Niches and mainstreams in our food system

Whenever I attend gatherings in my line of work that address the question how to change the food system for the better, I’m confronted with the recurring pattern of a split in the discussion between niches, developing alternative propositions, and the mainstream, working on improvement of the existing ones. Entrepreneurs that find the space to tinker in a niche are looked upon by the mainstream with slight amusement and bemusement at just how alien that class of innovation is to them. Real change is achieved by a big system making big shifts. Not by gullible projects with cuddly eccentrics, right?

What I would like to point out here is that mainstream forgets itself in this stance. In the mainstream everybody is a good manager, we work by certain protocol towards certain expected outcomes. Everybody participates according to those values. A nested system network, where assembly of the food components fit snuggly like a Matryoshka doll. The emphasis is on execution and optimization of the known business model, not the search for alternative ones. Over longer periods of environmental constants they are unbeatable: a big, efficient, influential, even dominating community.

But when key supports in the business environment start changing, then such value systems become vulnerable. And change is happening, and the rate of it happening is accelerating; whether mainstream likes it or not. The graph below depicts just how fast new technologies diffuse through society. This alone is change enough to radically alter the landscape in which business is done.


The real question under such turbulence is whether the mainstream is still delivering what the customer wants. Is it still in tune with the customer, and with the empowerment that technological change is providing her? Or is it rather suppressing pressures on the system, for instance, controlling for animal welfare issues by getting activists to shut up, or by downplaying horse meat in beef lasagna is an anomaly? Is the mainstream still in tune? Or, is it practicing elitist technocratic infantilization of the customer, who currently has no real alternative on how to purchase food products?

The reality of our environmental dynamics, combined with the attitude of “how everybody is a good manager”, can now take a whole system down the drain with the same efficiency and speed. One day you might be member of a seemingly robust food security delivery mechanism. The next day, some niche-guy will have figured out how to hack a whole market through empowering customer choice, by actually delivering what costumers really prefer for their basic food requirements. And, trust me, customers simply don’t care if that implies leaving behind a whole industry for another one that provides a better alternative.

My position is that members of the mainstream food network need to revalue the niche. Revaluing the niche, means learning about how what the niche is doing, might apply to the mainstream, instead of doing the opposite. The niche is likely to provide an insanely rich source of actionable customer insights, that the monolith execution network will never discover.

The dichotomy in our discussion is dangerously artificial. It is created by fear, leading to scathing of the tinkerers, with complete disregard of the fact that we’re dealing with competing business organisms in the same ecosystem. What we should have is inspiration leading to the embrace, crediting the tinkerer with the insights they can provide about what factually works and what doesn’t under new circumstances. And, it all starts by treating our tinkerers in the food system in a more inclusive way, not exclusive. As a well known Blankian phrase in Silicon Valley goes:

What do we call a failed entrepreneur? Experienced!

I want to see more of that attitude in food and agriculture.

The Business to Business of Customer Development

Selling your work in progress product or service as a startup to an incumbent company is very hard. You can find yourself offering a value proposition that competes head-on with existing products, for instance on price or efficiency benefits. In that position you have to elbow your way into an existing value network that is already servicing your designated customer at a satisfactory level. In contrast, you can also find yourself in a position that you actually have no competition, because there is no reference to the solution you have developed. That is equally difficult as muscling your way into an existing market, but a different challenge: how are you going to convince your customer to change their existing value network relations based on a solution for which they have no clear conception of a problem? In this post I’ll share some of my first-hand experiences on this issue.

Creating a new value proposition
My experience in business to business work stems from the cotton processing and marketing company I co-founded in early 2006 in India, Zameen Organic. Our idea was to set up a farmer-owned company that could supply top branding customers with a sustainability ambition like Marks & Spencer’s and H&M.

We saw that these customers were interested in Fair-Trade and Organic certified produce. At that time the market for Fair-Trade and organic was growing explosively. Cotton production was nowhere near the growth rate of demand. Our proposition in this market was thus to provide a professionally run company of farmers that would be able to grow at the rate of the market, and supply the demanded quality. This was in a time when organizing trade relations between big brands and small producers was mostly the domain of NGO’s.

In developing our proposition we also saw that enabling our customers to put a label like Fair-Trade and Organic on their products was not a unique enough proposition to capture the value we intended to create. Lots of suppliers were doing that. That wouldn’t make us unique. We thus set the bar for our marketing ambitions a bit higher than just creating access to brands. We wanted to also develop systems of co-branding, where brands could affiliate themselves with social and environmental progress of their supplying smallholder producers. In return for supplying quality produce and growing supply, we wanted to let our company and our farmers in on the value that was captured downstream in the consumer market.

