Rob Dongoski, Food & Agribusiness leader at EY, and now Kearny

In the second episode of the DIALed IN webcast, Allan Gray welcomes Rob Dongoski from EY.

Allan Gray:

Today, we're really fortunate to have Rob Dongoski from EY joining us. He runs the ag and food division at EY. He and I, in full disclosure, have known each other for quite some time. So, I'm looking forward to the opportunity to get a chance to visit with him here on the second installment of our DIALed IN podcast.

Rob Dongoski:

Yeah, thanks for having me. It's always fun connecting.

‍Allan Gray:

I talk about EY quite a bit. We have a great partnership. We work together on a number of different things. But when I mention EY, people are like, “Who is EY? What do they do in food and agriculture?” Maybe you could take us through exactly who EY is and what they do in the food and ag space?

‍Rob Dongoski:

In EY is one of the larger professional services from the world. We've got about 400,000 people globally and focused on insurance, tax and then consulting and transactions, which is where I spend most of my time. I'm actually part of EY-Parthenon, which is our strategy firm, where we're working with any client across the entire food system on where are they going, how they get there, what are the new markets, all kinds of things that are challenging their business or helping them reach new heights.

Allan Gray:

You were the founder, if you will, of the food and ag side of the practice a little bit. How did you get there? Give us a little bit about your personal background, how you got to where you are in developing this food and ag space.

Rob Dongoski:

I'm a native of central Illinois, Decatur, specifically. I've always been around the corn, soybean world. It's just part of what I grew up with. But I started my career in banking and then eventually ended up at EY. And at one point there, in about early 2000, we sold our consulting practice. I spent time at Fidelity Investments as I didn't move with the transaction. But I came back to EY about 18 years ago. And when I came back, I started working with food companies right out of the gate. And what I noticed right away is that you can't really bring all the value to a food company if you're not thinking about their sourcing and their agriculture side. What I was the early innovator on was linking ag and food together and treating it not as individual sectors, but really as a system, a very interconnected system that has primary actors and secondary actors. I've been doing that for almost 10 years now at EY. It's been a lot of fun, to say the least.

‍Allan Gray:

I do credit you with that thinking that way. We've done some of that here at Purdue, too, over time. Really tried to think quite a bit about ag and food as all one thing. Although, I do think that a fair amount of the industry still, in reality, has a lot of ag stuff thrown over the wall of food, and then food does its own thing. But that seems to be changing. And in fact, I think, one of the terms that you coined, perhaps I'm giving it to you, and I shouldn't give it to you, and you'll give credit to somebody else, but I credit you with this idea of a food system reimagined, as you call it. It's to me an underlying brand of EY food and agribusiness is this food system reimagined. Tell me, what is the food system reimagined and what do you reimagine it being?

‍Rob Dongoski:

Yeah, thanks for the credit for the term. I've got a great team and marketing is not my forte, so I'm sure it came out of the team somewhere. But basically, what food system reimagined is, it's a decade-forward view of how we see the food system evolving. It's not like it's a point in time, but it's not tomorrow, it's not a year from now. But if we look at a decade, what's going to be different? And there are three main pillars that we think about: Number one is an increase in consumer centricity. And people argue, hey, the food system today is consumer-centric. That's where it all ends up. But I think we've seen innovation happen more from a production standpoint and not with consumers in mind per se. And now, consumers are really driving that narrative to say, Here's what I want. Here's how I want it. Here's the kinds of ingredients I want in my food. I think that consumer-centrism is one element that's changing things pretty dramatically. The second one is around planet friendliness. Again, I think people really criticize the ag industry specifically for greenhouse gas emissions and all that.

I think at the end of the day, can we be better? Yes. Is it the big black eye it gets in the press? I don't think so, but there's definitely an opportunity to be more planet friendly as a food system. Then, the last pillar really around it is a new connectivity. Today, we basically move food from left to right in a linear format. We think about the future being much more connected, much more ecosystem oriented, various networks inside networks, things like that that we think will have tremendous impacts on the supply chain, the value chain all the way across.

