The ten lessons of the International Year of Co-operatives

2012 was a year of teamwork, sport and a renewed confidence that the country can pull together. It is perhaps appropriate then that the year was also designated by the United Nations, for the first time, as the International Year of Co-operatives.

It is, now we have finished, a fascinating case study, somewhat removed from run of the mill topic of business marketing. After all, when the United Nations names a year in your honour, what impact does that have?

1. Politicians listen. In launching the International Year, the UN asked every country to review and improve its legislative framework for co-operative enterprise. On just the 19^th January 2012, the UK became the first country worldwide to do this as the Prime Minister promised to bring forward a new co-operatives act before 2015. The last time there was a co-operative consolidation act in the 1960s, soon after, as it happens, the launch by the Beatles of “Love me do” their first single in the Co-op Hall in Nuneaton.

2. It is not what happens in Manchester that matters. Over the course of the year, around three hundred co-operative enterprises took part in organizing local events or running promotions under the theme of the United Nations International Year, with common branding used by coops right across the world.

3. Coops are not the goal. They are the means to achieve our goals. In March, a grassroots campaign, emerging out of the UK Uncut campaign, was launched to encourage people to ‘move your money’ from the shareholder banks to the Co-operative Bank or to co-operative credit unions, on the rise across the country. Change the world? Go co-operative.

4. We are going to have such an amazing time with new technology. Co-operate, an iPhone and Android app, is out, for example, letting you find co-operatives close to you, whether one of the four hundred co-operative schools, a housing co-operative or a branch of Nationwide, the UK’s leading building society.

5. Employee ownership works. In the period of Co-operatives Fortnight, the Deputy Prime Minister organised an Employee Ownership Summit, along with the launch of an independent review on how to spread employee owned and worker co-operatives

6. We have alcohol on our side. In July, we sponsored a Financial Times supplement on co-operative and mutual business. Among the example profiled by the Financial Times was the Wine Society. They have been voted National Wine Merchant of the Year at the Decanter World Wine Awards for two consecutive years. As Sarah Evans, Chair of the Wine Society, says “co-operatives make lovely wines.”

7. Nothing counts if you are not successful businesses. The Co-operative Economy, our review of the economic performance of the sector confirmed the commercial success and resilience of the co-operative model. For the last five years, since the credit crunch, the co-operative sector has outperformed the UK economy. Across the UK, co-operative turnover is now £35.6 billion. Since 2008 the number of co-operatives has grown by 23% and there are 13.5 million member owners of co-operatives in the UK.

8. We are bigger than we thought. Or we think. Research I led on global business ownership was re-published by Worldwatch Institute early in the year, revealing that globally there are three times as many member owners of co-operatives as there are direct shareholders. In the fast growing ‘BRIC’ countries of Brazil, Russia, China and India, co-operative sector growth is even more extensive. As a sector worldwide, the International Co-operative Alliance estimates that co-operatives employ 100 million people – more in fact than all the transnational corporations put together.

9. We are more visible than we think. Co-ops are also behind some of the most recognised brands. In recent years, blackcurrent growers in the UK for example formed a co-operative to supply the berries going into Ribena. Working together not only gave them more of a say it gave them a better deal and, in supply terms, it also worked well for Ribena. Similarly, the aptly-named Green Pea Company is a co-operative of UK farmers that provide the produce for Birdseye.

10. What happens in Manchester can matter. At the end of the year, along with the outstanding team at the Co-operative Group and the International Co-operative Alliance, we hosted an International EXPO for co-operative business worldwide. 11,000 people visited the ‘Co-operatives United’ event in Manchester in early November, which showcased the co-operative model not just in the UK but overseas.

The International Year of Co-operatives has been a unique business event. A short video on activities over the United Nations International Year of Co-operatives is on http://www.uk.coop/2012/celebrate2012 The commercial world should be proud of co-operative enterprises – and to regain its own pride, going co-operative is still an option.

Thank you everyone who followed and who contributed to this special year.

These are the ten lessons I have learned. Do add yours!

No fantasy

The new film out today is Chasing Ice, which premiered in fitting style at the Ritzy Brixton in conjunction with The Cooperative – a night which was topped off with the news that the film has been short-listed for the Best Documentary category at the Academy Awards.

It is not the Hobbit, but even so, since then, the makers say that the buzz has grown. A video on The Guardian showing the largest iceberg break-up ever filmed has received over half a million hits since it was posted two days ago. The Telegraph ran a cover story on the film last weekend, and Time Out has awarded the film 4 stars.

No fantasy, I suspect, but a warning of a planet moving to more horror scenes.

Twelve has been our favourite number

Co-operatives, their members and their supporters around the world marked the start of 2012, the International Year of Co-operatives, on 12 January. From Chelmsford to China, co-operatives came together to highlight the start of an incredible year.

