Anyone with an interest in business and the economy is hearing a lot about growth and development and what can be done to enhance one or the other. The terms are often used interchangeably, and it is true that they are inextricably linked. Yet it’s important to note that they are not the same, and having some clarity about the difference, especially in a co-op, can have a powerful influence on everything from boardroom discussions to workplace culture.
In October, the Imagine International Conference on Cooperative Economics and 2012 International Summit of Cooperatives was held in Quebec, where cooperators from all over the world met to discuss the future of cooperation globally and locally. Growth and development of cooperatives topped the list of many workshops, seminars and panels. There was widespread agreement among economists and other presenters that today’s dominant global economic models are unsustainable and that cooperatives have an opportunity to be part of the solution to a pending global crisis.
Richard Wilkinson, professor emeritus at the University of British Columbia’s School of Community and Regional Planning, challenged cooperators at the conference to think about the question of growth and development in their co-ops. “Are we getting better versus getting bigger?” he asked. Wilkinson argued that for co-ops growth points to efficiency and development to equity. By applying the values of cooperation and sustainability to being better businesses, it is possible to grow in ways that give back to societies and the environment, rather than exploit their resources.
Walden Swanson, CDS CC consultant and Co-op Metrics founder, attended both the Imagine conference and the Summit. “One message that came through, especially from people not involved in co-ops, was the moral imperative of developing co-ops worldwide. Because of the unintended consequences of the world’s economy being controlled by publicly-traded companies, it is imperative that co-ops all around the world grow and develop.” Swanson said that the world economy needs to come into balance in terms of equity and fairness.
One of the interesting and simple facts about business development and how you define the big D, is that it is almost always focused on the long term. That’s because it is a process that usually involves education and/or investment, things that may not show an immediate return on investment. There can be bad development, but advancement with the aim of building positive outcomes is usually about transformation and improvement.
Growth, as it is carried out as an economic activity, is a subset of development. As a basic concept growth is something measurable, like a change in size, number, or an increase in value. It is important to note that expansion is just one aspect of a development vision. Multiplication in and of itself doesn’t carry the same moral weight. For example, we’ve seen what increases without intentional improvement can do to an economy—strip it of precious resources and leave behind a wake of exploited people and devastated communities.
Cooperation is antithetical to the model of growth for growth’s sake. One of the differences is that co-ops are structurally designed as businesses geared toward economic development.
“Size is not the point. A co-op can lose touch with its members even if it’s a small operation, and a large co-op can be successful if it is committed to serving its members,” said Marilyn Scholl, manager of CDS Consulting Co-op. “Focusing on growth without focusing on better meeting member needs won’t create the type of development we need.”
Growing for its own sake isn’t necessarily the best path to an equitable economy, as we have seen. That’s why when we talk about co-op growth, we really mean escalation with purpose, with the aim of fueling positive improvement. Co-ops want to grow, and want more members because they want to transform society toward a more just distribution of resources, economic and political democracy, and environmental sustainability. The attributes of cooperatives lead Riccardo Petrella, an Italian economist and political scientist, to declare that cooperatives should be awarded the Nobel Peace Prize. “Economic injustice is an enemy of peace. Cooperatives are defenders of peace,” he said.
The major management consulting firm, McKinsey & Company, embarked on a research effort to better understand cooperatives and explore opportunities for success in the 21st century. They released their results in study called “McKinsey on Cooperatives” at the Summit, and the conclusions are stunning. Regarding growth, co-ops have growth rates comparable to public companies and overall, are better at growing market share. They are good at aligning with their communities and delivering trustworthy customer service. Very good news there. Pat selves on back.
However, co-ops scored low as innovators and on their abilities to make decisions and respond to challenges. Effective management and governance are areas of concern. Generating new ideas, developing talent, and sharing knowledge are weak points. Without adequate investment in education and leadership training, a co-op sector’s ability to pursue expansion is limited. Imagine how much more could be accomplished if co-ops strategically focused and pooled their resources in ways that increased their long term prospects and maximized opportunity.
“It’s a validation that we need to invest in people in the workplace,” said Sean Doyle, general manager of Seward Co-op, about the McKinsey study. “When you do that you have tangible results. You also have results when you don’t, and they are not as good.”
The National Cooperative Grocers Association (NCGA) also commissioned an impact study specifically related to food co-ops in the U.S. called Healthy Foods Healthy Communities: The Social and Economic Impacts of Food Co-ops (see sidebar on page 3 for more information). Robynn Shrader, NCGA CEO said, “I was so pleased to see the McKinsey research results were consistent with our findings.” Not only is that information useful for consumers who want to know what good food co-ops do, but Shrader pointed out that the results can also be used by co-op leadership to gain an understanding of the far-reaching impact when their co-op is focused on its purpose. “Leadership is powerful if it relates to our place in the world,” Shrader said.
In the last 10 years the food co-op community has a created a support system that is unprecedented in its history. By investing in its creation, the food co-ops have made definite strides, but the growth and development of food co-ops still needs improvement. Karen Zimbelman, the director of development services for theNCGA, thinks that both the NCGA’s impact study and the McKinsey report point to the need for fostering talent and creating alignment around purpose. “The results shouldn’t just make us feel our business model is superior, but challenge us to do better and be a more vital force in our economy,” she said.
Walden Swanson feels a sense of urgency because values like concern for community resonate with people at large right now. “Most people think economic growth is perpetual when it’s cyclical. There’s something to these cycles and how much opportunity they provide. So the larger the co-op sector, the smaller the WalMarts might be,” Swanson added.
The 2012 International Summit of Cooperatives presented a Declaration that was presented in Manchester at an event organized by the International Cooperative Alliance.