‍Allan Gray:

Rob, I think about these concepts around consumer-centric, planet-friendly and connectivity. Part of me says this is just not new. I suppose that my grandparents or my great-grandparents raised their own food. So, they were pretty focused on themselves, and they knew not to mess things up or they wouldn't have those crops the next year, those animals the next year. And I don't think you'd be more connected than doing it yourself, probably. So, tell me why you think that the food system needs to be reimagined. If I could imagine one 50 years ago.

‍Rob Dongoski:

I often say the future of food is retro. When I look back, I think you're exactly right. When I look back and I say, you know what? There was a point in time where consumers knew their producers. When we go back, not even that many decades ago, half a dozen or whatever, you knew who produced your meat. That was somebody that came from the butcher. It came from out in the farm somewhere. You knew where it came from. You had a forest on one corner. You had a baker on the other side. By the way, you actually had milk delivered to your house. So, home delivery is nothing new either. And so, I think we are talking about retro, but the connectivity that consumers had top producers in the past was around physical proximity. And now we have a global supply chain. When you look at that, it's like, how do consumers get to know producers again? I don't think it's as much by physical proximity as much as it is about data, insights and transparency. I think now we're starting to see a digital connection versus a physical connection.

‍Allan Gray:

Interesting that you talk about that in terms of particularly the connectivity piece being digital. Of course, at DIALed IN this is what we focus on is this whole idea of digital, so perhaps self-serving. But you had written something recently around the idea of value networks. And you talk about this physical-digital disconnect that exists right now, some of what you're talking about. Can you give me some sense of what you're thinking around why you see the future of the food industry being this idea of around value networks? What is that? How do you see that playing out?

‍Rob Dongoski:

The strategy question has always been, where do you play? How do you win? I think the strategic question now starts with, what role do you play in the future food system? Is that role that you want to play different than the role you're playing today for one? Second, is it as valued in a future food system as it is in today's food system? And if those things are not right on track, then you ask the question, what should I do? And so, I think you start to see opportunities to leverage your assets, leverage your capabilities into a new value formula that consumers are desiring. So, if consumers are going to make choices on their food beyond just taste and affordability, which I think will always be the two criteria that is the primary choice, right? But if they start to put things in the 3, 4, and five slots that move up to is this planet-friendly? Are the animals treated humanely? Do I know exactly what feed went into this animal? When they start to make decisions off of that, the connectivity to your suppliers starts to change.

You start to think about what's the value that I'm driving versus what do I need from my supplier to really think about bringing that value forward to the consumer. We talk about segmentation, but when you think about a food system that starts to become personalized, you're creating a market of one. So how do you start to cater to a market of one that is in a personalized food system? Clearly, it won't be a single person, but you're going to really micro-segment the consumer population going forward.

‍Allan Gray:

This is really what that value network is driven by – the whole concept of connectivity, although the reality is that planet-friendly is a part of that, particularly because the argument is that the consumer wants to know how did you treat that field. How did you treat that animal? This is partly the planet-friendly side of it that needs to be connected. My question is to you, would the consumer pay for that?

‍Rob Dongoski:

We're going to see, I think, a couple of different consumer behaviors. One is consumers who care a lot about their food. They want to know a lot about it, and they're willing and able to pay for it. Then you're going to find consumers who aren't as interested in their food and they're unwilling or unable to pay for it. I think if you start to think about those two segments, it starts to really shape the food store. I also think about farmers at the other end. Are farmers making decisions around transparency? How much does my seed cost? Why did the seed cost go up 15% this year? It's the same seed I had last year. Tell me why that is. Are we willing to give transparency to farmers as well to make their buying decisions? Now more than ever, I think we're starting to see this digital-physical asset combination, particularly in upstream farming, where it's not about the price, it's about the outcome. You start to think about that narrative, and I think it becomes very interesting when you start to merge physical and digital assets that way.

‍Allan Gray:

Rob, I'm going to take you down a path that maybe you're not prepared for. Let's just see where this goes in a minute.

‍Rob Dongoski:

You always do this, so I'm prepared for that.

‍Allan Gray:

So, I'm thinking a little bit about this connectivity piece. Clearly, that's that digital footprint, or to me at least, I think of it as that digital footprint. How are we going to share the data and the information across the system? We haven't done that in the past very well, in my judgment. In fact, I'm not too sure and you can agree or disagree with me that I'm still not sure we do it well inside the firm, much less try to do it across companies in that system. By and large, the consumer trusts our food system. What created that trust? How did that trust get created if we haven't been transparent in the past?

‍Rob Dongoski:

I think we can give credit to a lot of different people in the value chain. I think we can look at our regulatory bodies which people have learned to trust. Now, we can say that consumers have skepticism around big institutions. That can be played both ways. I think there's comfort in big brands, big, friendly brands that people like and trust and have built that brand loyalty, brand equity. I think that's another area that built trust. I think today's world is starting to shift a little bit. If you look at the number of farmer's pictures that show up on packages today, that tells me that big brands are trying to appeal to consumers in a different way. Is that farmer that produced the product inside the bag? No, but it represents that they know where the food came from, and they've got a connection all the way back to the land. I think that's the message. Then, you can look at the rise of some of the small brands where I think the big challenge is big brands have to figure out how to appear small and small brands have to be careful not to get too big.

I think particularly in the Gen Z and Millennial generations, the fact that you found a cool brand, you virally spread it to friends and everyone's trying it, that's a cool thing for a small brand. As soon as that thing gets really, really big and everyone has it, they lose interest. I think there's some value in having more connectivity to the brand in a couple of different ways.

‍Allan Gray:

That's interesting, Rob. Maybe we practice that, but I don't think we did because I didn't expect you to answer that way. But that is exactly what I was thinking about, particularly this idea of, well, you have government regulatory bodies. That for sure is there. We've been pretty good at that in the U.S., frankly, over time. In Europe, maybe not so much. The one reason why you have less trust there is the regulatory bodies struggle. Historically in that space here, maybe not as much. But brands have played such a big role over time. It seems to me that the new, smaller brands that you're talking about have a tendency to have positioned their brand more around the transparency piece and the data and the information, as opposed to the big brands and established brands didn't do it that way because they said, one, it's hard to do, by the way, it's hard to do traceability and transparency. So, they said, ‘let us take care of it. Trust us. We'll do this for you.’ And that worked. But now, the consumer is saying, well, now, wait a minute, are you really doing what your brand says you are going to do?

That's what I think is shifting here. And I say that in a sense that, and you know this because I've told you this before, I'm not convinced that there's enough consumers in the marketplace who are going to go out with their phones and QR codes and search down every piece of food they're buying, where it's going to go. I don't think there's enough of those, but there's enough big brands that have figured out if I don't have that capacity, that capability, that ability to not just say trust my brand, but actually verify that my brand stands for what it stands for, I'm in trouble. Does that sound right?

‍Rob Dongoski:

Yeah, I think you're right on point. One thing is to think about Western brands in an Eastern nation. Eastern nations tend to trust Western brands, not because of the brand itself, but because they know the scrutiny that it goes under. There are certain Eastern countries that will buy a Western brand before an in-country brand simply for that reason. I think the other side that's hurting big brands, particularly with, again, I think the younger generations, is the fact that we've got a lot of stories and blogs and stuff that come out and talk about all the different things that these big brands have done and so forth, on the heels of already a consumer population that distrusts large institutions. Big companies fall into that institution category. I think their challenge now is to reconstitute their brands for something that may be different than what they were known for a decade or so ago.

