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In this week’s Principle 6 Newsletter, who makes decisions about cooperative identity?

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Image show many hands coming together, each holding a different piece of a puzzle.
Bottom line? Everybody must consciously decide about and contribute to organizational identity.

In this week’s newsletter, Mike Mercer explores cooperative identity—specifically, who gets to make decisions about the movement’s shared principles and values.

“Cooperative identity is a designation that must be lived in practice in order to be legitimate in the eyes of the beholders,” Mercer writes. Read the full issue of Principle 6 Newsletter below to learn more.

And while you’re thinking about “cooperation among cooperatives,” take a moment to consider how you and your cooperative practice this principle. 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 – Cooperative Identity: Who Decides?

Issue 33 – October 13, 2021

…Cooperative identity makes it possible for people to have a shared understanding of just what a cooperative is so that we can have meaningful, productive conversations with people inside and outside the cooperative community. The cooperative identity can also inspire members and leaders of cooperatives to act differently so that co-ops yield better outcomes for their members and communities. Finally, when outside stakeholders—such as the government and prospective co-op members—understand that a business embraces their co-op identity, they will regard the co-op favorably. – Doug O’Brien, “When cooperatives act on their shared identity, good policy follows,” 3-2-21

Although the co-operative identity has involved some other aspects besides the principles, for example the definition(s), aims, functions, etc. of the co-operative and co-operation, for most co-operators the so-called co-operative principles are the cornerstones of the evaluation of the validity of a co-operative. They can prove that a co-operative is genuine one or not. – Dr. Gabor Szabo, “Cooperative Identity…”, Institute of Economics, Budapest, 9-6-06

Resolved, that the Valley Alliance of Worker Co-operatives… Encourages its member food co-ops, other co-operatives and credit unions, and allied organizations to become involved in efforts to protect and promote the Co-operative Identity and to ensure the integrity of statutes and use of the co-operative name, and to promote the co-operative business model as an effective tool for self-help, poverty reduction, human development, and economic and social sustainability. – adopted by the Valley Alliance of Worker Co-operatives, 2014

From personal pronouns to ESG designation, much attention is devoted to intentional identification these days. It is no different for cooperative businesses. The International Cooperative Alliance will gather co-op leaders from around the globe in Seoul less than two months from now to talk about deepening cooperative identity. NCBA CLUSA’s 2021 Cooperative IMPACT Conference devoted considerable attention to cooperative identity earlier this month.

Identification is a way to congeal beliefs and behaviors inside the organization. It is also a way to propose differentiation/uniqueness to prospective customers/members/stakeholders outside the walls. To a significant degree, identification matters for short term success and long-term sustainability.

Identification matters for short term success and long-term sustainability.

“Identification,” of course, is ultimately measured in the eyes of the beholder. And there are lots of beholders for any organization. Take the corporate ESG (environmental, social and governance) designation, for example. Investors (significant beholders) look at companies as being in-bounds or out-of-bounds based on many considerations. According to ADEK Innovations these considerations include the likes of:

Environmental

  • climate change
  • greenhouse gas emissions
  • resource depletion
  • waste and pollution
  • water and energy efficiency
  • deforestation
  • biodiversity

Social

  • working condition
  • equal opportunities
  • human rights
  • employee diversity
  • health and safety
  • child labor and slavery
  • community engagement
  • philanthropy

Governance

  • business ethics
  • executive pay
  • board diversity and structure
  • bribery and corruption
  • political lobbying and donations
  • tax strategy
  • compliance

There are many beholders of cooperative business organizations as well. The notion of cooperative identity is a shared understanding, mostly within the walls (among elected officials and employees). If there is a strong sense of cooperative identity, it is projected outside the walls as a key element of competitive differentiation. But, as every reader here knows, co-ops are not all the same. A large purchasing co-op probably doesn’t embrace cooperative identity in the same way as the small worker co-op. Even so, co-ops can point to well-articulated and remarkably common “identity DNA” in the form of the cooperative principles and values.

A large purchasing co-op probably doesn’t embrace cooperative identity in the same way as the small worker co-op. Even so, co-ops can point to well-articulated and remarkably common “identity DNA” in the form of the cooperative principles and values.

Some of the so-called Rochdale co-op principles are directed at governance: 1) Voluntary and Open Membership, 2) Democratic Member Control, 3) Member Economic Participation and 4) Autonomy and Independence. Others are behavioral: 5) Education, Training and Information, 6) Cooperation among Cooperatives and 7) Concern for Community. In Seoul, consideration will be given to an 8th principal focused on embracing diversity, equity and inclusion (DEI). There are also consistent cooperative values that provide guidance for the culture of a co-op. They include self-help, self-responsibility, democracy, equality, equity and solidarity. Collectively, these elements of cooperative identity are heavily embedded in training and messaging at most co-ops but are often appreciated and embraced in the way that food gets selected at a buffet.

