| Rural System, Inc.
Sustained rural lands; sustained profits
The Strategic Plan
Draft, August 11, 2003
Summary: What's Rural System, Inc.?
Rural System, Inc. is a proposed new for-profit corporation, a conglomerate of over 50 small natural resource related enterprises operating throughout Southwestern, Virginia. Its center is in Radford, Virginia. Some of the enterprises, subsystems, are new and some are existing businesses that have affiliated with the System. It is a system doing modern, sophisticated, computer-aided management of the lands and waters of an eastern US region in order to sustain long-term profits and quality of life for citizens. It provides services, facilities, equipment, and merchandise for creative, diverse uses of private lands that produce profits for landowners and others over the longrun. While including outdoor recreation and specialized tourism, it deals in rural development through modern forest and wildlife management, restoration, enhancement, and production from the rural land and water resources.
The umbrella entity is a conservation and education organization. It may use national and state lands and waters but, most importantly, it provides opportunities for the owners of private lands and waters (often for absentee owners) to experience profits related to superior land management. These lands and waters are called Pivotal Tracts, and managed under contract. While managing these assets, Rural System, Inc. provides profits to the landowner, staff, and investors from related unified business units. Half of these units work from the managed lands. A central unit provides incubator-like services and allows the corporation to harvest public research investments, to achieve economies of scale and division of labor, to gain synergism, and to stabilize employment.
The enterprise leads the region in computer-aided, year-around, private land management. It shares funds with citizens and originators. It links citizens as well as visitors to the land and its long-term potentials for profits. It provides an alternative regional identity, one of a place for modern rural resource development and management. It links buyers and users with producers of certified forest products and wildland resource opportunities from well-managed rural land and water resources. Successes are achieved via diligent work with personal incentives, diverse enterprises and products, and computer optimization of a total system. It overcomes the old failures of natural resource management, i.e., diseconomies of small-scale operations, mixed objectives, lack of diversity, seasonal work, lack of annual income, and failure to add value to products and efforts. It capitalizes on innovative uses of the Internet, global positioning satellites, and computer mapping throughout the region.
Existing Strengths, Weaknesses, Threats, and Opportunities
- We have a new, socially-responsible concept for a for-profit conglomerate that advances long-term improvement in the land and water resources of a region, increases in employment, and stable or improved quality of life.
- We have an excellent location with major highways providing main access to all of the region, allowing us to use the resources of the local colleges and universities and the business acumen of the Radford University Small Business Development Center.
- Federal and state agency staffs are being cut and the major advantage of job security within such groups is decreasing. We can fill the gaps left by these cutbacks and meet needs of the public that are now only poorly served.
- We know where the results of billions of dollars that have been invested in rural and resource-related research are located. We can build on it.
- We have skills of systems analyses and "operations research," giving us special and strategies for optimization.
- We have the expertise of pioneers in developing geographic information system and applying them, giving us new capabilities for our customers in optimally locating forest and agricultural practices, making landscape analyses, and optimally locating utilities, impact analyses, and sites.
- As for mutual funds and personal stock portfolios, and as observed in stable ecosystems, we have diversified activities and profit streams from over 50 enterprises (our "Groups").
- We use the lands of willing landowners (and some public lands as appropriate) thus minimizing the needs for capital investment.
- We recruit from among the "best and brightest" within the natural resource schools, offering major advantages unavailable currently in most public-land related resource agencies (e.g., forests, parks, Extension, soil and water) that are recruiting from among graduates. Similarly we may attract experienced people from agencies with specific knowledge and skills.
- We have a special concept of System Central, a singular corporate management group providing leadership, marketing, accounting, legal, and other related services and support for all Groups of the enterprise. This coordinating and integrating role exceeds that of conventional "incubators" (following the poultry analogy, being more like a breeding area and hatchery) and delivers, as well, computer needs, security, a computer knowledge base, and operates a foundation that meets research, education, conservation, and environmental needs of the region and the business.
- Related to the above strength, we have a carefully structured total incentives program, one that links the successes of the business to the citizens of the region, the staff of each group, to participating land owners, and to investors.
