Farmers, builders, and others who work the land have always sought ways to be more productive, to gain more from their hard work. I suspect one tool we’ve all been looking for—though it can neither furrow the earth nor move mountains—is the Internet.

Even though some still question the effect of the Internet on business, I believe we are on the threshold of productivity increases—both for us and for our customers—not seen since the switch from horses to tractors.

Digital tools, which are a powerfully disruptive but wondrously creative force, may make it possible for us to solve an important puzzle—how to deliver breakthrough innovations that truly satisfy our customers while simultaneously providing consistent and attractive returns to our company’s shareholders.

 
Today, we have much in common with the great technological transition of the early 1900s. At that time, our industry faced a fundamental question of whether to keep selling the popular horse-drawn equipment or switch to tractors. Deere & Co. (www.deere.com) stood fast in its belief in the proven tools of the past, writing in one bulletin, "There is nothing as yet, we believe, to prove the idea [for tractors], but there is much to substantiate a conclusion that the horse will always be the mainstay of the farmer."

Despite that statement, Deere eventually moved ahead with tractors, providing the tools to customers that they demanded. We’re spotting the change that is required now, too. We see that, while the move to tractors let farmers go from a work-intensive to a capital-intensive way of doing business, the Internet is letting all of us move from a capital-intensive to a more efficient, information-intensive approach.

At Deere, the Internet is giving us a new way to communicate with customers, letting us eliminate expensive guesswork and deliver what they truly want—every time and on time. We can schedule production based on actual sales, not on what we project customers will buy. When dealing with customers’ equipment, we can anticipate maintenance requirements, keeping many problems from occurring in the first place and avoiding the need for repairs. By knowing more about what customers like and dislike, we can also accelerate the development of new products and features.

Through the use of new communication tools internally, we can cut back on the physical assets that we amass in inventory and in showrooms. In addition, we will not feel restricted by geography, easily connecting even to the global corners of our enterprise in China, India, Russia, and Brazil.

All of that technology will not diminish the hard reality that we produce heavy machinery that works in tough environments, so customers will always have important needs for service. Such service requires the finest global logistics systems for ordering replacement parts, supported by the best-trained and motivated service technicians using the most advanced online diagnostic tools, often operating out in the field. This will require the finest network of dealers and distributors.

Our business will nevertheless be reforged. The Internet is altering the balance among suppliers, manufacturers, distributors, and customers by making price comparisons easier, erasing geographic boundaries, reducing search costs, increasing expectations, and speeding up decision-making.

In just one example of how these changes will play out, we held a series of online procurement trials last year. While it normally takes a month to collect and negotiate price quotes, this reverse auction compressed that into four-hour sessions. Because qualified suppliers were competing to win our business, we saved an average of 10% to 20% on these supplies.

Yet we understand that the Internet isn’t just about cutting our costs by a few percentage points so we can reduce prices for consumers. It’s also about extending our reach to consumers to create value from our entire interaction.

So we intend to deliver to customers a range of new services and innovative products. As a beginning, we introduced a Web site, www.johndeereag.com, designed to help U.S. farmers and ranchers become more efficient and profitable. This offering, soon to be followed by sites tailored to other markets worldwide, delivers information to farmers and ranchers, agribusiness associates, educational organizations, and special interest groups.

Visitors can check out prices and specifications for not only our new equipment, but also for used equipment and for competitors’ products. In addition, we provide information about the availability of service and parts, plus third-party ratings on all kinds of machinery. We’re also offering up-to-the-minute information on weather, markets, and agricultural news, and are offering ways for customers everywhere to share information to maximize yields and increase productivity.

We intend to provide customers help with their planning on job sites, management of their fleets of heavy equipment, and their data storage. We plan to help them solve problems so they can become more productive and more profitable.

Taking advantage of another type of technology, the Global Positioning System, we’re becoming more precise in our efforts to help farmers better understand the yield they experience in their fields. We’re also applying GPS technology to a variety of other tasks, such as construction machinery fleet management. On the farm, a producer uses GPS information to adjust how he seeds and fertilizes. In construction, a fleet manager knows precisely where his equipment is located and whether it’s operating.

We are just at the beginning. Even though Internet adoption is unparalleled in the history of media and technology, it is only in the first wave. Today, customers can access our help from their homes and offices. Soon, they’ll be able to access the Internet from their personal digital assistants, from their cellphones, and—with the advent of ever-more-advanced onboard communications technology—from their automobiles, trucks, combines, and tractors.

Change will come more quickly over the next decade than it has in the past. Customers will become more comfortable with technology and the Internet. Like the long-ago move from horse to tractor, the Internet will bring us dramatic advances.

It is a privilege to lead at a time when the breakthrough potential is so great. The prospect of new strategic options opened by new digital tools that are so much more powerful than ever before imagined is invigorating. To have the chance to reach new heights in customer satisfaction, while simultaneously being able to take out unprecedented amounts of cost, capital, and cycle time, is energizing.

Lane is chairman and chief executive officer of Deere & Co., the large producer of agricultural equipment and forestry products. He can be reached at hs00477@deere.com.