I've just been reading an article on the Register about Co-op outsourcing of financial services to India... You can read the article here: http://www.theregister.co.uk/2008/10/29/steria_staff_strike/. Aside from the usual "the co-op is one great big business" assumption that winds me up there is something else that deserves consideration.
How much should Co-ops behave like normal businesses?
Co-operatives have different motives to normal business, or so people say, and there are those Co-operatives out there which genuinely do. Some, in my opinion, don't really behave any different but I've heard people talk and say "first we have to make the money and then we do the good with it" as a justification for it.... Does that make sense to Co-operatives? I'm undecided, the purist in me says no, the realist says maybe.
Co-operatives have to survive in the environment that they find themselves in. That is the fact of the matter... But should that really be done at the expense of the values and principles? That just devalues the brand in my opinion and by doing that you end up not providing the consumer with a choice or at the very least limiting their choice to a value/service decision rather than including ethics which I think can be a major differentiator...
One of the things that has been difficult during the two years of Co-operative Web is allowing another company to have a stake in the business because of our status as a Worker Co-operative. It’s not a massive problem as the business model we have adopted is to only spend what we have made to try and grow slowly and organically to avoid getting ourselves into any sticky positions – I guess from a purely personal perspective I’m keen not to have it all go wrong and have to go and work for someone else so cautious progress seems to be the best way forward! However there has been one incident of this; and it has proven to be a little bit of a headache.
The history of this is that we used to be part of a much larger company – this was the retail Co-operative called the Midcounties Co-operative”. When they formed from the merger between Oxford, Swindon & Gloucester and West Midlands they made the decision to concentrate on core business; this meant that the team I ran which provided IT development services to outside companies was no longer required. Due to the fact that they are nice people and that they didn’t want to cause the relationships with the client base that we had built up to turn sour we hatched a plan for us to take the business and form it into something on its own. Co-operative Web was born.
During the discussion process when we were setting up two key facts to this story emerge. Firstly, us (the workers) were keen on the Co-operative model and the principles behind it so we setup as a Worker Co-operative, and secondly Midcounties very reasonably wanted to keep a stake in the business so that if we did make our millions from it then they would have the reward of helping start the whole thing. We agreed a 20% stake, drew up the relevant contracts, registered the company and I thought that was that. Unfortunately it wasn’t to be that simple.
According to our first set of Memorandums and Articles of Association (the documents that get lodged with companies house to register yourself as a company) that are the standard issue from Co-operatives UK we had two different sets of shares: investment and worker. Worker shares are designed only to be issued to workers, a maximum of one per worker in accordance with the basic principles of Worker Co-operatives, the investment shares are there to help you get money in. But if you read them carefully investment shares in the way they are defined don’t really equate to a stake in the company, and can be bought back out at face value by the Co-operative at any time. On recommendations from Co-operatives UK we are actually writing the 20% stake directly into our Memorandum and Articles... Which while it may be fine for our friends at the Midcounties I wouldn't consider it as a solution for a less known or unknown investor...
The history involved in the worker co-operative movement has shaped this as a problem - the whole idea is that it is self-financing sustainable business for the workers by the workers. I, however, think there must be a better way out there as raising capital investment is key in so many businesses for success and I personally hate the thought that the good ideals of Co-operative principles would need to get abandoned in order to build a business (though it has to said at this point that there might be other ways I haven’t yet found as it has not been so much of a problem with Co-operative Web).
If anyone has any solutions then please get in touch as I’d love to hear about them!
Through the course of selling the products and services of Co-operative Web to new customers one of the things I most encounter is an ignorance of what a Co-operative actually is. I'm sure that even some of our current customers think of us as being part of some massive company called the Co-operative and to be honest due to some of the complications of retail sales this image is being propagated out in the advertising by retail Co-operatives in this country - but I am getting ahead of myself...
A Co-operative is a way of running a business, with a set of rules which need to be adhered to in order to call itself one. The basic premise is one of self-help, joint ownership and democratic control. Unfortunately it then gets a bit more complicated as there are a number of different variants; including Consumer Co-operatives (which include groups of supermarkets that you see on the high street) and Worker Co-operatives (which is what Co-operative Web are).
Consumer Co-operatives are a business that is owned by the people who use the service that they provide. I think it helps to think about where it all came from: in 19th century Britain items which were vital for survival such as flour and sugar were really expensive to purchase for oneself but by clubbing together and buying in bulk the price could be brought down. So that is what they did - and through this cooperation items could be bought and the savings enjoyed by everybody. So, when you go to your local supermarket and they ask you to join for a £1 contribution what you are actually doing is taking ownership of part of the business (it has to be noted that you are owning part of a business that isn’t all of the supermarkets called “the Co-operative” as they are actually organised in regional groups but that is something I will, no doubt, come back to later).
A worker Co-operative is a different proposition but following a similar “let’s all get together and help each other” principle. So instead of needing to buy something we we switch it for all need to work - i.e. a group of individuals get together and perform a task. The company that is formed to do this work is still owned and controlled by members but in this case the members are the workers of the company. The fruits of the company can then be shared out between these workers in an equal and fair way; benefiting those who actually do the work rather than those who sit at the top with the money to open the companies in the first place. This was done for many different reasons, I guess the main one back in the early history of the Co-operative movement was to give work to people in an area/industry which wasn’t considered that profitable for a company to make much out of but the workers wanted employment and it made them enough... I think in the world of today being a Worker Co-operative has a huge amount of relevance and potential to shake up the way companies work – but for now I will save that rant for another day!
I’ve tried to give an impression of what Co-operatives are here, and the kinds of things that they can stand for. There is a lot more (including the rules, ethics & values involved with Co-operative business), stuff I will touch on as this blog evolves but if you are keen to know more – or the actual history that I’ve paraphrased above then check out “What is a Co-operative” on the Co-operatives UK site (Co-operatives UK is the apex organisation for Co-operatives in the UK
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