- Our computer-aided techniques for quantifying the financial gains from increased production (with sustainability limits) and relating them to optimum profit with reduced costs, losses, and risks may motivate participation. For example, or work on vertebrate pest damage control (with few competitors) is a loss-and-risk reducing function.
- The conglomerate is needed within the region (southwestern Virginia), but it can be developed as a much-needed franchise in other regions with similar problems related to industrial changes, competition, "out-sourcing," environmental regulations, and changing land-use practices.
- The business concept is both new and old. Many people say: " wrapping your mind around it is difficult." It is new, very diverse and requires expertise on many technical and economic fronts. It also deals technically with many common topics (like hunting) in which many people have experience and hold themselves to be experts.
- Pricing will be difficult for products and services will be poorly known. Many actions are taken to increase future profits and rebuild land function and thus value. Multiple sources of income are planned to address this weakness.
- Some aspects of the business are controversial (pest control; wildlife as disease vectors; wilderness preservation; clear-cutting; sustained yield; family farm preservation; waste disposal on farmland; watershed management; and energy conservation). These require using research results, education, effective responses, demonstration projects, and legal action.
- Computer optimization is hardly known, and if so, it is treated skeptically. Active current use of these practices within industries and other large corporations is hardly known by the public. Slogans like "garbage in/garbage out" persist. Skillful use of feedback, feedforward,and failsafe systems along with demonstrated gains from using the optimization- and expert-systems will reduce this weakness. Optimization may not be known effectively by people employed and so the essentials will have to be taught to them.
- Gaining and stabilizing the employment of experts to guide each of the more-than-50 units will be difficult. Schools now point students to government agencies. The typical graduates, once longing for a "cabin in the woods," now seek amenities for themselves and their families. Providing adequate salaries and benefits, building esprit de corps, and locating staff in desirable towns throughout the region may reduce this weakness.
- We shall have to compete with short-term profit-maximizers - resource-miners, cut-and-run, and quick-buck specialists - for we must develop a system with dispersed managed land units that collectively, over time, provides sustained profits.
- We may not be able to start without major grants or support from government or foundations. (The desire is to demonstrate that improved modern, sophisticated natural resource management can be achieved on private lands for a very long period operating in a capitalistic society, without government support. We shall have to compete with those groups and individuals subsidized by taxes until we can provide alternatives, education, financial incentives, and engage in litigation to achieve a new free-market in these goods and services.)
- The target region, southwestern Virginia (and areas of North Carolina, West Virginia, and Tennessee, and Kentucky) is notoriously short of African Americans. Achieving legally-required numbers of minority participants or employees may be very difficult. There are few African-Americans entering natural resource fields. We shall sponsor education for such people and recruit them actively for computer and more conventional roles within the conglomerate.
- Individuals are brought up in competitive systems, limited discussions before the TV, and large university classes with competitive grading. This company has incentives for cooperation, but that may not be enough to overcome individualism and build the collaboration and teamwork needed. Expert assistance will be sought.
- Landowners are independent. They may not respond well to offers to place their land under contracts and within Pivotal Tracts. Tax advantages, direct annual payments, improved land value, reduced risks from fire etc. and improved forest land values may not be sufficient. The goal of widespread land improvement, 500,000 acres within 6 years (it only being achieved on a few tracts), may have to be discarded.
- We shall have great diversity of topics (the name of each of the over-50 groups) but also of financial contributions to the corporation. Some units will be high profit producers, others will not make profit and be recognized as a "cost." Assuring cooperation and balanced performance within the conglomerate will be a persisting challenge.
- We may not be able to hire the people with the expertise that we need, and the high costs and diseconomies of gaining expertise from consultants (there are few) will be great.
- There is currently being discussed a policy for federal agencies to hire national park and forest action (e.g., fire fighters) from private groups. Companies responding to these conversations and suggestions may emerge and expand, and become competitive, at least for some Groups.
- Private consultants exist for forestry and a few other activities of the company. We shall hire superior consultants but we shall have to compete with these narrowly-focused consultants by using profitable forest inventory and accounting technology, providing dynamic planning, selling wildlife and land analyses and maps, and providing income incentives from the general financial welfare of the entire conglomerate.