Identity is a conscious choice. Shared identity is the fabric of organizational culture. Reputation is the acknowledgement of identity outside the walls. Common reputation is the result of intentional collaboration at the sector or industry level. “Credit union” is a common reputation that comes with a set of public expectations. “Cooperative” is a common industry reputation that credit unions can embrace. There are industry alternatives. For credit unions, “bank-like” is the usual alternative. For a rural electric cooperative, the industry identity options could include “cooperative” or “electric utility.” Identity is a choice that has significant implications inside and outside the walls.

So, at the co-op, who gets to make decisions about intentional identity?

The Members?

At startup, the organizing members have much to say about the identity of their new organization. The co-op is often formed in the context of an economic void. Lack of access to fresh food. Control over the work environment. Influence over housing conditions. The organizing members have a huge say in the decisions of identity. And they probably learned about cooperative principles and values through some form of technical assistance.

The Board?

When the number of members grows, decision-making is quickly delegated to elected representatives. At the handoff and during subsequent elections, the importance of one-member, one-vote is reinforced. Expectations of member centricity are embedded deep into the DNA, reinforced by the legal trappings of fiduciary duty. Even in the largest of co-ops, member representatives on the board often regard the cooperative model (and identity) as a foundational construct that should not be weakened by distraction or deception.

The CEO?

It is often said that the culture of an organization is established by the CEO, intentionally or not. Hard to argue with that. Rare to find exceptions. But, as maturity sinks in, CEOs usually migrate from short-term (tactical KPIs) to longer-term (sustainability) in their thinking. And pragmatism (growth) gives way to mission (impact). Organizational identity figures into all of that. At the level of conscious choice, being like the others (in the market) and being different from the others co-exist in the form of constructive tension. And every good CEO knows that nothing gets done without the motivation and initiative of the team. Increasingly, the C-suite calls the plays. The CEO deals more with things like strategy, organizational identity and culture.

The C-suite?

As co-ops grow, tactical decision-making is delegated. Then, functional leaders find themselves as part of a team that increasingly decides the big things—together. The CEO wants to hear from all of them. Initially armed with departmental protectionism, members of the C-suite eventually get asked to opine about competitive positioning and strategic differentiation. Prepared/oriented or not, the C-suite finds itself influencing thought about cooperative identity. From their career paths, some might not even know that cooperative identity is a thing. But their talents for tactical accomplishment and receptivity to innovation are essential in the total scheme of things. Some see the beauty/wisdom of differentiation through the exercise of cooperative identity. If that aligns with the views of the CEO and the board, they are usually placed on the fast track.

The Member-Facing Staff?

The concepts of identity cannot make it outside the walls unless the intended identity is understood, believed and embraced by the folks that make everyday impressions on members (customers, clients, public opinion leaders, etc.). Increasingly freed up from transaction-doing, staff can focus on providing helpfulness that addresses the true well-being of those being served. This can only happen sustainably if everyone further up on the page embraces member-centric ideals. The cooperative business model comes with a set of structural and behavioral instructions that can reinforce attention to member well-being.

Cooperative identity is a designation that must be lived in practice in order to be legitimate in the eyes of the beholders.

Cooperative identity must be a conscious decision made by those empowered to make it so. For that matter, any other concept of identity is a conscious decision that must be backed-up in practice. The board and CEO can make the decision and use the words for inside the walls. The C-suite, line managers and member-facing staff must be intrinsically motivated and well-informed about the importance of organizational identity. Cooperative identity at the top can be sabotaged by extrinsically motivated (ie: transactional, give me more money, give me more time off…) staff. Conversely, intrinsically motivated staff will become frustrated by pragmatic leadership. Most will eventually leave. All will perform at the least acceptable levels.

Bottom line, everybody must consciously decide about and contribute to organizational identity. If not, competitive mediocrity will be the reward.

Clear identification as a credit union (or a financial service firm), an REC (or an electric utility) is an in-sector choice. To effectively identify as a cooperative (instead of a for-profit, non-profit, or other organizational form) requires strategic collaboration across economic sectors. Being a co-op is to embrace a category brand. Cooperative identity is competitively about differentiation. It can and should help to grow the business. But it is also about mission and internal culture. It is a designation that must be lived in practice in order to be legitimate in the eyes of the beholders.

Stay tuned,

Mike

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