Twelve months on, what a momentous year it has been. Across the globe co-operatives have celebrated what makes their businesses different. We’ve seen everything from flash mobs to formal conferences. Here in the UK, we’ve seen hundreds of activities, events and promotions by co-operatives up and down the country.

Wherever you are, whatever you did, I would like to thank you for your support, activity or good wishes during the International Year of Co-operatives.

Take the time if you can to mark the end of this wonderful year, by watching and sharing our new short film, Celebrating 2012, with your friends and colleagues.

Available online at http://www.uk.coop/celebrate2012 this 3 minute film showcases celebrations across the world this year.

Images of Manchester & Salford

These are some striking images of Manchester and Salford taken by my friend Richard, after a conversation with my mum about life here up the hills and in the cities.

In a hole in the ground

In a hole in the ground there lived a hobbit… the opening words by Tolkien come round again with the premiere of the Hobbit.

Ramsey Margolis, my counterpart in New Zealand, is nearby it all and we’ve compared notes on the co-operative dimension.

It seems to amount to a sense that teamwork pays when you are facing a dragon, and that treasure is better shared than hoarded. It’s still good advice for our times, especially for any of us with our heads below ground.

Everyday essentials – cheaper co-operatively

In the market for essential household (‘white’) goods, like vacuum cleaners, cookers and washing machines, the old adage is true that the poor pay more. The reason is that it is not easy to find a lump sum at short notice, and many people turn to doorstep lenders and easy access schemes, such as ‘rent to own’ purchases, that end up costing far more than if you could purchase outright or with affordable credit.

One in five tenants in social housing has used a doorstep lender. The leading rent to own company, Brighthouse, is marketed well and operates across the UK with 250 stores, serving 200,000 customers. Its message at this time of year is ‘pay a little bit at a time this Christmas’. The low upfront costs make it easier to sign up, but the total costs are high. Barnado’s for example has found that for the purchase of a washing machine, with service cover, you can pay an astonishing £780 more when buying through rent-to-own companies. The Guardian reported this weekend on prices for basic goods that were up to twice the same prices you could get from Tesco or Co-operative Electricals.

Not too long ago, the Office of Fair Trading found that consumers can easily face three-digit figures (APR from around 100 per cent up to 400 per cent) when buying with shorter-term credit products, with offers from some suppliers even marketed as ‘interest free’.

The solution is the winner of the Buy Better Together Challenge that we launched this year with the Department of Business. Our research shows a growing trend of collective buying – with half of all consumers now planning to save money by co-operating with others on purchasing.

We had one hundred and nine entries and awarded the prizes to finalists today with two senior Ministers (invite one, get one free), Ed Davey, Secretary of State for Energy and Climate Change, and Jo Swinson, Consumer Minister.

Smarterbuys is a collective purchasing scheme that uses its group purchasing power alongside existing sources of affordable credit to bring down the costs of everyday essentials. It has been developed by a co-operative consortium of housing associations and local authorities (Northern Housing Consortium).

Smarterbuys is a website that links consumers both to the product they want to buy and to the credit provider, typically a local credit union. The pricing policy is to ensure that they beat the list prices of Asda and Tesco Direct, while also connecting people through to affordable credit so that the end cost is less still.

The offer of the month in November is a Hoover HP2200 Hurricane Power bagless vacuum cleaner, selling for £73.99, a 62% discount on the full retail price. The site was launched in April 2012 and has the backing of 110 housing providers, representing 1.2 million tenants.

Having launched the core e-commerce platform, with over 12,000 enquiries since launch, Smarterbuys now plans to partner with local housing associations and authorities to market this as a service to tenants from their landlord.

Smarterbuys uses the convening power of social landlords to enable tenants to buy together and save money in the process. Because it handles the need for affordable credit and operates a simple to use online store, it makes the end of a cooker or breakdown of a vacuum cleaner far less of a crisis.

It is a worthy winner of the inaugural Buy Better Together Challenge Prize.

Everyday dignity

The United Nations Secretary-General Ban Ki-moon has lauded the coming close of the International Year of Co-operatives.

“We know there continues to be a hunger for policies and approaches that address social and economic goals that go beyond a one-dimensional bottom line,” he says. “By emphasizing core values, cooperatives help advance a vision that embraces social objectives into the business model.”

“As a strong partner in development, the cooperative movement works … every day to empower people and enhance human dignity.”

A senior director at HSBC asked me on Monday quizzically whether there could be a UN International Year of Multinationals.

Get values, get people, get democracy, I said… and we’ll talk!

Can we save more businesses that fail?

New is shiny, old is not. Innovation is the rage, conservation an afterthought. In business, a lot of dissipated energy goes into the frenetic chase to do something new, where a loving touch to something already out there could deliver so much more.