‍Allan Gray:

So let me just express my bias. I think yours is similar. Our industry is really good. The ag and food industry is really a great industry. It has a great history. It has a great story to tell of innovation over time. This change in the marketplace that you feel is happening, and I do too, is one that we struggle with a bit because it's a set of technologies that maybe our industry is not as used to or familiar with. What I like to say to people is we are very good at taking physical stuff and innovatively turning it into physical stuff that's more useful for humans. And this digital piece is not core to what we do in food and agriculture. So, to be innovative there is a bit more of a challenge for us to think about because it's an enabling technology rather than the core of what we do. So, I think of it that way. So yes, what we're talking about here is a change where likely that technology is the core of what helps you get to that. So, what do you think have to be the assumptions that need to be true for our industry to really adopt this digital transformation mindset? What are we going to have to have to make that actually happen?

‍Rob Dongoski:

There are two misnomers, I think, about agriculture. One is that they're not innovative. I know my peers in the automotive industry come over to me and talk about... Five years ago, they were talking about autonomous vehicles, and I said, we've had auto-steer in place for a dozen years. You guys are a little late to the party. Innovation happens. And if you walk on any farm or you watch a farmer's machine break down the middle of a field, you'll see areal innovation in action as they figure out how to get that thing running again. So, I'm challenged to think that our ag industry is not innovative, but I don't think it's what has to be true. I think the question that I think everyone has to ask is, when you think about technology on the farm through the system, the question is, will you disrupt the industry, or will you be disrupted? And I think there are only two choices. I don't think you can go halfway on some of these technologies. I think you have to decide which one matter and place some bets. And so, I think that's going to be the big play.

We can talk about blockchain traceability, and you can stay out of that market, or you can enter the market, do one or the other. But I think once you dabble, I think you're really hedging bets, not placing bets

‍Allan Gray:

That's an interesting way to think about that is either you have to be all in or not. Let me ask you this question about it. My sense is we can sit on the outside and say, we know what the choice should be, or we think we know what the choice should be. Sitting on the inside of that as I try to do that and think about being at the firm level, I think it's a harder choice than it might seem. Oh, yeah. Because, well, look, the industry, by and large for all of its history, has mostly been built off of private information. The more we think about adopting digital technologies, we have to think, as you do, as you suggest here, a value network, where we got a network of people working together in this process, suddenly information, which has been our primary currency of value for various players within the chain is now being commoditized in that process. I think if I'm in the industry, I have to think carefully about what does it look like for me to be in the industry? What does my business model have to look like if it's about a transparent information system, not one that is built on private information?

And I think the easy answer is, well, you're going to get disrupted if you decide to stay with private. But private has worked for 1,000 years.

‍Rob Dongoski:

Let's just take blockchain for an example, private versus public blockchain. There has been for a while, a raging debate around that. You have got to be careful you don't get trapped in a private blockchain. And so, is a public blockchain going to be more transparent? I think those are some of the questions. I don't mean to say that you have to go in and digitize and bring technology to every single aspect of your business, but we've gone through period after period of technology over-hype. And I think we have to be careful and selective about the technologies we go after. I think ultimately you say, how do I decide where to put my bets, which technology to put in? I think it starts with what experience are you trying to disrupt in the industry or what experience are you trying to create with your customer, your supplier. Everybody uses Uber as a great example. When you think about Uber, why did it succeed? Well, they looked at the industry and they said, Taxis have dispatch –bad connection, can't hear them. They say a taxi is on the way and I have no idea when it's coming or so forth. Then ultimately, the taxi says they take credit cards, but they really want cash. How many times did you get out of a taxi thinking you're paying with a credit card, and they go, oh, sorry, we don't take one. What did Uber do? Uber said, well, let's just not even have a dispatch service. Done. We won't have to deal with that at all. We won't have one. We will only take credit cards. I think that bold disruption was all about the experience first. It wasn't that the technology was selected, but it was the experience they wanted to create it. And that's what really, I think, disrupted that industry. I think we have the same opportunity with consumers in food and farmers all the way upstream in the fields.