- The public has had free access to and gains from resource experts. We propose to charge for similar (but better and more specific) services. We shall have to create products and services that they will buy, compared to asking for and getting advice from cooperative extension service tax-supported advice and that from county, state, and federal natural resource agencies.
- Drought, air pollution, massive forest fires, extended war, and long freezing periods can have region-wide negative consequences on resources, people, and the corporation. Diversification is somewhat responsive to this perceived weakness, but insurance and contingency tactics will be needed. The 150-year planning period, sliding forward (see under Values and Beliefs) requires continual insightful work on this problem.
- There may be disruptions in services and vandalism from the people strongly opposed to our philosophy, work, or project outcomes. We will work for some companies (e.g., a gas company to supply computer maps; a fishery on a power-generating lake) with whom many people may be very angry and opposed to the client's proposed action on the land or waters.
- Smartwood is a corporation actively engaged in certifying lands (based on international criteria) as sustainable forests. They have a chain of control that allows products to be certified as being from sustainable forests. These wood-products can gain substantial additional value due to being certified. We can provide the plans (he Trevey), participate in certification, and develop products from such woods.
- We have links to the Just Connections organization and may be able to affiliate with people in small communities (e.g., Clairfield, TN) that are in great need for enterprises and employment within the once-busy coalfields.
- Affiliations with Radford University's geology and geography department may provide cost-effective development of GIS software and products for sale. Affiliations with Radford University open opportunities for gaining (a) expertise for startup and business management, (b) economies in global trade and tourism, (c) suggestions for the above-mentioned racial topic, and (d) arrangements for offices and operating space.
- Developing effective small-area gardens and a system of aids as responses to people using rural areas as bedroom-spaces as they work in the cities. We may respond to the order to "handle it; handle it!" including that with their neighbors, all in their busy, high pressure, no-time-for-outdoors-work world.
The Vision for the Business
Its success in improving the social, economic, and environmental health of the region can allow the enterprise to become more effective and offer franchises. It becomes a nation-wide corporation having many more groups than proposed in 2003. Thus, similar influences can be transferred, years later, throughout a region near southwestern Virginia, then internationally. It pays off start-up loans at the end of six years and becomes a three million dollar a year business. It expands in size and effectiveness in improving the social, economic, and environmental health of the rural component of the Southwestern Virginia region. Several centers of activity (franchises) develop in the US and rural areas of the world. It becomes increasingly profitable for its clients, investors, and staff in relation to the significant changes in productivity and profitability of the lands and waters of its affected regions. The work of the diverse conglomerate will be recognized as providing a major paradigm in rural management and stabilization and, as such, will become the basis for a highly profitable business operating well past this century, given its special 150-year planning horizon.
Proposed Actions of the New Conglomerate
- Develop a Board of Directors
- Develop a brief descriptive document.
- Secure funding for the System Central software (accounting, planning, Internet-related business software, GIS, harvest scheduling, The Trevey, and reporting) and computer rental as required.
- Affiliate with as many as possible existing enterprises (e.g., Wise County bakery "Granny's Goodies," Claytor lake entrepreneur, CMI of Virginia Tech, Glencoe Museum, local restaurant for "Brown Bags", local outfitters, Britt Boucher and Blue Ridge Woods Cooperative and Foresters, Inc. of Blacksburg; town governments or others to create Trading Markets; weight clubs to sponsor The Challenge annual "fair)
- Affiliate with interested local university librarian(s) to implement The Rural Knowledge Base Group
- Affiliate with local college or university for developing Novosports, GPSence, Tree Tops, he Wildland Crew, and nature related sports
- Affiliate with a local stable to develop the potentials of The Stables
- Affiliate with a local owner of a dairy goat herd for startup and expansion and developing the goat system
- Affiliate with a poultry breeder/raiser to develop he Goose Flock and expand its presence.
