Model Innovation: In the Media

As a follow-up to my prior post regarding Model Innovation–the New York Times ran a unique story which speaks directly to this trend.
Disruptive models are breaking up even staid, commodity industries like coffee.Coffee Perfect Cup

…growers of commodity crops like coffee and cocoa often live in poverty. Over the last few decades, a worldwide movement under the broad banner of fair trade has tried to rectify that imbalance.

Fairtrade International, one of the largest organizations, upset this industry by setting a price floor to ensure a minimum price for coffee–and insulate the small, rural farmers from the boom and bust cycles of commodities like coffee and cocoa. That’s model innovation! What’s more, it functions well for the farmers and for the consumers.

And, innovation breeds innovation:

But Mr. Lander started to think that he might improve on the idea. He began to experiment.[…] In the system that [Thrive Coffee Farmers] is trying to develop, farmers are paid only after their coffee has been exported, packaged and sold — at a much higher price — to retailers…Thrive splits the proceeds 50-50 with the farmers…

The model improved on the return of the coffee to the farmer–but innovation is not without its costs. The higher payout, because it’s connected to the retail sale (as opposed to wholesale) of their coffee, payments (though larger) are delayed 6-12 months to the farmers.

Food (caffeine?) for thought as you and your organization evaluate change.

Source: New York Times

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