Co-operatives: Why it's even better to share

The success of the co-operative sector shows there's a lot that 'regular' business can learn...

by Dave Waller
Last Updated: 07 Feb 2013

‘Greed is good’ was the old Wall Street motto. While that was always a fairly unappealing creed, it seems to have stuck as an ethos in certain areas of the business world. Certainly more so than those higher-EQ concepts like sharing. Good lord, the very thought of it…

Yet there is a corner of the business world that plants this kind of thing right at the centre of its model. The co-operative sector has been doing its thing since the 19th century – and now has 5,000 enterprises and 12.9m members. And it’s not just a right-on exercise in the power of understanding: the sector’s combined turnover increased by 15% last year. With high growth like that, during such a tough period, it’s amazing the rest of the business world isn’t rushing to claim – we mean share – a slice of the co-operative pie.

John Lewis is perhaps the best example of a co-operative success (the retailer has had a particularly good recession). But the model goes further: to businesses that count their customers as partners, co-operative villages, and schools that are run by the teachers, parents and kids.

While such a concept may seem alien to many business minds, Co-operatives UK has been working with consultants Tinderbox to pin down the reasons for its success into a set of principles that can benefit any company.

‘It’s all about building a win-win,’ says Ed Mayo, general secretary of Co-operatives UK, ‘as opposed to the regular corporate set-up, which is often win-lose. We just wanted to move it from wooly notions to the concrete.’

As well as benefitting from sharing a clear set of values, the group found that co-operative success was built on several consistently key factors: a shared commitment, a common interest, and mutual trust. The combination of these factors led to an engaged workforce, better relations with customers, and a strong sense of purpose.

Which, you may say, is all well and good for a bunch of hippies swapping home-made hemp bracelets, but what good is it among the Gordon Gekkos of the business world? You’d be surprised. Tinderbox recently introduced the idea to Lloyds and found that, even in the banking industry – hardly the most sympathetic to the idea of giving – co-operation can play a crucial role.

‘Lloyds were interested in co-operating with its clients,’ says Jason Miller, a partner at Tinderbox, ‘not treating them like traditional customers. Instead of you making a demand, and me giving you a product from a range of choices, you instead ask what each person cares about, what loyalty looks like, and why each trusts the other to be their partner. It’s not a passive process like normal customer relations – it’s active, and there’s a commitment on both sides.’

The team took their formula to Pepsico, too, another environment that was more about competitive, alpha-male behaviour, where the plan is ‘to drive cost down, not create loyalty and value’.

You may, of course, feel like you’ve heard all this before. Indeed, it all sounds remarkably similar to the fashion for employee engagement and open innovation that has ruled in the past few years. But Mayo says it goes further than that – it’s not just a case of listening to stakeholders’ ideas and then going off to do what you like. It’s a two-way process, where each party benefits.

‘There’s a different tone to the conversations,’ says Mayo. ‘It’s not just a case of "I create and you buy". It’s a co-operative.’ And, he says, it’s the same when it comes to employees. ‘The model of "I’m in charge and I tell you what to do," is not the best way to get the best out of people,’ says Mayo. ‘Engagement was a matter of identifying what people liked and just going along with it.’

And, Mayo insists, there’s no better time than this kind of harsh economic period to implement some of the changes. As he says, companies often end up investing more in the people they keep after they’ve had a period of job-cutting. ‘It may be hard to create fully co-operative enterprises,’ he says, ‘but there’s a huge productivity gain when staff are working in co-operative settings. One in four UK workers aren’t engaged in their work – that rate is far lower in co-operative comapanies.’

Mayo admits that the Co-operative sector has suffered from a lack of understanding in the wider business world, and that its companies are still seen as marginal. But there are signs that it’s starting to change – take, for example, the Co-operative Bank winning the FT’s award for the world’s most sustainable bank this year.

‘I would love to reach the point where the FTSE-100 companies come out saying, not that we’re going to be co-operatives, but we will co-operate more,’ says Mayo. ‘Co-operation underpins every business. And we can all benefit from more of it.’ We haven’t seen Wall St 2, but we can only hope Gekko’s gone this way. Somehow we doubt it…

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