- Hire a student to affiliate with the blueberry experts at the state farm in Russell County and with Robert Adams for developing blueberry-patch franchises
- Affiliate with a local scout troop to study the feasibility and potentials of the rabbit enterprise
- Affiliate with Glencoe museum and Radford University to develop a prototype garden
- Affiliate with local surveyors for suitable property boundary surveys and related GPS work and advice
- Affiliate with a local winery (or several) to develop a picture of demands for quality, locally-grown grapes in suitable quantity (see The Vineyards)
- Employ a general manager and managers or directors of the major Divisions of the enterprise, with appropriate office support, currently seen as:
- General Manager and Director with advisors (System Central)
- Assistant General Manager - promoting, assisting, and developing the full set of Groups and developing affiliations and new programs with existing enterprises such as for The Memorials Group. Supervises staff employees for "The Pivots"; "The Realtors" (with strong GIS inputs); The Safety and Security Group
- Operations Research Director - modeling, simulation, optimization, especially linear programming, expert systems, and statistical analyses for decision making
- Spatial Dynamics Director - modeling and GIS support for all units with OR staff
- Safety and Security Director - sales, and anti-trespass, vandalism, poaching, etc.
- Laboratory Director - analyses for all Groups and developing new markets (forage, food habits, disease identification, water quality, air monitors, noise-level monitors)
- Education and Training leader - for staff training, special programs that tend to mix advertising, marketing, "conservation education", "nature study", and "environmental education.", sales of distance-learning opportunities and supplies and materials and training of people seeking responsible membership in several groups (e.g., stalkers, seekers, anglers, hikers, etc.); employ on contract a TV camera staff.
- Forestry (working with the forestry cooperative and dealing progressively with rangelands and pasture and all forest-related groups)
- Nature Folks Manager - dealing with all nature and wildland groups including The Camps Group and Stoneworms. Special staff members handle Floats, Fog Drip, GPSence,
- The Tours Group Manager - working with international as well as US sites, also local tours for groups such as The Owls Group;
accommodations as with Dogwood Inns
- Products Manager - patents, licenses, regulations, marketing, packaging, delivery, etc. of the list of products as well as those opportunities seen and developed by staff. A work area and warehouse is developed for production of products and prototype developments
- Wildlife System Manager - promote and work with staff for 15 Groups including fisheries, pests, soundscapes, and viewscapes
- Gardens Group manager - designing the system garden and working with soil and related systems including ecorods, decomposition, publications, plant products, and garden items, pest damage reduction, and fences
- Pasture and Rangeland manager - employ a Tech graduate student to complete a MS thesis on an optimum regional pasture system (with computer software) with a contract to implement the total system upon completion and graduation; work with fence group
What the company really does is to employ experts, help them improve, help them work together and with the citizens of the region, and send them to do excellent work on the land for profits. It asks them to become members of a modern system, to take a systems approach, to be very up-to-date and cost effective (two often-conflicting ideas), to concentrate on profits, but to assure that the future "factory" or operating platform is of equal of greater productivity or quality than when starting work.
Corporate Values and Beliefs
Major strategic values and beliefs:
- Land is a working platform with unlimited opportunities for producing ideas, products and services
- The platform or "factory" must be tended very carefully if it will improve and sustain profits
- Dynamic and chaotic social and environmental conditions, as well as resources undergoing predictable transitions, can be estimated and profits sustained if managed with computer optimization as a whole system.
- Major fossil energy shortages (of various types) will occur within 20 years and such shortages can be the source of major profits if preparation is made for those conditions.
- General systems theory, modified can be an aid in organizing and communicating within the complex enterprise. Modular subsystems with a common objective and set of policies can excel in natural and rural resource management.
- A "rationally robust strategy" (Giles et al., see References below) needs to be used in rural resource management.
- The principles of biology and ecology, allowing species and systems longterm survival, can be used to advantage within Rural System, Inc.
- Ranging, comprehensive diverse outdoor recreation and tourism, can excel in a region with evidently increasing quality of rural life and natural resource management.
Secondary and related policies or values and beliefs:
- We are intent upon natural resource improvement
- We desire to stabilize or improve the quality of the rural environment for people living there and visiting
- The concept of "resource" includes and we emphasize human wants and needs
- Resources are a function of four manageable or possible-to-change dimensions which are (1) the energy-matter dyad, (2) time, (3) space, and (4) variety.
