The following is a blog entry from Seth Godin's Blog by Seth Godin.
A small island grows sugar cane. Many people harvest it, and one guy owns the machine that can process the cane and turn it into juice.
The guy with the machine, of course. It gives him leverage, and since he's the only one, he can pay the pickers whatever he likes--people will either sell it to him or stop picking. No fun being the cane picker. He can also charge whatever he likes to the people who need the cane juice, because without him, there's no juice. No fun being a baker or cook.
But now, a second machine comes to the island, and then three more. There are five processors.
Certainly not the guy with the first machine. He has competitors for the cane. He can optimize and work on efficiency, but pretty soon he's going to be in a price war for his raw materials (and a price war for the finished product.) Not so much fun to be the factory owner. And then!
And then one cane processor starts creating a series of collectible containers, starts interacting with his customers and providing them with custom blends, starts offering long-term contracts and benefits to his biggest customers, and yes, even begins to pay his growers more if they're willing to bring him particularly sweet and organic materials, on time. In short, he becomes a master of the art of processing and marketing cane. He earns permission, he treats different customers differently and he refuses to act like a faceless factory...
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