the smaller agricultural side,maybe in production systems like hay production or high-value crops. You know, they'll eventuallyadvance to larger production crops like corn, soybeans, cotton, sugar.
22:49But I think there are ways away from that and from developing those technologies.We still sell our most advanced agricultural equipment into China for their large state farms.But like every industry, we're watching it.We're absolutely watching it.Another thing which is changing is climate.What are farmers seeing now that they didn't see 10 years ago?You know, if you can look at any season and the difference in weather patterns is by far probably the biggest challenge.If you look just here where I am today, sitting in the Midwest, we have places in the Midwest that had 20 inches of rain in the last week.
23:28That hasn't happened in 10 years.So the variability, I would say variability in volatility in weather.And I'm sure you see that in your markets as well, where.We seem to have more extremes than we do more constant type of patterns.So that becomes a big challenge for growers to adjust to that.You know, also as regions change, you see different crops going into those regions.You know, we're growing corn, for example, in northern parts of the United States, and we never did that 20 years ago.A lot of that has to do with genetics, but a lot of it has to do with weather as well.
24:08When you see the impact on farms and farmers, are you surprised that there is not more focus on climate or that the focus has actually decreased over the last few years?You know, I think, not I think.I know farmers care probably more than anybody for their soil, for their water, because those are the critical inputs for them to grow a crop.So when we come out with technologies that allow for more precision placement,of things like nitrogen, of things like herbicides, of things like pesticides.They want to invest not just because they're saving money,but because they want to be good stewards of their land.It's their factory.
24:52It's their factory where they make all their money.So it's very important to farmers.Let's be on to corporaculture.An incredible stat.You are only the number 10 persons to run a company,which is 190 years old.unbelievable. What is it that has made that possible?Well, I'll tell you, I think it's the employees that we have in our company are committed to our
25:22customers. They're committed to our industry. And the majority of our employees are like mewhere they've had three decades with the company and their whole lives have been focused onagriculture. So I think our culture and our purpose of we want life to leap forward. We want toinvest in equipment, invest in technologies that constantly and consistently advance the livelihood ofpeople around the world. And that purpose is passionate. And I think that's why we have peoplethat have long tenure with our customer and are fully invested in our industries and want to seeour customers succeed in advance.What are the part of corporate culture that you would never change?
26:10I would never change.What are you some of the kind of the funny ways that you do things?You know, I would never change the fact that our customer is the most important personthat we focus on every day.And I'm telling you, if you walked around any one of our factories, any one of our engineeringcenters, and if a customer happened to be there, they would be swarmed by our people.and our people would be talking about their commitment to them, their focus on innovation, their focus on quality, their focus on integrity, how important it is to do things the right way, as well as humanity. We want to treat everybody the way we want to be treated. And I would never change that because if you have to remember as a business, you're not a business if you don't have a customer. If the customer is not ringing the cash register, then you don't exist.So you have to have this incredible passion to serve that customer and get better every single day.
27:11What are the things that you would like to change, though?Yeah, I think we're making a big shift right now as a company on the technology side.And, you know, we're going from a very mechanical engineering focused company to much more software development.And that shift is difficult because you still know,need the strong mechanical engineers, but you need this new high-tech, hard-to-recruit software engineers,but you have to make sure everybody feels value. Because without the hard iron, we can't deliverthe software that makes the machines better. How do you do this? How do you get a 190-year-oldcompany to run fast? You know, one of the things we did early on when we did smart industrial
28:00is we delayered the company.We had 11 layers and we went down to seven,seven layers in the company.You can't have this traditional industrial companythat has so many levels of decision making.Otherwise, things are too slow.I mean, the first company we bought was an artificial intelligence companywhen I was CEO called Blue River.
28:23They had two layers.They had this guy that was running it, the entrepreneur,and everybody else.They move fast.So we had to make some big changes to accelerate our speed.What's the cleverest thing you've done since you took over as a CEO?You know, I think the biggest change that we made that has been successful is we moved away from a very traditional matrix organizationwhere you had product lines and you had regions, very traditional, looks like automotive companies,
28:54other traditional industrials.We aligned around production systems.So you're on the corn team, you're on the soybean team, you're on the wheat team, the cotton team, the sugar team.And all you're focused on is developing equipment and technology for a person that grows corn.That's all you do all day long.You get really deep, really close to the customer, and it's hard to compete with that org structure.And I think that's been the most successful change we've made as a company.Have you made changes which you need to reverse?
29:27You know, I think the big challenge that every company has is, you know, you want to be as efficient as possible.And to do that, you're always constantly trying to determine how centralized should you be in order to leverage economies of scale versus how decentralized should you be.And we have to balance that all the time.And we're doing that every single year.functions that maybe put too much focus on centralization like, say, a supply management teamthat's sourcing all of our components for every industry we're in, that may not, that may havegone too far, and we need to look at that. So that's the biggest balance that we're challenged with.Two slightly deep dive questions here. The first one, what is your biggest personal failure in life?
