Mastering Co-op Management
Can managers really build healthy businesses based
on co-op principles and values? How is success measured?
By Jane Livingston
Editor’s note: Livingston is a freelance
writer based in Maine who specializes in coop
issues. Contact her at: mejane@gwi.net.
s senior project manager
for the 100-year-old
Scottish Agricultural
Organization Society, Bob
Yuill works with 80 member
cooperatives that have combined
annual sales of $2.8 billion, accounting
for well more than half of Scotland’s
annual $4 billion in total ag sales. His
job is to ensure that the Society meets
its purpose: “To strengthen the profitability,
competitiveness and sustainability
of Scotland’s farming, food and
related rural industries and communities
through the development of cooperation
and joint activity.”
It’s a challenging, complex job, so
Yuill was eager to learn more when he
first heard of the Master of Management
— Cooperatives and Credit
Unions (MMCCU) degree program.
“I knew I didn’t want the standard
program based on profit maximization,”
Yuill says. “Even most of the co-op education
courses I’d discovered seemed to
be the basic MBA with a co-op module
attached at the end. That doesn’t work.
You’re not using the fundamentals of
cooperation as the groundwork for
building the business. If you start with
the premise of maximizing return on
capital, you will always get to the wrong
conclusion.”
Yuhill’s boss had already signed the
Society up as a member of the
Cooperative Management Education
Cooperative (CMEC), which produces
the MMCCU accredited degree program
(the only one of its kind in the
English language). Tom Webb manages
the program from its home base at St.
Mary’s University in Halifax, Nova
Scotia.
International scope
CMEC has more than 55 members
that represent every sector of cooperative
enterprise. They are located in
Canada, the United States, the United
Kingdom, Ireland, Finland and
Oceania. Included are such well-known
names as Co-op Atlantic, Co-operators
Insurance, Credit Union Central of
Canada, and the gigantic Co-operative
Group in the U.K.
Credit Union National Association,
the National Co-op Bank and the
National Cooperative Business
Association in the United States are
members, as are the Co-operative
Federations of New South Wales and
Victoria (Australia) and the New
Zealand Co-operatives Association.
Faculty and students enrolled in the
MMCCU program are scattered widely,
too. After an initial, week-long orientation
at St. Mary’s in Halifax, they
telecommunicate with one another
from home and at work. They also go
on at least one study tour together, to
co-op ‘epicenters’ such as Mondragon,
Spain, or Emilia Romagna, Italy. The
complete course is rigorous. It requires
144 weeks of classes, assignments and a
major project linked to the sponsoring
employer co-op/organization.
“We operate the program on two
premises: One, that bankrupt co-ops
don’t meet their members’ needs; and,
two, that if there isn’t any difference
between your co-op and a regular business,
no one really needs you,” Webb
says. “It’s the combination of these two
that drives the course.
“We keep asking the question over
and over: ‘This is how it’s done in a
regular business. How is it done in a
co-op or credit union? How would you
design a store differently? How would
you treat your workers differently?
How would you do the accounting or
the marketing differently?’
“I dislike it when I hear people say,
‘Co-ops aren’t about making money’,”
he continues. “It’s dishonest. Otherwise,
they’re bankrupt. The real difference is
about the purpose of the business and
who gets to decide how the surplus is
used for the good of members and the
community. The problem is, we either
think about it from a consumer’s point
of view — ‘I want to pay the lowest
cost’ — or from the producer’s: ‘I want
to get the highest price.’ This doesn’t
reflect the cooperative concept of interdependence.”
Unique curriculum
As the MMCCU curriculum was
being designed, an accountant for Coop
Atlantic asked Webb what they were
going to do about teaching accounting.
Webb said, “Accounting is accounting.”
“So you’ve written us off as bean
counters, eh?” the accountant replied.
“Well, your program won’t achieve
what you want it to.”
Webb explained what he meant this
way: “You’re the manager of a co-op
and I’m the chairman of the board. You
have four goals, but I measure
you only on one, not the other
three. You’ll do your best on
those others, but you’re really
going to focus on the one. So
in three years, how will you
know how successful you’ve
been on your other three
goals?”
The trouble, says Webb, is
that co-ops can’t measure their
success with the accounting
tools that exist today. “The job
of an accountant is to show
how to use our resources to
achieve our goals. But we don’t
do it. We don’t account for our
other bottom lines. Where are
the tools that let a co-op know
if we’ve balanced our multiple
bottom lines?”
Its challenges such as these
that the first class of MMCCU
students has been grappling
with for two years.
Yuill is in the home stretch.
He’ll complete the courses this spring
and earn his Master’s degree next
spring. How have he and the Scottish
Agricultural Organisation Society benefited
from his participation? He lists
several concepts that he’s introduced to
his member-owners, which have helped
them improve the Society’s operation.
“The organization’s awareness of
these areas of opportunity has grown
significantly,” he explains. “But even
more fundamental is that we never really
had the confidence to base what we
do on co-op principles. This course
gave us the confidence to say, ‘This can
be done.’ Now, we recognize that we
are in a unique place in the market.
We’re much more focused on what we
are.”
Internal marketing
Yuill refers to this as “internal marketing,”
where the employees and
members of the organization internalize
the co-op principles and core values.
This in turn enables everyone to be part
of ‘marketing our cooperative advantage’
(or MOCA, a key concept of the
MMCCU program, and one which
Webb helped develop).
