In this week’s Principle 6 Newsletter, Mike Mercer reminds cooperators about a key target audience for the co-op business model—not academics, social justice champions or even policymakers, but entrepreneurs.
And entrepreneurs find problems that need solving and opportunities that need seizing in three “innovation neighborhoods,” Mercer writes. The Start.coop accelerator program is providing a model for matching entrepreneurs with the cooperative structure, he adds.
Read the full newsletter below, and consider how co-ops could collaborate to scale the kind of work Start.coop is doing. 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 – Innovation Neighborhoods
June 22, 2022
Our mission is to build a thriving cooperative movement of stable, empowering jobs through worker-ownership. – “About Us/Mission,” U.S. Federation of Worker Cooperatives website, 6-18-22
UHAB empowers low- to moderate-income residents to take control of their housing and enhance communities by creating strong tenant associations and lasting affordable co-ops. – “About Us/Mission,” Urban Homesteading Assistance Board website, 6-18-22
The existence of BLUE HAWK allows independent businesses to use their combined purchasing power to attain competitive pricing for the goods and services they use. – “Blue Hawk Story,” Blue Hawk Cooperative website, 6-18-22
People don’t go looking to start a co-op. They are looking to solve a problem. In many cases, the co-op model is the best way to do that. – Doug Fecher, remarks at the Co-op Executive Roundtable, 5-25-22
Seasoned cooperators, especially the Rochdale disciples working in the trade associations, are often inclined to project the cooperative business model onto societal issues like wealth disparity, unfair work practices and social injustice. They are committed to the hope that existing co-ops will assemble themselves in support of achieving a more fair and inclusive economy. They participate often in efforts to appeal for special policy treatment from government—inclusion, favor and funding. Appeals to academia for programs, specializations and degrees in cooperative business model studies evidence the co-op model everywhere mindset. This is all worthy and necessary to keep the co-op fire burning.
But entrepreneurs rarely start with the business model. They have ideas about how to solve a problem or to create new demand. For our purposes here, let’s define entrepreneurs not just as inventors or excessive risk-takers, but also as resourceful people with ideas and convictions about how to make things better. If creating personal wealth is their primary motivation, they will appeal to the owners of capital, hoping to be successful and retain a significant portion of ownership, thereby creating personal wealth. They won’t choose a cooperative business structure.
If, on the other hand, the entrepreneur’s motivation is to create benefit for a broad range of users or beneficiaries, the cooperative business model is structurally very appealing—if they know about the option and can find help in getting organized. Later, they will have to find ways to generate capital. But, like all entrepreneurs, they will be starting with an idea, with a problem to solve. Somewhere in their past they might have heard about the cooperative model. Or maybe existing cooperators will have identified them and their idea soon enough to get innovation and the cooperative structure married from the start. So, where do cooperators find—or, how do cooperators cultivate—innovation-ready entrepreneurs?
Well, it turns out that there are three fundamental “innovation neighborhoods” where entrepreneurs find problems that need solving and opportunities that need seizing:
- Sustenance (acquiring the wherewithal for life, usually through work)
- Shelter (building a safe place for life)
- Consumption (acquiring the trappings of life)
Existing cooperators can find virtually all of the prospective co-op founders and enhancers in these three innovation neighborhoods. If cooperators could discover entrepreneurs in these “neighborhoods,” we could accelerate the growth of the cooperative community—presumably with benefit for all. Most co-ops spend their lives largely within just one of the innovation neighborhoods.
Co-ops that are formed to advance the well-being of workers apply their value creation and innovation trade in the sustenance realm. Better work conditions, more say in key decisions and a bigger piece of the economic pie are among the problems being addressed by worker co-ops. But sustenance is not limited to workplace innovations. There are opportunities and problems that need solving in small business formation, education to advance skills, along with asset accumulation and investment management. All of these things fuel the wherewithal for life (and lifestyle).
Housing co-ops have long been at work to solve problems and create opportunities in the shelter neighborhood. Finding an affordable roof to put over one’s head continues to be a problem in search of solutions. In some parts of the country, it has become a societal crisis. The shelter neighborhood is not just about “bricks and mortar.” It includes all of the household formation needs that families attempt to solve for. Remodeling, fixing and furnishing are all elements of shelter. In addition, finance and insurance are intimately tied to and embedded in the shelter innovation neighborhood.
Many co-ops are formed around the problems and opportunities faced by people (and their small businesses) in the consumption neighborhood. The local food co-op is a perfect example of entrepreneurial activity in sourcing/providing affordable healthy food. Encouraged by entrepreneurial types, people pool their resources to build a cooperative store in their community. Value is created through cooperation and sustained through the democratic structure of the co-op. Opportunities for finding entrepreneurs in the consumption neighborhood exist in food, healthcare, entertainment, transportation and many of the other “streets” of consumption.
In the years ahead, growing the cooperative community/commonwealth/ecosystem will depend as much on finding and nurturing the entrepreneurs at the points of innovation as it will on spreading the Rochdale gospel to the younger cooperative employees. Cooperative financial organizations (co-op banks and credit unions to name two types) and mutual insurance companies drape across all of the innovation neighborhoods as they reach scale. They, along with the cooperative disciples, have the most to gain from finding innovative entrepreneurs.
But none of us should forget that entrepreneurs are trying to solve problems and seize opportunities. Those that are trying to enhance the well-being of the many will need to be met near the point of their inspiration if the cooperative structure is to proliferate. An organization called Start.coop may be showing us the way:
Cooperatively-owned businesses are a viable alternative to traditional winner-takes-all capitalism but few people know what cooperatives are and few entrepreneurs even know this ownership model exists. Start.coop is breaking open the black box and shifting the narrative by:
- Partnering with educational and economic development organizations to tell the stories of successful co-ops: startups and mature businesses alike.
- Connecting the traditional entrepreneurship and economic development communities with the co-op community.
How could co-ops collaborate to take the kind of work being done by Start.coop to transformational scale?
Stay tuned,
Mike