Selling ‘new’ in an existing market
Filled with ambition, I set up several meetings with potential big brand customers to discuss our idea. I started off with just the guy from procurement at the table. Unfortunately he didn’t want to take the discussion further than product price, quality, and quantity specs. My conclusion was that this guy apparently was not authorized to set any kind of innovation into motion. So I conjured my way into follow-up meetings with procurement, CSR, and marketing around the table, hoping to make each part of our proposition understandable to each relevant silo within the company. Hopefully they would come to an ‘aha!’ moment together, and that would get the ball rolling…

…But no such luck! There was no emotive response from any of the parties at the table. No recognition that our story could latch on to the problem they were facing. Why? Well, purchasing was only told to procure certified produce at the lowest possible price and secure the supply that the company required, regardless of working against odds of tight supply in the market. CSR’s job was focussed on making up the reports that showed the company was seriously picking up its responsibility. This department wasn’t involved in actual company decision making. And marketing, well marketing was not much into the business of understanding how the supply chain operated. Rather they preferred to put creative thinking into how to put the brand into a positive limelight with the end consumer. So, none of the people at the table could properly assess the value of the proposition we were trying to sell.

Selling ‘new’ in a new market
Our proposition didn’t connect with our larger customers. But on the other hand, we also serviced a segment of smaller apparel branding companies who were dedicated solely to ethically produced garments. One of our more successful branding customers was Pants to Poverty, a non-profit awareness raising company on equitable trade, under leadership of Ben Ramsden. Pants to Poverty had released a line of undergarments, conveniently lifting on Nelson Mandela’s campaigning to Make Poverty History which made the Pants brand go viral.

Ben understood the proposition of co-branding, and securing the supply for their operations. With him, we were able to set up a branding initiative advertising the link between Zameen farmers, and the underwear made from their fibers. Pants’ website till date still uses images of the Zameen Organic farmers holding up their product, demanding riddance of poverty.

Zameen farmer Pants to Poverty

Zameen Farmer Pants to Poverty Man

Zameen farmer showing ‘their’ pants

Pants to Poverty was able to create a unique value proposition to the consumer market by showing their direct contact and collaboration with farmers. Our collaboration gave PtP a more secure position in the supplying market, amidst bigger competing buyers. Farmers in return were able to negotiate better terms of trade, also including farmer training on cultivation practices in pricing, as well pre payments, on top of the regular investment of the Fair-Trade premium in meaningful projects for community development.

Existing vs. New
So what made the difference? For one it’s the fact that PtP was looking for our proposition. There was no other supplier out there that could provide the same kind of consumer marketing opportunity. Zameen enabled them to do it. But the more interesting distinction is that we succeeded to form the collaboration because Ben embodied the function of purchasing, CSR, and marketing all in one. Ben was a fully integrated customer, better able to critically assess the performance contribution that our proposition might bring. This made life much easier in pitching the idea for making Zameen part of the PtP value network.

What we saw in our other discussion with the larger companies was the symptom of dealing with a new proposition and a dispersed customer. Even though the reality of the market of short supply begged for a change in assessment of relations in their supply chain, there was no way that our large customers could recognize the value we intended to provide. They did not have the joint understanding and feedback mechanisms in their own internal cooperation that would allow them to properly assess the proposition. Nor did they feel in any way inclined to discuss the opportunity with their superiors. The proposition was too new. Hence they preferred the possibility of leaving value lying on the table and sending us home over taking a chance with us and assessing the actual potential of Zameen as a supplier on its merit.

The story above describes a challenge that entrepreneurs often face (social entrepreneurs almost by definition). It happens when you’re so very early to market with a solution, that people generally would dismiss it as a market opportunity. This is what Bright B Simons refers to as the struggle of creating “a new value class”.

In our Zameen case, things got rolling when we shifted focus to working with smaller companies. With these companies it was easier to come to an integrated assessment of our proposition with the people who fulfill the critical roles of user, purchaser, and beneficiary. They were organized informally enough to have a validly critical discussion about our proposition in relation to their performance priorities. At the least it ensured us that our product wouldn’t be dismissed based on false-negative arguments.

My key learning from this experience is that the more a product or service relates to the norms within an existing value network, the better you can deal with the dispersed customer. The further a product or service is removed from that network, the more you’ll need to look for your integrated customer to get a substantial discussion going. As a rule of thumb, I would say that your chances of finding integrated customers is highest with companies with up to a billion euro in revenue. Over a billion in revenue, things get layered and segmented, and you’re likely not to get a proper early assessment of your product’s market potential. Start your proof of principle with smaller companies. They might provide you with the insights and reputation that allow you to enter the big league after.