How beer barrels, teabags and salmon became an alternative to reporting on profit… with a new guide to Key Performance Indicators for co-ops

It can be a liberating exercise for any organisation to talk about what success looks like.

For co-ops, set up to meet a wide variety of needs, it is also an essential task, because the pressures are always to behave like any other business. So, it is good that we have new guidance out for co-ops on one building block, which is about finding the right Key Performance Indicators (KPIs) to track how you are doing.

Barrels of beer is one indicator of a social club I visited in Yorkshire. The more barrels, the more people, the more sales and the more use made by the community. Not perfect, but simple and memorable. Tea bags used is another one, in a community setting.

For Rochdale Boroughwide Housing, a key indicator is keeping properties in use, with tenants staying longer and lower levels of vacancies.

For the largest co-operatives, it is about measuring things that, added together, make for what is most important. I visited VanCity Credit Union In Canada at the very start of their efforts to measure their difference – we acted as their first ‘social auditor’ when I was at the New Economics Foundation. Today, VanCity is a recognised leader in social and environmental reporting, active in the growing Banking on Values movement. Their 525,000 members hear about how the credit union is doing against three headline measures, with a scaffold of targets and indicators underneath:“we measure three connected outcomes – impact, confidence and integrity.”

There is a growing wealth of metrics out there now, particularly at the neighbourhood level. One indicator I recall that was chosen to capture local quality of life was the number of salmon in the local river. Measures are like these are not just numbers, they are indicators in the sense of being resonant of something larger.

And like all numbers, if you follow them blindly, you lose the line of sight with that larger sense of what success looks like. I have written an article on “what is the best way to prove your social impact” for Co-op News in which I contrast the corporate and sustainability reporting of Shell – more pages put together than Sense and Sensibility by Jane Austen, published new every year – with the Blockley Village Shop and Café in Gloucestershire, which keeps everything short, because members can see how it is doing when they drop by for their shopping or coffee. For the village shop, indicators are part of a short chain of accountability, part of the conversation. For the oil giant, necessarily complex perhaps but unnecessarily opaque, the numbers are a substitute for accountability.

In the new guide, written by Shelagh Everett and overseen by the Co-operative Performance Committee, what is invaluable is the linking of potential indicators with the underlying values and principles of co-operatives. It complements guidance Co-ops UK published last year on ‘narrative reporting’ – beyond the numbers and the annual accounts.

There are many alternatives to relying on profit as the key metric for reporting. An example is metrics around the co-operative principle of democratic member control:

So what is right for your organisation? Beer barrels or impact and integrity? As Shelagh concludes in the guidance:

“The best KPIs can provide the common thread that links purpose, strategy and activity to the work of the board, employees, members and volunteers. But be careful. The wrong KPIs will hinder you if they are not embedded in the way the organisation works.”

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Are you well connected?

I don’t mean in terms of social circles, I wouldn’t presume. But in terms of line speed for your smart phone and computer?

The answer is that it depends in large part where you live. Urban concentrations, big cities are milliseconds faster. Coastal villages or rural market towns can be a go-make-a-cup-of-tea slower.

Rolling out fibre networks, the key to high speed broadband, is something that is national policy, but to date it has been dominated by private companies who want to control as much of the infrastructure as they can – and then charge the rents that any good monopoly can extract. Openreach, the network activity formerly known as BT, can act as a wholesale operator, which can then be used by an Internet Service Provider (ISP). But they make the same basic offer when it comes to extending broadband – you pay and we will own.

Set up in 2011 by a technology specialist, Barry Forde, with colleagues, B4RN (Broadband for the Rural North) is a co-operative alternative. Now with twelve hundred members, it has connected around four thousand rural properties with high quality broadband (1,000Mbps FTTH) at a cost of only £30 per month. As one industry observer told me, admiringly, their model succeeds in leveraging community engagement in a way that dramatically decreases costs. 

The idea of developing infrastructure in a co-operative form has been an extraordinary success in the USA over time, both with telephone lines and with rural electricity networks:

  • Rural electricity co-ops employ around 58,000 people in the USA, operating on a non-profit basis. