It seems logical that better solutions emerge when facing difficulties or trying to improve the situation in any human activity. Better still is if the thinking process follows the correct path for the best value-adding solutions.
It is like using the problem-solving theory, which follows sequentially some steps to reach a point where everything becomes evident:
Careful observation of the reality to clearly define the problem (a problem, in a broad sense, is a situation needing the attention of the top Manager); Comparison with similar situations, whether in the country or abroad. It may help to understand better the problem and find out alternative solutions; Definition of criteria to evaluate the merit of each solution. Least costs? Time constraints? Technological advancements incorporated?
Select the best solution under the criteria stated.
We do this exercise implicitly in daily situations. In more complex ones, as are many cases of life, we must proceed to a deep analysis, first looking if there is more than one independent issue and if they are intertwined. One must find the best solution for each topic and then look at the whole, ensuring that solving one does not worsen the others; if so, take measures to eliminate/reduce the pernicious effects.
In the agricultural sector, price variation is evident according to the anticipation of the production volume. Therefore, prudence is necessary when deciding what to sow each year. It may be the case that the great demand for a product one year leads to excess production the following year, as everyone thinks and sows the same, leading to a significant drop in prices and driving situations of distress to those who took out bank loans what may have disastrous consequences for them.
In any sector of activity, a simple and logical thinking model can help a lot. It may be an explicit equation of the global rent, with the linear combination of the areas cultivated, the expected production and the prices of each. A model allows us to make a sensitivity analysis of costs, trying by trial and error to find the best composition and an acceptable economic outcome.
It combines a varied composition of what one wants to cultivate, the foreseeable production and price. Large fruit trees and their production cannot change in the short term. However, in cereal and vegetable crops, there can be a good combination among the different varieties one masters to optimize sales revenue without falling victim to fluctuations in market prices.
Choose the seeds and saplings of the highest quality and productivity and the most appreciated by the customer. They may be more expensive, but their productivity and better sale prices over the lifetime will largely compensate.
Is there a way to combat price fluctuations? Many farmers try to organize themselves into cooperatives. It allows for gathering important productions and conferring negotiating power within the country or with multinational retail chains.
Cooperatives do not need intermediaries, meaning the gross sales proceeds go mainly to the farmer. There is a need to trust the system and those who manage it. They must make the value the cooperative brings to each one of the members understandable. Dealing with large quantities makes it easier to go to export markets if domestic consumption does not respond fully.
An alternative to Cooperatives, especially when there is not enough convening and agglutination strength – as there may be not people with knowledge and dedication and, above all, with proven ability- will be to incite Farmer Producer Organizations- FPO, which must have in mind two conditions: one, to buy from associated Farmers, paying them the best possible prices; and trying to create a compelling sales organization, with good logistics, a wide cold chain, not forgetting the possibility of exporting.
The Sahyadri Farms post-harvest care, Ltd., based in Nashik, is an initiative of a small group of producers where one person invested in creating the Infrastructure to allow the purchase, treatment, packaging and conservation of the products (fruits or vegetables) and then selling the entire production, inside and outside the country. While very beneficial for the Associates, it allowed the Investor to create a Joint Stock Company to continue the activity with transparency of operations.
Thus, reaching a large volume of sales in the country’s large cities and exports could continue providing an excellent service to associated farmers, paying them an acceptable price. The promoters of the FPOs have, in fact, a philanthropic attitude of helping their farmer colleagues to sell well.
These groupings also work like buffers for the imbalances that appear, capable of stabilizing prices and markets, given the high amounts of products they handle.
The same ordered mindset will be appropriate for industrial products: not just to do what the market demands, but to take a step forward to put products on the market that meet customers’ needs, whether they are individuals or companies—for example, varied materials for building houses, electronic appliances and accessories, etc.
This attitude requires paying attention to promoting small innovations for better performance and more value addition to the products. Some good companies encourage all workers to think about improving or doing it in less time. Other companies offer training to explain better a new technology or the order of assembling the components of a new model to avoid errors; by knowing the value for the client and the function of the different parts, the will to do well, at the lowest cost, comes soon.
Service companies can benefit from understanding the customer issues to solve them well. Be it in software development, tourism services or, above all, healthcare problems.
Advances or improvements in software for specific purposes can mean significant savings in time and money. A large software company says it offers its customers next-generation products, which the company has developed for some clients and knew which customers would find valuable for them.
In the hotel industry, repeat customers can receive personalized treatment by knowing their preferences and registering in personal files.
In health services, a complete diagnosis, based on the symptoms and necessary analysis, is a condition for effective treatment, eliminating the disease and curing the patient more quickly. There is software with detailed decision-making trees based on different types of symptoms and parameters of clinical analysis. Such software helps to ensure that the MD is not forgetting any possibility that could occur.
The diversity of people involved, their provenience, academic formation, ethnicity, and geographical origin are decisive factors of advancement. The example of the USA is evident: they are receptive to high-value talents from wherever they come: India, China, East Europe, etc. They thrive in disruptive innovation and have placed the USA at the forefront of the Sciences, Technologies, Medicine and Healthcare, clearly based on the comprehensive and divergent thinking each one brings.
(The Author is Professor at AESE-Business School (Lisbon), at I.I.M.Rohtak (India), author of The Rise of India)
