Cooperate to thrive: How Traive is supporting Cooperatives in the 4.0 era

By Luis Lapo Chief Risk Officer @TrAIve Finance

This story was originally published in Portuguese in Traive Brasil on July 3rd, 2020

Photo by Elaine Casap

Picture the following scenario: Socioeconomic conditions posing challenges never before seen, requiring people to create innovative solutions, to overcome the status quo and to grow at a fast pace, bringing benefits to all involved and to the society. As we read this sentence, startups certainly come to mind. But in reality, it describes the end of a period taken place 180 years ago, a period known as the First Industrial Revolution, in which an innovative business model was created giving rise to modern Cooperatives as we know today.

Throughout that period, Cooperatives have developed and fulfilled a crucial role in local socioeconomic development and, most importantly, without losing their basic principles. They have gone through the Second and Third Industrial Revolutions and now have the opportunity to start off what is being called by economists the Fourth Industrial Revolution, or Industry 4.0, on the right foot.

Every Industrial Revolution can be characterized by the great innovations that were incorporated in that period, and allowed significant changes that can be observed through improvements in processes and products, usually supported by new technologies.

The Fourth Industrial Revolution will be ruled by digital solutions, the integration of different types of technology, massive use of data, artificial intelligence, and connectivity of machinery, processes, people and plants. These changes will happen at an increasing rate, creating not only competitive advantages for those who do choose to adopt such technologies, but also an environment in which companies and business models will disappear — mainly for those who take longer to adapt to the new era.

We believe there is a great opportunity for the exchange of knowledge between startups and cooperatives — even though both have innovation and dissemination of new technologies in their roots — as they differ in style when it comes to dealing with uncertainties and adopting innovations, especially the ones that are outside the standards known today. For this reason, there is immense value in conjoint work between cooperatives and Startups.

In Traive’s case, which develops solutions with the purpose of democratizing access to agricultural financing, we are aware of the potential of this joint work as well as the difficulties of those who need to adopt new technologies that alter the traditional analysis and decision-making model, despite countless positive impacts associated with these changes. To overcome these challenges, Traive offers complete solutions, reducing the need of interaction with various agents and technology suppliers, minimizing transaction costs, complexity of choices, and work to implement these technologies by the Cooperatives.

These comprehensive solutions offered by Traive help reduce the need of highly specialized teams to promote this sort of innovation. Yet one of the great limitations is resistance to the new solutions; that is, it is necessary to be open to understanding new technologies and to be prepared to accept the changes coming after their implementation. That does not mean losing the essence of Cooperatives. On the contrary, it is a way of ensuring their survival through the current and the upcoming revolutions.

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