Ed Mayo, Secretary General at Co-operatives UK and Vice President of Cooperatives Europe, says the cooperative business model can bring value to society and the economy.
Highlights of the discussion:
- Worldwide there are now some 2.9 million cooperative businesses co-owned by around one billion members. Cooperatives are economic businesses that are classically based on member value. In cooperatives, the ownership rests with people who participate in the business; it may be staff, customers, suppliers, or a mix of those (multi-constituency cooperatives). The value that they get out of the business is two-fold: a financial arrangement or investment and services that the business offers.
- There has been a wider frame of ethics and values which has always been there within the cooperative sector and in the late 20th century (1995) they were codified into a set of values and principles and they take that idea of “value” within the cooperative wider than just “member value” because if makes an open commitment through to a wider frame of reference with concern for the community and sustainability, as well as some specific normative commitments, particularly around education.
- That commitment to values as being core to business is a very distinctive element. Values are part of the glue that allows people to come together. It’s not just a transactional basis of involvement in a business, it is a common alignment toward a sense of purpose (see Desjardins in Canada, insurance cooperatives in Japan, or the Mondragon workers cooperative in Basque Spain). Members don’t use the term “public value”, they talk of “cooperative value”, but in essence it is public value.
- Cooperatives are complex systems. We live in a tide of simplicity where everything points towards things being simpler. In a business context that simplicity is fundamentally about return on capital, about shareholder value over time. In the cooperative sector, it all starts with complexity.
- Sustainable development means a reallocation of responsibilities. The traditional notion of “who is responsible for what” does not hold and therefore we are faced with open expectations or demands about what companies will take responsibility for. There has to be an engagement between consumers and across consumers, and between consumers and companies, and then policy-makers and other parts of the chain that actually moves things on to a different footing that can be transformative. In cooperatives, people have different identities and accountability reflects the complexity of those identities.
- Profit is a license to operate. There’s no point in being the most sustainable business in the business graveyard. You need to be able to generate surplus to take the business forward. Cooperatives are a distinctive form of business and they will use that form for competitive advantage. Cooperative do best in food and farming (cocoa farmers behind the Fair Trade mark in West Africa, Fonterra in New Zealand). There are also very successful banking cooperatives around the world.
- All organisations are based on values. They may just be the wrong values. There can be companies that are based of values of greed, of patriarchy, competition but they’re not necessarily ethical values. And many of the sustainability challenges call for ethical responses, which are universal values. What is needed is a sense of alignment where values become powerful because they are fundamentally a deep-rooted psychological source of motivation. When people see their values reflected in the values of the company, in the workplace or in the service offer, they can decide to take action and it can be quite powerful .
- To tackle the issue of integrating values throughout the business in an effective way, there is a need for a Chief Value Officer who can focus on ethical values to move the agenda forward. It is a “new frontier” for business. The chief value officer cannot be the chief exec, it cannot be the HR department.
- Every business can benefit from being more cooperative, giving a sense of ownership to staff, to customers, having a strong sense of purpose, a commitment through a set of values, collaborating with other businesses (one of the seven principles of cooperatives worldwide is cooperating with other cooperatives).