- The system may change under management by changing the social world or/and the physical world
- We advance through synergism
- Each Division or group provides superior services and products
- We each gain by promoting each other
- Divisions are unbalanced in size and function and profitability
- It is as important to reduce risks, lower costs, or reduce losses as to increase gains for the enterprise
- Rural System, Inc. succeeds based on bounded total profitability as well as financial (cash flow) stability
- Maximum resource improvement (that of the land and water "working platform", by many criteria) is more important than maximum profit.
- We work with and advance concepts of marketing that for us include four related actions.
- analyzing individual and group wants and needs;
- presenting new options and alternatives that are now or may become wants and needs;
- increasing desire for needed things and services (life quality enhancing and prolonging; socially beneficial); and
- assisting in finding legal ways for individuals and groups to satisfy these wants and needs.
- We use the classical 4-Ps of marketing but add service and relationship (as for the Saturn car) as in
Price = (product + service + relationship) + place + promotion
- Deeply involved in energy conservation, we are involved in net-energy budgeting in ecosystems and all of your activities. We have unusual insights into embodied energy and life strategies that have been successful in nature and desire to share these and implement socially relevant systems to improve energy collection, storage, and reduced or slowed losses.
- Do good work. The quality and quantity of the work will speak louder and more convincingly over time than any advertising the System is able to produce.
- Evaluate: a request for more services or fellowship is an expression of success.
- Land area influenced over the long run (the product index) is one major unit of effect. (A farmer with 1000 acres with an expected ownership turn-over rate of 12 years an average is a lesser success than a foundation acreage of 500 acres but expected duration of 100 years.)
- Youth are customers tomorrow.
- Profits in one area allow experiments in others; land use control and restoration (costs) allow profits tomorrow
- Success stories are better than paid advertisements. Both are needed.
- Services (from state and federal employee have seemed to be free; we need to resist giving free advice. Offer service. Low costs are in order when presented as a learning or experimental case. This allows higher costs later to be justified.
- Target people likely to afford products and services; work toward other customers later. The area and resource volume influenced per unit invested is the criterion for effect, not numbers of individuals contacted.
- Time is money. All reasonable costs and reasonable periods must be accounted.
- Every customer contacted by one Group person probably involves potential work by at least one other Group of the Rural System. Every employee seeks to connect customers to other Groups or individuals of the enterprise.
- Research is a cost; results or findings that are available within the conglomerate are assets. Contracts to do research for others provide opportunities. Profit is desired, but at-cost. Research in our enterprise for the first 6 years is very acceptable if there is >90% likelihood of using results profitably within the Rural System. (Otherwise delay until all available results have been "used up" or substantial funding is cost effectively usable.
- To have "learned" means to have changed behavior; to teach means to attempt to change behavior. Every presentation of any type (telephone call to multi-media) seeks to change peoples' behavior in ways compatible with the objectives of the organization.
- Break-even, marginal analysis and optimization are intuitive, but poorly understood. They rarely can be explained. Hide the complexity; use the analyses; present the "best" -- show the differences between the next one or two bests, e.g., compared to best (100) this one gets a score of 86; the third, 84.
- Whether desirable or not, most people think initially in terms of self-interest. Speak to it for the long run. It will probably be good for all of us.
- Total number of people contacted is not a criterion of marketing, only median cost per value of each request produced.
- Demonstrations work. Locate such demonstrations well.
- Promise only what you can deliver.
- Develop equipment pools, teams, and software, all to be general systems, which have multiple uses.
- We have many "messages", all in our slogans, guiding principles, as well as operational truths. You are encouraged to write and publish about them, as well as pass them along in any way (e.g., it is possible to find an optimum, then work to achieve it.) There are at least 50 distinctive market groups, the domain of each unit of Rural System, Inc.
- Special-interest groups must understand us well so we may have the freedom and low costs to achieve our objectives profitably.
- We support developing land easements, but believe it essential that they be managed by us and that financial gains for owners from such management be shared with counties as taxable income .
