In this week’s Principle 6 newsletter, Mike Mercer challenges co-ops to lean into their collective identity and impact. While a farmer co-op in the Midwest might not share many commonalities with a worker co-op in the Bronx, they can unite around a common purpose.
“The possibility of having a compelling societal mission that applies legitimately to all co-ops is an extraordinary opportunity to build commonality in the years ahead,” Mercer writes.
Read the full newsletter below, then consider how cooperatives across sectors can work together to identify and leverage their commonalities. NCBA CLUSA is on a mission to document Principle 6 collaborations across the country so we can identify trends, document best practices and share this knowledge with you—our fellow cooperators!
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Principle 6 Newsletter – Commonality
November 22, 2022
Tribe: From the ice age on, forming a tribe was a way to improve our odds for survival. As we’ve gotten more sophisticated, it’s become a way to increase our odds of success. Tribes can help us marry better, do better in our job, be healthier—a lot of positive outcomes are associated with tribes. – Dr Fischer-Wright, “The Five Strategies of Business Tribes,” Business Journal, 5-8-08
Sector: A sector is an area of the economy in which businesses share the same or related business activity, product, or service. – Will Kenton, “What is an Economic Sector?” Investopedia, 5-28-22
Commonality: The state of sharing features or attributes. (as in) “a commonality of interest ensures cooperation” – Oxford’s English, Google, 11-19-22
Co-op Principle #6: Cooperation Among Cooperatives
Co-op Commonality Principle #1: A commonality of interest enables cooperation
Among co-ops, let’s consider where commonality of interest exists, and where it doesn’t.
Common History/Tradition
The history of recorded cooperation goes back many centuries and has arisen in many places. But the present-day American co-ops almost all trace their roots to a group of weavers in a small town outside of Manchester England (Rochdale) in the early days of the Industrial Revolution. It was there that a short list of ethical operating principles was adopted and posted on the wall. Over time, these principles were revised into the seven that we’re all taught about today. Of note for this discussion, the one about cooperation (#6) didn’t get added to the list until relatively recently, although the ideals of commonality and reciprocity were long ago presumed.
So today, almost all U.S. co-ops teach their new employees about cooperative values, principles and practices. Modern co-ops are built upon democratic ownership structures and embrace cooperative governance models (boards elected by and from the members). Most elevate attention to the well-being of those being served to a higher priority than do the for-profit firms in their midst. In many sectors, there are unique relationships with government officials and their policies. In summary, co-ops of all types can be said to share a common DNA.
Sectoral Segregation
Cooperatives spend their operating hours in very different economic places. A farmers’ co-op in the Midwest would struggle to find commonality with a housing co-op in the Bronx. A purchasing co-op would have trouble seeing the world the way a credit union does, even if they were located in the same town. Co-ops operate in most of the nation’s economic sectors. Within those sectors, co-ops know each other well. They collaborate often. But, if they aren’t making similar products or providing the same sort of service, there is rarely productive interaction.
A farmers’ co-op in the Midwest would struggle to find commonality with a housing co-op in the Bronx.
To exacerbate sectoral segregation, many of the economic sectors come with their own unique regulatory environments, have their own champions in government and play by a sector-tailored set of rules. Competition from the for-profit players creates unique landscapes for operating in the various sectors. In a number of sectors, co-ops have built up significant association-coordinated advocacy machines that are reluctant to wander beyond the boundaries of sector-specific regulatory issues.
Geographic Distance
While digitization of the economy (think Zoom conferencing) is breaking down the barriers of location, cooperatives in Hawaii would rarely interact with their brethren in New Hampshire. Truth be told, collaborations with co-ops in the adjacent state are infrequent. The co-op commonality principle #2 might be, “geographic proximity enhances cooperation.” Said another way, “the strongest cooperation is local.”
Public Policy Differences
On the surface, one would think that co-ops could lean into public policy deliberations with the strength of commonality. That’s not always the case. Credit unions and grocery co-ops find themselves in complete opposition when it comes to the never-ending debate about debit and credit card transaction interchange fees. The Ag co-ops take the side of the farmers when it comes to the use of fossil fuels but some of the rural electrics are leaning into public policy initiatives for the use of renewable energy sources.
