Leveraging the Co-op Model for Business Success

[Amanda Beal]

Did you attend - or wish to attend - the recent conference for food producers organized by the Eat Local Foods Coalition (ELFC) of Maine: By Land and By Sea: Leveraging the Co-op Model for Business Success, on January 19, 2012?  If you have an interest in continuing and/or initiating new conversations/information sharing/networking started at that conference, this is your space!  

Also, when notes from the conference are ready, we will share them here, so keep checking back for resources and to participate in the ongoing dialog about how to build successful co-ops. 

[Nikkilee Carleton]

Amanda,

Yes I very much wanted to attend the conference, but had a scheduling conflict.

I have a couple questions to put out there to all...

I am considering starting a farmer's coop. It would be sited at an established greenhouse/nursery business that I would purchase. At the site farmers (or anyone) would be able to cooperatively order needed goods in bulk (feed, soil, pots, whatever) as well as purchase them in smaller quantities. They would also be able to sell their own products (compost, soil, some food), and set up a hub for wholesale distribution. We would be an incubator site for experimental projects (such as running a tractor on glycerine, or heating a green house with fuel from an anaerobic digester, or projects in growing, such as aquaponics), that farmers would be able to observe and comment on when they are at the coop. In the main store there would be a very basic coffee counter, encouraging folks to visit socially as well as for business. Eventually we would convert the house that is on the site to a soil-to-supper which would serve the products of our farm coop members. Over all, the idea would be that the coop would be an exchange site for bartered products that local folks need and have, and more importantly, a place where farmers come just so that they cross paths on a regular basis, allowing for the opportunity to exchange ideas and experience.

So my questions are:

As a farmer do you feel that a site like this is something that you need? If so what parts interest you the most, and what parts do you think you would not use.

Does anyone know anywhere in the world where there is a cooperative happening similar to this? Or even, do you know of any really effective utilitarian farmer's cooperatives that I could study?

[Nutter Farm]

Hi Amanda,

We at Nutter Farm are also considering inovative coop stategies in our business model. Check out www.nutterfarm.com

[Belfast Co-op]

Nikkilee - I encourage you to check in with the folks at the Cooperative Development Institute www.cdi.coop re: similar cooperative ventures. Also, let Gloria LaBrecque, Cooperative Fund of New England's Northeast Loan & Outreach Officer, know about your project. Her email: [e-mail] (she's based in Maine). Her work includes helping cooperatives expand healthy food access across Maine.

[Randall Parr]

Nikkilee Sounds like a winning idea!  I think start up farmers like me would be in the market  for rental equipment such as tractor + attachments which are expensive 2 purchase .  Also tips and contacts between buyers + sellers could be lucrative..  Workshops and discussions on techniques and tips could draw audience = greenhouse/ coffee shop?

[Barbi Ives]

Hi Nikkilee, I was there and can share some resources I brought back if you're interested.

[Randall Parr]

I attended and was happy about the conference.    I still have questions about co-operative model advantages over a single proprietorship for  small start-up enterprise.  There is much to be gained from future conferences and a lot of discussion material remains I think.  If all members co-operate there may be strength gained from having others support.  How to get tasks that need to be done, accomplished,  I don't see.  that could be a topic for future discussions.

[Cooperative Maine]

Amanda,

We had several people there, have heard all positive feedback, and we look forward to keeping the conversation & cooperation moving forward!

If you have a chance, check this out:

THIS WEEK! MECEP Executive Director Garrett Martin and his guests Jennifer Hill, Member, Cooperative Maine; Scott Cooper, Co-manager, Rising Tide Food Co-op; and Joanna Linden, Fedco Seeds discuss how local coops offer a real alternative to national chains and big box stores and contribute more to local economies. 

Time Warner Cable TV affiliates statewide on CHANNEL 9

http://cooperativemaine.wordpress.com/2012/03/06/cooperatives-key-p...

