Notes on Cooperative Development (p2)

In 2013, I participated in the CooperationWorks! Cooperative Development training, and even got certified as a cooperative developer (woo!). This was in the midst of a lot of reading and travel to visit various kinds of cooperative enterprises in person, so I took a bunch of notes and wrote it up and eventually came back and broke it into less-unreasonably long blog-ish chunks, and here it is. This is part 2. Here is part 1 and here is part 3.

CooperationWorks! at work, cooperatively

CooperationWorks! is a cooperative of cooperative developers; all of its members are ‘on the board,’ it’s entirely cooperatively managed. The organization provides training, capacity building, and advocacy for cooperative projects across the country. Its professional development training has three parts, and was described to me by a freelance cooperative developer as the premiere training program in the country.

So, sign me up! Being unemployed, I searched around for local DC institutions to sponsor my attendance — no dice. Fortunately, I found financial support to be readily available from both the Co.Bank and the Ralph Morris Foundation. (In fact I felt like was almost too easy for me to get this support from them. These trainings should be packed, and there should be lots of clamoring for aid to attend, from people who have even more need for support than I do myself. Of course, I’m grateful! I hope to make good on the support in some small way.)

The CooperationWorks! training brought participants into direct and substantive contact with a broad range of cooperative developers. Together we walked through the history, principles, practices, precedents, challenges and new frontiers of cooperatives.

And I learned a lot just listening to my fellow workshop attendees, who came from all over the country with all kinds of objectives. Many of them were already working in cooperatives, or were employed by organizations that are supporting the development of new cooperatives. A couple of participants had come from Hawaii, where each managed a separate, neighboring cooperative: one was a home healthcare provider coop struggling to increase its membership of provider/owners; another was an agriculture coop looking to increase engagement with its consumer/members. A small crew came from North Dakota, a state that’s nearly unique in the U.S. for its booming economy, which opens up all kinds of potential for cooperative development. Another attendee had been sent by a local food systems organizing initiative. One community organizer from Newark had been sent by her active civic association. A few were lone rangers like me (a polite elderly man from Detroit who has been trying to figure out how to help small businesses there; a web entrepreneur working on timebanking software). The diversity of backgrounds and interests in the room matched the diversity of kinds of cooperatives that we learned about.

The week started out with a set of case studies from each of us. We heard a lot of examples of organizations that up and started without a clue, struggled, failed, or sometimes managed to survive despite failure but wouldn’t advise taking the same route; even the few success stories seemed to be struggling with sustaining their cooperative character in the face of their own growth (such as mine, of Free Geek, a worker-managed computer refurbishing non-profit that started Portland and has since franchised out across the country — and subsequently began struggling with growing pains from tension between growth pressures and their cooperative principles).

Being located in Madison, the hub of perhaps the most coop-intensive area of the country, added value to the training on a few fronts: we were visited by a range of local developers and scholars  (many associated with the University of Wisconsin Center for Cooperatives), and paid site visits ourselves to a set of organizations (like the beautiful Willy Street Coop grocery, two full stores strong and expanding; a large ‘co-housing’ facility of about 40 living units that share a communal kitchen, gardens, social spaces and garage; and WORT, a community-supported and worker-governed radio station).

Though most of us seemed interested specifically in learning about worker- or consumer-owned cooperatives, I was also super-interested to learn about coops whose members consist entirely of other organizations. For instance, ACE Hardware is actually a chain of hardware stores with a central purchasing coop supplying their inventories. We explored another case study of a new cooperative that purchases supplies for veterinarian offices (by pooling the demand and purchasing directly from producers, the coop undercuts the outrageous overpricing of suppliers, to whom the vets otherwise wouldn’t have any alternative). And there’s the the Organic Valley Cooperative — a cooperative world all-star — with almost 1800 dairy farmers supplying milk to this processing and distribution hub. i