Key Long-term Objectives
An objective is to demonstrate significantly-improved private land management resulting from engaging in services of a for-profit, private enterprise. We shall work to reduce government involvement in such activity in direct proportion to our financial successes. We believe a market-based approach will work better in achieving superior land use than current dependence upon ethics, responsible behavior, altruism, or religion.
- Shareholders - We anticipate from estimates that returns on investment will be in the range of 4-7%. Investors receive memberships, tours, and notices of special events and other benefits and opportunities.
- Contract Landowners (Pivotal Tract Owners) - Owners receive a high percentage of the total profits of the total enterprise. This amount distributed is (preliminary only) about 40% of the total profit, proportioned on the basis of the percentage of their acres among the total acres in Pivotal Tracts. The work on their tracts increases their personal value of the land (thus care) and also increases monetary value of the estate.
- Management - Staff will, by the end of 6 years, be recognized as being among the best-paid employees working within the broadly-defined field. Discussions will continue about reformation as an employee-owned company.
- Citizen Groups - We believe that money cannot be used to solve a money problem. We do, however, believe that evident poverty cannot be a desirable condition for ranging. We shall seek to provide specialized employment in the region, assist in government projects, utilize incentives creatively, and pay cooperators, collaborators, and part-time employees well. We carefully avoid the firefighter's ploy (setting fires that can be fought for money) and fox bounty hunter's ploy (releasing female foxes to assure a future abundance of animals to trap).
Key Strategic Actions (Building, Exploiting Opportunities,
and Avoiding Threats)
We believe that the actions described above will allow substantial building and that the scope and details of the threats are so variable that the only appropriate response is in our planned diversification (the 50-plus Groups). The strategic actions are:
- Engage in a large program of public relations and marketing
- Engage in a sophisticated program of staff education (about the conglomerate and responding to threats and seizing opportunities)
- Engage in public education about rural resources and their management
- Conduct a public as well as within-house feedforward program.
- Actively fork on defining and re-defining the appropriate system context, the profitable subsystem
Future Strengths, Weaknesses, Threats, and Opportunities
Our future strengths will lie in improved software and access to appropriate hardware, and staff education and knowledge base. Planning and preparing for fossil energy price increases will give us advantages for the future. Diversification within the very-broad arena of rural resources will remain a strength and our expert-base will provide abilities to respond to opportunities as well as to threats.
Major Goals for the next 5 Years
- Secure funding
- Hire software specialist(s)
- Gain major software
- Hire major staff
- Affiliate with more than 5 existing enterprises
- Develop main and dispersed offices
- Develop 30 of the listed enterprises
- Eliminate major debt
We propose to continue with recognizing the systems property of equifinality - many different pathways to the same identical end-state. We propose to recruit and build as we discover experts, see opportunities, find sweat equity, see potential affiliates, see unique opportunities on lands of clients. As above, we propose to hire or gain the services of good people and begin work together. We have good objectives and a way of doing an important task better than in the past.
Giles, R. H., Jr. 1987. Systems ecology, marketing, and quality of life. Pp. 112-128 in A. C. Samli (ed.), Marketing and quality-of-life interface. Quorum Books, New York. xviii + 348 pp.
Sirgy, M. J. and R. H. Giles, Jr. 1987. System objectives: Dimensions and determinants. In D. Randell and M. Joseph Sirgy (eds.), System Research and Management. Proceedings of the Southeastern Conference of the Society for General Systems Research, St. Louis.
Sirgy, M. J., R. H. Giles, Jr., and B. Knuth. 1987. A systems model for unifying quality-of-life research. In D. Randell and M. Joseph Sirgy (eds.), System research and management. Proceedings of the Southeastern Conference of the Society for General Systems Research, St. Louis.
Giles, R. H., Jr. and T. Cason. 1990. Mapping the primeness of land for residential development. Proc. Conf. on Applications of Geographic Information Systems, Simulation Models, and Knowledge-Based Systems for Landuse Management, Blacksburg, Va. p. 393-404.
Giles, R. H., R. G. Oderwald, and A. U. Ezealor. 1993. Toward a rationally
robust paradigm for agroforestry systems. Agroforestry Systems 24:21-37.