[Noemi Giszpenc]

Hello,

Glad to see the participation on this discussion list. I was one of the presenters at the conference -- my workshop was titled "Steering Your Co-op Through Thick and Thin: The Role of Governance in Successful Cooperatives." If anyone would like a copy of my presentation please email me, [e-mail].

I got a lot of great questions during my session, so here is some follow-up:

Questions asked:
++about governance:
How do you get board members to take on leadership/ownership of work to be done?
-board job description, board manual
-board training, board development
-multiple ways to participate (skills, time, $, connections)
-focus on shared vision

How to create new distribution of effort among Leadership & the Board.
- see above

How does a new board member, with new ideas, walk into an existing board and not step on toes... but still get things done?
-board needs to speak in one voice -- no going around
-follow 7-step decision making process (see below) -- first step is getting agreement that a decision needs to be made on some issue.
-don't assume one person has all the answers -- everyone probably holds a piece of the truth.
-build a shared vision

How the board should function?
-see CBLD, BoardSource for ideas (www.cdsconsulting.coop/services/cbld, www.boardsource.org)

How boards can operate effectively & efficiently.
-see above

Is decision making by consensus or by Robert's Rules or some other method better?
-I like the 7-step method (see below) which doesn't assume consensus vs. voting, but does assume thorough investigation and creativity, and ALSO requires good communication about the decision (including why it was made).
-voting sets up a win-lose scenario. In general seeking win-win scenarios is preferable.
-no matter what decision-making system is chosen, it should be clear what the process is
-see "Deciding How to Decide": http://nwcdc.coop/Resources/CSS/CSS04Deciding2D.pdf 

Interested in how the board can healthily lead the organization without taking it over.
-not sure what "taking over" would mean
-hopefully the discussion on the distinction between management and governance was useful

How to form a board; do natural leaders appear?
How the members of the board get elected in the beginning of a co-op.
-forgot to make a big deal about the trustworthiness and integrity of board members. Also standing in the community. these are important.
-as a board, you want NO hanky-panky, NO chance for hanky-panky, and NO appearance of hanky-panky
-for goodness' sake please avoid conflicts of interest. no landlords for the co-op on your board, e.g.
-on the positive side, need people who "get" the vision/mission of the co-op, and are fairly highly committed to it; have the time; work well with others--can take leadership, but can also let others lead; willing to learn and work hard.
-cultivate the 5 democratic arts. (active listening, creative conflict, negotiation, mediation, mentoring)
-steering committees that get co-ops started are different from boards--may want different people for these different roles.

Getting people involved - key players needed - size MANAGEABLE
-see above
-can also have non-board member advisors with specific skills
-on size, one of the key questions is having a reasonable and legitimate quorum requirement

what are the common challenges that Boards face in the running of a co-op?
-conflict of interest
-too hands-off
-too hands-on
-acting as individuals rather than group, or representing narrow constituency vs. good of whole
-not asking for help when needed
-not thinking through decisions enough
-taking too long to make decisions
-considering education and training to be a luxury--it's NOT, and it's needed MOST in hard times
-not planning for success...

Discuss similarities/differences between nonprofit boards & co-op boards?
-a lot of similarities
-main difference may be in the way constituency is conceived, and the way board is chosen -- in a non-profit the board is the final seat of power, but in a co-op that is the general membership
-some nonprofit boards are asked to do a lot of fundraising as part of board service, not generally the case in co-ops

++Other:
What kind of outreach is needed to initiate the formation of a producer's co-op, when you, yourself, are not a producer?
-you need to get a core group of people who really see/feel the need for the co-op

How do you prevent members from bailing when the "processor" pays more?
-go back to the history of why the co-op got started. Remind members of life back when they had zero control over prices paid for product. If the co-op fails, nothing will stop the processor from going back to squeezing producers. The co-op introduces an element of competition in the market -- for this to be meaningful, the members have to value it, and the co-op has to strive to be as efficient as possible. Review your cost structure and make sure members understand it, too. If improvements are necessary, let the members know what the co-op is going to do and why.

Ingredients for co-op members to feel true ownership of their co-op.
3 elements of psychological ownership:
1. knowing and understanding the source of ownership (e.g. purchase, gift, creation, discovery, etc.)
2. intimate knowledge & understanding of what is owned
3. some measure of control/influence over what is owned.
-as you can see this demands a lot of (continuous) education and continuous communication

How to start a small worker-owned biz?
-See the worker co-op start-up toolbox (http://www.usworker.coop/howtos)

How to manage power of being a major equity member with minimal equity members?
-for some important decisions, have an outside neutral facilitator
-make it very clear that the equity piece does not confer any extra voting power, and that you are not going to hold the co-op "hostage" to your opinion
-build the leadership capacity, if needed, of other members, with specific training on how to bring proposals forward, how to participate in meetings, how to understand the business, etc.
-have a plan for reducing equity differential over time

am thinking of starting a co-op. Yet my time is already fully occupied. I have $ to burn - but no time.
-does anyone else want the co-op? if there is a group of people eager for a co-op, surely they will find good uses for your money :) (e.g. by hiring co-op developers, lawyers, accountants)

What would you say are key/minimum competencies among a group considering forming a cooperative? / My organization trains refugee farmers who are interested in co-ops. We're concerned that language/decision-making cultures may make that challenging.
-connect to the New Entry Sustainable Farming Project (http://www.nesfp.org/)
-connect to Association of Africans Living in Vermont (http://www.africansinvermont.org/)
-connect to the New American Sustainable Agriculture Project in Maine (http://www.cultivatingcommunity.org/programs/nasap.html)
-connect to resources from USDA (http://www.csrees.usda.gov/nea/ag_systems/in_focus/smallfarms_if_pa...)
-connect to organizations outside agriculture who are working with immigrant communities, e.g. the Center for Family Life in Brooklyn, NY: http://geo.coop/node/636
-contact me for more info ([e-mail])

I am here to learn how to access economies of scale through cooperative structure i.e. communal equipment - chicken proc.; bulk purchasing - grain.
-connect with my colleague Lynda Brushett, [e-mail] 

How could artists share studio space together in one large mill.
There are loads of these in New England.
-connect with Western Avenue Studios (http://www.westernavenuestudios.com/), Gorse Mill Studios (http://www.gorsemillstudios.com), Washington Street Art Center (http://www.washingtonst.org), and more.
-co-op rents or buys mill; artists rent from co-op. OK to have different rents for different size studios, but still one member one vote.

Why we don't have more co-ops.
-people don't see the need
-co-ops don't do enough education and investment because although it will benefit them in the long-run, it is an extra expense
-most people are not familiar with how to be entrepreneurial and are scared, and there is not enough support to make it not scary

***Additional resources***
Dance New England manual, includes thoughts on consensus decision-making and nonviolence:
http://www.dne.org/business/lc/dne_manual_20071105.pdf

3 elements of psychological ownership:
1. knowing and understanding the source of ownership (e.g. purchase, gift, creation, etc.)
2. intimate knowledge & understanding of what is owned
3. some measure of control/influence over what is owned.

5 most valued aspects of (employee) ownership (no particular order, but being treated fairly is #1)
1. being treated fairly
2. being able to participate in day-to-day of managng work
3. having influence over the big-picture of the company
4. financial reward
5. sense of community

7-step decision-making process:
1. Initiate Process (determine that a decision about some issue needs to be made)
2. Gather Information
3. Generate Alternatives (DO NOT SKIP: most creative part of the process!)
4. Make Recommendation
5. Make the Decision
6. Inform Others (e.g., Members) (this should include info on who made the decision, why, and when it will be evaluated)
7. Evaluate Decision (an important moment of accountability) 

[Randall Parr]

Can this be simplified into 100 words or less?

[Noemi Giszpenc]

Hey Randall,

What do you mean by "this"? You mean my answers to a dozen questions? Or my general advice to people who want to start cooperatives? Or set up/serve on a board? Is there a particular reason you want it in 100 words or less -- what's the purpose? Or are you just saying I'm being long-winded ;)

Noemi