Monday, December 2, 2013

Is there an ideal size for a co-op business?

The co-operative brand and model of doing business has taken a bashing in the public and media realms recently – the co-op bank being bought out by private investors; its board being found to lack the skills and awareness needed to manage such an enterprise; the co-op groups' collaboration with Thomas Cook over the future of its travel business turning sour, and plenty more besides… all things which anyone who's a member of any co-operative enterprise will feel shamed, embarrassed, upset, and angry about because they show that our ideals and hopes for this alternative model of doing business have been 'betrayed' by one of our largest number...

Many are commenting and writing elsewhere on the implications and reasons for these fall-outs, but I find myself wondering about the question it raises about the dangers of a co-op enterprise of any type becoming 'too big' and in doing so, too distant and removed from its members who are the reason for its existence, and if by extension that means that there might therefore be an ideal size for any co-operative enterprise?

Anyone who's been involved with any co-op will know that people become members of it for all sorts of different reasons: ideology, need, economic gain, community, employment, … and with those different motivations come different expectations as to how they want to be involved in, and influence, that co-op's trading and development.
Sometimes co-ops can focus on their members' interests over maintaining a profitable enterprise which leads to trouble, but conversely those co-ops who neglect their members' interests in pursuit of a profitable business also find themselves in danger...

But does this mean that as well as an ideal size, there should also be an 'ideal type' of co-op member? After all, doesn't it get too messy otherwise to be able to manage? But pursuing this line of thought likely leads to madness: we live in a wonderfully diverse world, and its because not everyone thinks the same that new expressions and ideas and opportunities can emerge.

So – back to the original question: should we limit the size of a co-op? I know of several worker and housing co-ops who've wrestled with this question in the past, and decided that 'yes', there are natural limits to how large a co-op should be allowed to become before it has to enact formal democratic structures that would dilute and stifle their members' voices and influence  to levels that they deem to be too low to be acceptable.
But conversely, scale brings advantages despite its governance and regulatory challenges, the Co-operative Group has been able to support thousands of local community projects with grants, campaign globally on numerous issues, and help hundreds of existing and new startup co-ops across the UK through its Enterprise Hub initiative solely because its large enough to be able to generate the levels of trading surpluses it needs to commit itself to these national programmes as part of its manifestation of the defining co-op values.

Co-ops exist for the benefit of their members. 
Co-ops need to be answerable to their members. 
Co-ops should be informed by their members. 
Co-ops should therefore regularly review how well and appropriately they are ensuring this in light of changes to their business models, marketplaces and wider societal expectations and pressures. If not, then co-ops fail to properly evolve, and just like dinosaurs will quickly become extinct after an all-too-brief parade and flurry of excitement.

1 comment:

  1. Thanks for this Adrian. I've often considered this question and personally drawn the conclusion that if a co-operative becomes 'too big' member engagement will ultimately suffer, community and charitable involvement starts to look like blue chip CSR, and the society and wider movement suffer.

    The Co-op Group has ~7million members but how many are active consumers, and how many actually know what membership really means? Members are the life blood of co-ops and the big boys should consider this in every decision - mergers, acquisitions and otherwise.