We briefly considered credit unions, which seem like the big enchilada as far as potential community-power-through-cooperative-development goes. Credit unions range from small community lenders to full-service financial institutions. They’re a potential game-changer for local economies, as large banks don’t like to lend to small businesses, especially unproven ones. At some point, national legislation compromised their ability to lend, from 25% of their holdings to 12% — but there’s pending legislation to raise that level back up. Expansion and strengthening of the credit union sector could counteract the evils of the payday lending industry, much of which is owned up the chain by the big bad banks, and basically just serves to fleece vulnerable people. (The complications and implications are pretty vast, and I admit that I didn’t even try to wrap my head around them, it was already so full…)

The case studies and site visits were illuminating; it was edifying to see how the core principles manifest themselves in such a diversity of forms. It was in the details (how to launch; how to manage) where we glimpsed the devil.

All of the lessons echoed a few key refrains: a) there aren’t set templates for cooperatives, the specifics all depend on the concerned people, their interests and their community; and b) all cooperatives are hard to launch, and if anything they are harder to sustain.

Hence the cooperative developer.

Cooperative Development: what is it and how to do it

This term was new to me, actually. It’s something of a cross between an organizational development consultant and a community organizer; someone who plays some set of supportive roles (from facilitation to strategic advisement to project management) as a given set of prospective cooperative member/owners make their way along the path. It’s a profession all of its own, and the members of CooperationWorks! are pre-eminent practitioners, with their own codified set of norms and principles. We learned these, too, early on — a variation on the Rochdale Principles called the Madison Principles, established here in 1994, which specifically address the agency and responsibilities of those who would catalyze a cooperative.

The principles largely mirror Rochdale’s, with additional guidance for the developer: Developers adhere to a high level of ethics (declaring any real or perceived conflicts of interest); they are committed to courses of action that unite members; they are committed to be market-driven, with the assumption that cooperatives only work when they are grounded in the realities of business (even if the values of the coop’s mission are primarily social or cultural, it still has to figure out how to sustain itself without grants and charity); their objective is to develop cooperatives that generally promote “social and economic empowerment,” and that specifically offer ‘tangible’ benefits to members; and they affirm that, while on one hand, each cooperative must respond to its unique socioeconomic context and thus be itself unique, on the other hand there are a set of ‘essential’ development steps that must be taken on any critical path to success.

There are plenty of resources online with greater expertise than I can offer. But just for the sake of it, I’ll try to sum up the process here in five not-so-simple steps.

Let’s start with an Idea being had. (Ben Franklin was real good at this part.) Let’s assume that the idea entails a potential solution, through mutual collaboration, to a shared problem. Let’s say this is Step One.

Step Two is to explore the feasibility of this idea. Step Two will involve some combination of research and meetings with other people who are interested in the Idea. Let’s not downplay this: Step Two is a huge, complicated step.

(At this point we should note that the proto-cooperative idea is going to emerge from three different kinds of people/contexts: 1) you are having Your Own Idea for an enterprise of which you would want to eventually be a member; 2) you are a cooperative developer who wants to initiate and incubate a cooperative Idea for others to form into an enterprise; or 3) you are a member of an existing non-cooperative enterprise, and your Idea is to convert it into a coop.)


“You” are probably not alone in this, remember — this is about cooperation, duh — but at least one of you should to be personally totally up-and-at-em bought in, a champion who truly believes that the problem is solvable and that the collective ‘you’ can solve it. (Your Ben Franklin types may not pass on this count — too promiscuous, idea-wise; anyway, your champion should hold a long-term commitment to, and deep credibility within, the community that the coop will serve.) If you’re a developer who is incubating this idea for the benefit of others, identifying a champion is a pretty early sub-step (if not Sub-step A or B) within Step Two. Without a champion, a cooperative is not likely to be feasible.

Step Two demands that you know your stuff about coops in general: how do coops work generally? How do coops work in this region? In this industry? What coop structure, if any, might be right for your idea? (Perhaps you should attend a training such as one offered by CooperationWorks!)