30:21That is a deep question. You know, I thinkI would say, you know, as you're coming up through the company, you know, you see a lot of things that you would do differently.And I'm speaking of now that I'm sitting in this chair.And then when you get in this chair, you realize the complexity of the company.And the frustration I had as an employee coming up that things were going too slow and we weren't making big enough bets.once you get in this chair, you realize how complicated those decisions are.And I probably would have had more patience, I think, coming up through the company.You know, I was fortunate to have some really good mentors along the way that would help me,
31:11you know, slow down and think more broadly.And then the last thing I'd say is I see the value as the CEO in having a really strong teamthat can collaborate on every issue.And when our management team gets in the room,there are no boundaries.There are no jurisdictions.And I think if I could have made that culture existall the way up as I was a manager,
31:41I would have produced a better product in any job that I'm in.Not many young people are able to see that.What are the part of yourself you're trying to improve now?You know, I continue to, you know, and you can appreciate this yourself as you come up and eventually become CEO.You've had almost all the roles in the company.And the hardest thing to do is to watch somebody make a decision that you know is not going to be successful.And I'm trying to do more of that.Step back and maybe ask probing questions to maybe get people.
32:21to think differently, but it's okay to let people have a failure because you learn so muchfrom that. So I try to ask 10 times as many questions as I do give answers and let peoplelearn from their own mistakes. What's something about you that most people don't know?Most people don't know that I grew up in Caribou, Maine, which is a little teeny town innorthern Maine, where our school system shut down four weeks a year. Everybody picked potatoes.My dad owned a little teeny local furniture store, and I had to go to school on federal Pell Grants because my parents couldn't pay for school.I think when you get in this role, I think people assume a lot of stuff was handed to you, and that's not the case.You know, I've worked for my college degrees.
33:14I've had to get jobs on my own and really work hard.And I say that, I should tell that more just to let people know that it is possible.I mean, you don't have to be a family, a member of the John Deere family to get in this role.You can be a kid from rural America that, you know, came from a real small, upgrowing and background.And if you have a passion for something, you can get there.What do you think it has done to you as a person?Well, I think it's made me realize, and I tell my kids,this all the time. I mean, you can do anything you want, anything you want. Whatever you're passionate
33:53about, if you're truly, truly passionate about something, you can get there, no matter how bigit is or how small it is. And I think everybody has that opportunity. What is a perfect day for you?Perfect day for me would be out with our customers sitting in the cab of a combine or a sprayer or a tractorand listening to them, tell me what things I need to do better as the leader of John Deere.And I try to do that as much as I can.And I always say, hey, listen, you cannot hurt my feelings.So tell me everything that's on your mind that we can do better to serve you as a customer.How do you switch off?
34:37Yeah, that's a hard question.I think, you know, when I'm back at home or on the weekends, having the opportunity,to maybe go visit one of my kids.They're relatively close to where I live and just sit and talk with them about what didthey do for their week and maybe convince them to go to lunch with me.You know, you know how it gets.It gets to the point where paying is not enough.You have to convince them that maybe this appointment's more valuable than the other appointment
35:08they have.But I'd say that's the big shutoff for me is spending time with family and just hearing what'sgoing on in their life.Do you a cook?We do cook. We do cook. For most of my career, we lived in rural America, so we didn't have access to a lot of restaurants. So we cooked a lot as a family.And what is your speciality? What do you put on the barbecue? I love to grill burgers. And then the other cool thing I just got, my girls bought this for me is one of these outdoor pizza ovens that heat up to like 700 degrees Fahrenheit with a big stone in it.I love it.Fantastic.
35:47I use mine all the time.Do you read?I do read.I do read.What do you read?I like, first of all, if I'm on vacation, I love to read fiction.You know, I also try to look for books where I can learn something, whether it's an artificialintelligence book or a book that was given to be the first day I became CEO that talked, it's
36:11called the outsiders, that talked about a small group of science.CEOs that were extremely successful that weren't known because they focused on the basic things.And that's capital allocation and deploying human resources to get the greatest return for the customer and the shareholder.So I look for things like that.I love to read newspapers and I get kidded for this, but I still read paper newspapers every day.I just like a paper newspaper.Yeah. And I agree with you. The book you mentioned is very, very good.Lastly, what is your advice to young people?
36:45You know, my advice to young people is, and one of the things that I've seen, and I'm sure you see this as well, people don't want to move as much as we had to coming up through our careers.And I understand that and appreciate that.But what you learn from taking on new responsibilities that are in different locations in the company or even different divisions in the company, or even more importantly, outside of the U.S., outside the U.S.,makes you such a better leader and gives you visibility into cultures and the way business is doneand even the customer, how different they are. It just makes you a much better person. And frankly,it gets you to that ultimate goal that I talked about around truly valuing everybody's viewpoints,my team. I want everybody to be heard because they have a unique set of experiences that I don't have.John, this has been a great conversation.
37:45I'll tell you one thing.A green tractor will never be the same.Thank you.Thank you.And thanks for inviting me.I really appreciate it.And thanks for your time.It's been wonderful.
37:56Thank you so much.
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