Fortunately, major deviations in policy positions are rare. But, within the sectors, differences in opinion about regulatory strategy are more frequent. Feelings of commonality are tested when public policy positions are under contest. The polarization of political persuasion can be another irritant in the chemistry of commonality.
Disparities in Scale
At any association convention one can easily observe the tribal proclivities associated with the scale of co-op operations. Everyone sits together for the opening general sessions. But watch how groups form up for lunch. Follow them into the evening receptions. Study the behavior around the vendor exhibits. Big hangs with big, small with small. There are practical reasons. The large co-ops operate with specialized C-suite leaders, the small co-ops tend to be guided by generalists. Clearly, the resources available, technologies used, and strategies deployed are considerably different across scale. The scale disparities have strong commonality implications. In fact, senior execs at large co-ops can feel more commonality with senior execs at large co-ops in other sectors, than with execs at small co-ops in their own sector.
Tribal Differentiation
Competitive strategy is often simplified into a triangular construct where the corners are characterized as 1) best price, 2) best product and 3) best service. Presumably, a company picks a spot to aim its efforts at some point within the triangle. Consultants will say that being in the middle (ie: not standing out in any particular way) is the shortest path to irrelevance and extinction. Getting to the competitive superiority boundaries on the triangle is a tough challenge for any individual co-op.
One strategy is to become part of a tribe that can collectively move closer to the points of competitive superiority in the triangle. This is the strategic essence of Principle #6. Enter into collaboration with other co-ops. Tribal collaboration is used extensively within many of the co-op sectors. It helps to create better economies of scale and stronger differentiation from the for-profit providers within the sector.
In some parts of the world, tribal collaboration is taken to the next level—the tribe grows to include those that identify as a co-op. Collaboration extends across the economic sectors. In this way, all co-ops enjoy category distinction from the for-profit providers. Cross-sector tribal differentiation could be an untapped opportunity for U.S. co-ops.
Societal Vision
Elon Musk has a societal vision that includes the electrification of transportation, the commercialization of outer space and the ubiquity of the digital town square (he’s stumbling a tad on the latter). To the extent that he succeeds, wealth will be astronomically concentrated in relatively few hands. Cooperatives, it is said, have a societal vision of lifting fortune for consumers, workers and small businesses. To the extent that they succeed, wealth will be fairly and inclusively distributed to the masses. The difference: Elon just has to look into the mirror to embrace his visions; cooperative leaders have to congeal millions of independent decisions into a coherent picture.
Having a compelling societal mission that applies legitimately to all co-ops is an extraordinary opportunity to build commonality in the years ahead.
Articulation challenges notwithstanding, the possibility of having a compelling societal mission that applies legitimately to all co-ops is an extraordinary opportunity to build commonality in the years ahead. At first because it will have the effect of bringing co-ops together, but in time because it will create a reputation of trust and value in the eyes of U.S. citizens. Achieving a commonality around societal mission would require a multi-generational strategic crusade. For today, it would require the audacity to try. And the foundation is already in place.
Community Impact
The strongest cooperation is local. Geography matters. Co-op Principle #7, also a relatively new one, is “concern for community.” Community is also where Rochdale Principles #6 and #7 meet. Through local collaboration, co-ops can maximize impact for their communities. Attending Rotary and Chamber meetings is good. But combining co-op effort to help the local community solve one or two of its pressing problems is compelling opportunity—for co-ops and the community. The challenges facing the place where members live, work and learn could create magnetic fields for co-op commonality in the years ahead. The segregating forces of sector, geography and scale become less distracting when contemplating the opportunities from community co-op collaboration. And the boundaries of community can be defined in the eyes of the co-op beholders.
The segregating forces of sector, geography and scale become less distracting when contemplating the opportunities from community co-op collaboration.
Writing in the Stanford Social Innovation Review (Winter 2011 issue), John Kania and Mark Kramer said, “…large scale social change comes from better cross-sector coordination rather than from the isolated intervention of individual organizations. Funders and non-profits alike overlook the potential for collective impact because they are used to focusing on independent action as the primary vehicle for social change.” Who better than co-ops to lead cross-sector coordination at the community level?
In the years ahead, there could be meaningful reward for nurturing co-op commonalities. Among the rewards: new growth opportunities, competitive differentiation and more effective community impact. With regard to nurturing, co-op leaders will have to chart the course.
Stay tuned,
Mike