This gives us, for example, an obsession in policy on the start-up of new enterprises, rather than a concern for reducing the closure of existing firms. It is as if we have swallowed the distant myths of Joseph Schumpeter, that destruction, particularly if it hurts, must be good for the creative process.

In the UK, around 17,000 businesses fail each year. Within this number there are many companies that on economic grounds could be saved. A large number, forty four percent, are wound up because of poor management prior to insolvency. There is a pool therefore of up to 7,500 viable enterprises that are failing.

One way to do this is to look to the staff. Workers taking over an insolvent company to preserve their jobs and entitlements has emerged as a trend in a number of other countries. Appropriate enabling legislation exists in Spain, Sociadades Laborales (SAL), and Italy, the Marcora Law.

A new report, Saving Business, written for us by Anthony Jensen, based out of the University of Sydney, tells the story.

In a period of economic crisis in the 1980s, both countries enacted legislation in 1985 to support workers take over thousands of failing enterprises. Both countries based the legislation on encouraging workers to become entrepreneurs in saving their jobs by taking their entitlements, and three years projected social security payments, in a lump sum payment, and investing these in the new company. This was supported by government loans and advice.

The Marcora Law set up the Campagnia Finanzaria Industriale (CFI), a financial institution to support workers establish a workers cooperative, to take over the failed company. CFI also provided advice, finance and has the right of a seat on the board of the co-operative.

Both these programmes were suspended by the European Union (EU) in the 1990s. The reason given was they contravened European competition law. However after a redesign, they have both restarted. Professor Alberto Zevi in Italy reports that the Marcora Law is working well, with eleven buyouts assisted in recent months.

In France, over 700 businesses on the verge of closing down have been transformed into cooperatives between 1989 and 2010 (over 30 every year), thereby saving thousands of jobs.

Now, I am sure that there is a view that says ‘don’t go there. Let them fail. It is too difficult. Or we don’t want to be associated with their failures.’ I understand the view, but the UK has now to be more entrepreneurial.

Worker cooperative buyouts of insolvent businesses have been successfully carried out in many countries as measured by their longevity, job saving and job creation and performance impact. There are successful case studies in the UK: UBH International, Tower Colliery and a number of smaller buyouts in Wales. There have also been failures when best practice has been ignored namely a viable market, strong leadership, a homogeneous culture and ongoing advice.

Not every business can be saved. But success overseas points to the potential to save some.

Making our mark

Today, I am giving my talk at Co-operative Congress – the annual gathering for co-ops – which this year takes place as part of ‘Co-operatives United’, the closing event for the UN International Year of Co-operatives.

We have taken the visual identity of stamps for the event and it is the comparison between the first stamps and the first co-ops that I will touch on.

Before stamps were introduced getting deliveries from one place to another was a nightmare. A free-for-all – profitable in town, extortionate in the countryside; paid for by the person receiving, not by the person sending the mail.

The first modern postage stamp – the penny black – was introduced in the same decade as the Rochdale Pioneers set up shop – both working to a different business model. The new stamps would be a single price, paid for by the sender for all mail across the country. The price of a stamp was set not to maximize profit, nor to reflect variable costs but to widen access and win trust – and grow the market on the back of that.

That first stamp enabled the ideas of the Pioneers to reach every corner of the land and then travel to every continent. To the position today where co-operatives have made it in many countries onto the stamps themselves.

Today, the debates around what form the internet will take in future – its openness and issues around, ‘net neutrality’ – mirror the debates around those first stamps and co-operatives. It is all about how to spread business on the back of transparency and trust.

A community energy revolution?

There is nothing like spreading the load.

That is true for work and it is true for campaigning.

We are part of a Community Energy Coalition that has come together to champion renewable energy co-operatives. Earlier this year, we published a review of some of the inspiring practice that is emerging, written by Becky and Jenny Willis – itself following a roundtable of members led by Pat Conaty on theme of co-operation in energy.

This ‘other’ coalition now numbers around two dozen civic society organisations, including the National Trust, National Farmers Union, National Federation of Women’s Institutes, the Church of England and the Campaign to Protect Rural England.

The Community Energy Manifesto we have published, with the Co-operative Group, is a clear and practical agenda to follow, if Government were minded to do so.

And having talked through the manifesto at a coalition roundtable with the Lib Dem Secretary of State for Energy and Climate Change, it is clear that the door is open. It was Ed Davey himself who recently said that he wants “to see nothing short of a community energy revolution in the UK”.

The most immediate challenge though is the Electricity Market Reform programme. With the kind support of Esmée Fairbairn Foundation and the JJ Charitable Trust, we have completed an expert review of the impact of the reforms on the community energy sector, by Cornwall Energy. The answer? The changes will, as currently designed, hinder the emerging community energy sector.

More work is needed for a sustainable energy future for the UK.

Let’s hope that by working together, we can move faster.