‍Allan Gray:

That's really insightful, Rob. And it's one of the things that I'm glad to hear you say. It's what we focus on in DIAL Ventures. The technology is not what drives DIAL Ventures. It's what problem do we need to solve? What's the challenge that we need to solve? I was just interviewing a potential fellow for our next cycle. He said, ‘Well, Allan, how do you feel about AI?’ I told him, ‘I'll tell you exactly what I told him. I said, ‘Well, in general, we're technology agnostic, but we want to go and solve a problem.’ Frankly, a fair amount of the challenges we've got in food and agriculture could probably be solved with the tech stacks that already exist today. You don't have to get all that fancy to start trying to actually solve a problem that exists out there. But if AI is the right solution for the problem we're trying to solve, or a blockchain is the right way to put together the system, we're all about those technologies being a part of it. And of course, in the end, you don't want to ignore the fact that VCs will fund you if you use the letters A and I.

But the point that I think that I hear you saying, and I agree with it, is this whole idea that our decision is around what problem are we trying to solve, which is ultimately what are we going to disrupt in the industry. Because the solving is saying, well, it's being done this way. We think it should be done that way. And then figuring out what the technology is that should help you enable getting that done.

‍Rob Dongoski:

Yeah, it's about discernment. It's about determining what really is going to make an impact. But if you're running around with chat GPT trying to figure out how to solve agriculture problems, you're a hammer looking for a nail. You're sitting there upstream going, farmers are struggling with what to plant next year or they're thinking about region ag, they're thinking about this, thinking about that. That's a problem. Now, if you solve that with chat GPT or you solve it with some really smart agronomist and a pad of paper, who cares? You're solving the problem. Now, you may start with a manual, maybe not technology-efficient solution to begin with. Then the question gets down to, can you scale? And now, maybe you need to think about heavier technology, a little bit more bold investment that we really start to go down the path of scale.

It's got to ultimately be driven by scale. It's one of the reasons why we're reminding people over and over, can we be better in our industry? The answer is yes. Should we be better in our industry? The answer to that is clearly yes. We should always be striving to be better in those things. But we also have to remember that the scale at which we are able to do things in agriculture is a pretty shocking credit of what we can do and how that has led to the ability to feed a growing population better and better over time. So, we're pretty good.

Someone asked me the other day, what do I think is the most disruptive technology in the last 30 years? I said Excel. Because I think there's still a lot of business problems that are modeled and solved using Excel with data that may be collected in other systems. But Excel has been a phenomenal piece of technology. It's just at some point when you're like, I’ve got to scale this out to 10,000 people, it doesn't scale. Now, you have to get into something different. But I think that's a game-changing technology.

‍Allan Gray:

Rob Dongoski, thank you for telling me that because you and I 14 years ago, I think now, decided we'd dig into spreadsheets in the deepest way we could think of doing it in a class that we were in together if I recall correctly.

‍Rob Dongoski:

I think that's about right. I go way back. I even go back to Lotus 1, 2, 3. We were writing macros back in the day.

‍Allan Gray:

Well, Rob, one last question for you as we get ready to go here. I'm curious about Rob Dongoski’s future in food. Tell me a little bit about the three pillars of the Reimagined food system. And is Rob Dongoski reimagining his own food system?

‍Rob Dongoski:

I do have a small farm. I'm obviously working pretty hard at EY these days, but I do think about my farm, and I think about what can I do with it? And I think about things across the board. Do I want to be in animal production or plants? Do I want to try to source food locally to restaurants? Do I want to put up a big greenhouse and produce something at a little bit bigger scale? So, I'll be doing something for sure. For me, it's time and capital like a lot of entrepreneurs. So, we'll see. I'll say stay tuned and bring me back on DIALed IN in another year. Maybe I'll have a better answer for you.

‍Allan Gray:

Rob, thank you so much for taking the time, providing some great insights to us here. I wish you the best of luck.

‍Rob Dongoski:

Thanks, Allan. I appreciate it. Good luck with the DIALedIn programs. Wonderful program. Thank you.