Step Two also entails that you come to know something approaching everything about the economic and social realities within which your idea would come to fruition. If you’re doing it properly, Step Two culminates in a presentable Feasibility Study, which asks All Of The Questions and provides All Of The Facts, starting with, What (really) is the problem? Then getting down to business:

  • Is there a “market” for this kind of problem-solving?
  • Is that market growing or contracting?
  • How big is the market, in terms of number of people who want the problem solved and how much they’ll pay for it?
  • What technology is involved with solving this problem, and how is that technology currently changing?
  • What’s up with the laws relating to this problem, and relating to your potential solution?
  • What’s unique about this particular problem in this particular place?
  • Who else is out there solving this problem, and what do they think about the prospect of a new solution on the block?
  • What’s unique about your solution; why will you be better at it than anyone else?
  • Have others tried to solve this problem in this particular way? What was the outcome of their effort?
  • What skills will you need to solve this problem, and how much will it cost to pay the people with those skills?
  • How will the cooperative get paid to solve the problem?
  • How will you raise the money it will cost to assemble everything you need to start doing the things for which the coop will eventually get paid?
  • How large will you have to become to attain a balance between the cost and the revenue?
  • If you have answers to all these questions, have you shown them to anyone else who might be able to offer an informed external perspective on the matter?   

That’s a lot, right? And it’s only Step Two, practically the very beginning.

As the CooperationWorks trainers rattled through these questions at a brisk clip, I could feel the energy in the room sagging. We didn’t deeply explore any of the individual components; there was just too much, really. Eyes around the room glossed over; pens were chewed and notes scattered into frazzled lists. I eventually came to realize that there was some intention to that — this was the pain that must come before the gain. CW is serious about bringing people interested in cooperatives to a reckoning: Is this Idea a business, or just a hobby?

In my notes: “Must know the difference between need and demand.” That seems on some level to be existentially provocative. But here it’s a matter of nuts and bolts: will your bird fly? Should it really be a coop? The CW’ developers asked this question repeatedly, with the clear implication that the answer might simply be ‘no.’ Their motto for this part of the process: seek the truth, and face the facts — but don’t give up hope.

And so we’ve reached the end of Step Two: the Feasibility Study has been read by the key parties (the members, or an empowered representative subgroup thereof), and they reach a Go or No-Go decision point. If No-Go, maybe return to Step One? If Go, then congratulations! You are ready to advance to Step Three: writing the business plan.

The Business Plan is like a sequel to the Feasibility Study, in that it includes the original formula and transcends it with actionable statements that contain answers to previous questions and punctuation for its implications. iiYour Feasibility Study was diagnostic; the Business Plan will be prescriptive. The Business Plan writing process digests all the market analysis done in the Feasibility Study, and poops out projections and financial models. It should be written by (or at least with the active participation by and commitment of) the people who are going to do it. If the Feasibility Study is like scouting, the Business Plan is like settling. iii

The business plan lays out Who/When/Where/How: the inputs and the outputs, the internal workflows and the marketing strategy; which permits and other operational formalities you’ll get and by when; who your customers will be and how many of them you’ll expect to have and what they’ll pay; how will your membership class work — what will be members’ responsibilities, and what will be their privileges; how the coop will be staffed and managed (coops can have actual managers! however they function more like labor, conducting operations at the bidding of the member-owners); your anticipation of risks and opportunities. The business plan even offers a ‘Sensitivity analysis’ that accounts for best and worst case scenarios (what happens if you’re more successful than expected? what happens if you’re less?).

One thing that both the Feasibility Study and Business Plan should have in common is that they are not just products, but processes. They are the vessels through which the collective ‘you’ travels from Idea to Institution. They give your steering committee its form and function, they are the means by which your group learns how to be a cooperative. Identify all the necessary components, parcel them out, and consense upon the results. This is the gestation of the cooperative, where the miraculous life-making work happens (or fails).

When it comes to Steps Four (Launch!) and Five (Sustain!), in a controlled setting (such as an incubator) the cooperative developer’s job should be winding down, if not wrapped up entirely. The CW trainers said they still occasionally talk with clients from years back, but this sounded more like a coaching relationship. The cake is baked, so to speak, there in the critical middle between Dream and Reality.

11. December 2013 by
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