Reaching beyond the low-hanging fruit – Indigo Agriculture’s climate change dilemma
come find out how Indigo agriculture might go from cotton and wheat in the US to the global stage
Indigo Agriculture’s mission is to understand how a plant’s microbiome improves resilience and ultimately crop yield in the face of industrial farming and abiotic stress factors exacerbated by climate change . In the class wrap-up, CEO David Perry warns that “strategy cannot be ahead of execution.” Licensing microbe cultures, conducting proof of concept studies, gaining regulatory approval, and filing patents are the execution piece. The strategy is deciding which of the stress factors to focus on and which geographies to expand into next. However, climate change will challenge Indigo in two ways – stretching the strategy and stressing the execution.
To understand how climate change will stress Indigo’s execution, we first need to understand Indigo’s product development process (Exhibit 1).
Exhibit 1: From observing robust crops to identifying and commercializing the responsible microbes
- Find a crop that for some reason grows well in stressful conditions (such as drought, cold, etc).
- Steal its seeds (or ask for them nicely), as inside the seeds contains the coveted microbes .
- Smash the seeds, isolate the microbes, sequence their genomes to determine something we’ll call the microbiomic signature of the crop.
- Use machine learning to figure out which microbes are missing from the control plant (grown in modern, industrial conditions), as the missing microbes, may be explaining why the control plant is not as strong against certain stresses 
- Bench scale development – make sure the microbes are safe and help the seedling grow
- Internal field trials (greenhouse experiments), and external field trials with real farmers
The product development process above is being codified by Indigo into a stage-gate approach, which makes sense to Indigo as they seek to reduce iterations, minimize uncertainty, and decrease lead time from promising leads to commercialization . To further decrease lead time, Indigo has also licensed more microbes from academic collaborators (both in the US and abroad), outsourcing steps 1-3 and starting at step 4. The drawback of the above approach is that by outsourcing steps 1 and 2, which require a lot of people to do the dirty work of collecting seeds from sturdy crops in far-away places, Indigo has less control over potential opportunities to respond to climate change in more severely affected areas where a country’s agricultural output and food security rely on a broadening, not narrowing, Indigo’s strategy.
One such country is Nepal. While Indigo’s seeks to provide value to enterprising US farmers, the Intergovernmental Panel on Climate Change found that those living in Asian developing countries with low altitudes will face the most severe effects of climate change . In Nepal, farmers faced issues not only with drought, but also with floods, which submerged farmers’ rice paddies and increased insect attacks . The dire need for these farmers to earn a higher yield on their crops could strongly pressure Indigo to expand its product lines to include coated seeds that provide resistance to a different condition (such as flood inundation) for a new product (such as rice which feeds over half of the world’s population).
But before that happens, Indigo will need to widen its product development funnel to support a greater and more diverse number of samples from abroad. As hiring personnel to constantly canvass the world for sample collection will certainly harm Indigo’s focus on execution, one option would be to partner with scientists and students at the Agriculture and Forestry University in Nepal, the only one of its kind in the country, and send representatives from Charlestown to learn the challenges that the local farmers are facing, talk about the promise of microbes, and teach students and faculty how to collect seeds from promising resilient crops and relevant control crops for further genomic testing. Given the relatively high costs of ~$200 to sequence these microbe genomes today (Nepal has a GDP/capita of $694 USD), Indigo will need to assume parts of Step 3 and Step 4 of Exhibit 1 to identify promising microbes . Indigo should also strongly consider hiring climate scientists to model which geographies, conditions, and crops will help Indigo make the biggest financial and societal impact going forward. By collaborating with agriculture universities in areas predicted to be hit hardest by climate change, and adding climate scientists to the staff, Indigo can expand its strategy while putting as little stress on its execution as possible and more closely fulfilling its founders dream to feed the world. (words 743)
 Iansiti, Marco, Michael W. Toffel, and Christine Snively. “Indigo Agriculture.” Harvard Business School Case 617-020, October 2016.
 Iansiti, Marco, Michael Toffel, Kerry Herman, and Julia Kelley. “Product Development Fundamentals.” Harvard Business School Technical Note 617-024, October 2016.
 Climate Change 2014: Impacts, Adaptation and Vulnerability – Intergovernmental Panel on Climate Change http://www.ipcc.ch/report/ar5/wg2/
 Climate change threatens Nepali farmers’ livelihood and nation’s food security. ClimateWire, 10/18/13 http://www.eenews.net/stories/1059989036
Student comments on Reaching beyond the low-hanging fruit – Indigo Agriculture’s climate change dilemma
Thank you for sharing your thoughts on this matter!
I think that food security is absolutely something that needs to be prioritized as the effects of climate change become more and more apparent. I agree with your observation that in certain parts of the developing world, the impact of climate change is felt in a unique way. It is very interesting to consider how Indigo can play in this space. Your suggestion of partnering with agriculturally-focused academic institutions in other parts of the world is a great one, but I do think there would be a few obstacles that would present themselves. In the US, the idea of looking into the microbiome and potentially modifying seeds to improve crop yield is already controversial. Do you think developing countries would be more open to accepting this? If not, would Indigo invest in educating (e.g. awareness campaign) or promoting this type of research? Although I think it is a good idea, I worry that there may be a gap in understanding or perception of this type of microbiome study that would require additional steps in execution for Indigo.
Great post, Paul. I think it is interesting how microbiomes seem to be growing in importance in a a wide variety of fields. At my previous job we considered investing in a startup company that helped enable the treatment of Irritable Bowel Syndrome via fecal transplants. A fecal transplant allows a person with an unhealthy or unbalanced microbiome in their gut to have their digestive track seeded with a healthy population of bacteria from a person with a particularly well balanced gut microbiome.
I know that microbiomes are being investigated as ways to reduce emissions from cattle farming as well as ways in trash dumps. I think that major advancements in our understanding and engineering ability with bacteria are going to open up a lot of doors for us in the future.
Paul, thanks for the post! Agree that additional product development is one way to tackle the climate change problem very directly. I wonder what the second-order impacts of some of their microbiomes will be and how they will manage climate-related tradeoffs. For example, I could easily imagine an engineered seed that is more resistant to pesticides, and therefore allows for greater pesticide use, which may contribute to harmful greenhouse gas emissions. I think these situations where there is direct tension between making money and sustainability are when you see what a company’s true priorities are. In the case of Indigo, they also have investors to answer to and their associated fiduciary duties.
Like you though, I remain optimistic that Indigo’s offerings are a net win from a climate change perspective. Great post!
Thank you for the post! I think another way of increasing adoption of microbiomes could be through educating the world on benefits of microbiomes. As the CEO mentioned in class, this is not a new idea. Indigo found a way to apply this to agricultural setting and they are experiencing first mover advantage of brining this solution to the market. As this concept get widely accepted by more players, there will be increased competition, which could spur up variety of microbiomes for different geographies.