“As a result,” Yuill emphasizes, “our
effectiveness and influence as an organization
is growing, on the basis of people’s
trust in what we say. Our relationships
with our members, clients, and
other stakeholders are much clearer.
And because we have greater clarity in
our approach, the solution that’s conveyed
by cooperation is more readily
understandable.”
When he talks to someone in government
now, that straightforwardness
enables Yuill to sell the co-op solution
more easily, whether he’s addressing a
civil servant, a minister or a member of
parliament.
“They’re more supportive,” he says.
“The agricultural strategy developed 5
years ago didn’t refer to co-ops, except
in broadest terms. The new one, to be
published this spring, we are sure, will
be much more focused on the cooperative
solution.”
Building strong leadership
Steve Lepp is general manager of the
Pioneer Gas Co-op in Alberta.
Incorporated in 1970, the co-op’s 350
members are mostly farm families
who use the gas for heat,
water pumping and other
needs within the area’s diversified
agriculture sector. He says
the fact that most of the
MMCCU program is pursued
from the students’ home communities
hasn’t led to feelings
of isolation.
“After we get face-to-face at
orientation for a week, we
pretty much know everybody,”
he says. “It’s interesting that,
although we’re nothing at all
alike and come from different
types and sizes of co-ops,
many of our problems and
issues are identical.”
Lepp enrolled in the program
because he knows his coop
will need good leadership
in the years ahead. He doesn’t
mince words about it: “We are
one of 60 similar co-ops in the
province. By now, everyone in
Alberta who wants gas has it. We’ve
achieved that goal; our growth is done.
“So how does the co-op keep going,
without growth? That’s a management
challenge, and that’s where this course
has come in handy. It’s shown us some
options we have in working cooperatively
with others…Re-engaging our
members is a huge part of what we need
to do, not just give good service for a
fair price.” For example, the co-op is
now looking at several alternative energy
technologies.
Lepp says he’s been able to apply
“pretty much everything they’ve thrown
at me” in the Master’s program. One
change he made was to open the door
more widely to employee innovation.
During a study tour to Mondragon, he
was impressed by their commitment to
innovation.
“If an employee comes up with an
idea, they’ll haul you right into the
process,” he says. “Now, we explain to
members all the ways the money they
invest is reinvested in the employees
and the community. We also emphasize
that because they are owners of the system, they have a role to play in how the
co-op is run. They can come to meetings,
speak their minds and run for
director if they want to.”
Co-op management
style varies greatly
Co-op Atlantic has 129 member
cooperatives across Atlantic Canada and
the Magdalen Islands. It is one of the
largest integrated wholesale agri-food
operations in the region, and also has
significant holdings in real estate, housing
and petroleum. In 2004, these
diverse businesses served more than
200,000 families, employed more than
5,000 Canadians and had consolidated
sales of $517 million.
When Robert Lemoine came to Coop
Atlantic to head the Food Division 3
years ago, he had some idea of what he
was getting himself into. Even so, he was
not prepared for the differences between
cooperative management and his previous
management positions.
“I came in with my eyes open,” he
says. “But actually living in a cooperative
culture has shown me a lot more
than I anticipated. And since being
here, I quite like what I see. In the corporate
world, there’s a lot of backroom
politics and old boy clubs, and I don’t
get that sense here. Here, there’s more
of a need to have a discussion. It may
take longer, but when you work it
through, you come out with a better
product.”
Enrolling in the MMCCU program
was, for Lemoine, “a good way for me
to get up to speed quickly, which was
important at my entry level. I wanted to
make sure I would be able to contribute
to the co-op’s growth.”
He was impressed right away by the
fact that the MMCCU students and
faculty were committed to rigorous
business practices. Lemoine had an
image of cooperative members as a
bunch of soft-hearted, but impractical,
idealists. Instead, he found a lot of practical
knowledge pertaining to issues he
cares about: employee and member loyalty
to the co-op and the co-op’s commitment
to the bottom line and the coop
values that support that.
New territory
Lemoine appreciated the business
courses, but says, “I’ve been reading balance
sheets for quite awhile. But when
we got into social audits and social
accounting — that’s new territory.”
As the learning accumulates, it all
starts to come together: the history,
the philosophy, the accounting. “The
closer we get to the end of the
course,” he remarks, “the more interesting
it becomes and the more usable
it is for me.”
Webb sums up his view of the
future of the cooperative business sector:
“There is no perfect cooperative.
But we need to ask: what are the new,
innovative thoughts that are even more
consistent with our values? Where are
self-help, openness and solidarity in
the way we treat our workers? If we
had workers and consumers sitting at
the same table with the problems on
the table rather than under it, would
that help?
“Some version of the stakeholder
model is the solution — that’s the real
cutting edge.”
Webb talks about a board of directors
composed of workers, consumers
and producers where “every topic is discussed,
where there is a basis of trust
and no conflict of interest because
everyone there represents the co-op.
The power of the cooperative business
alternative,” Webb concludes, “is that it
can nurture what is best in people and
enable us to meet our needs in ways in
which everyone wins: consumers, workers,
producer and, ultimately, families
and communities.”
The deadline to apply for next cycle
in the MMCCU program is May 31, 2006. Call (902) 496-8170 or (902) 863-0678 or visit www.smu.ca/mmccu.
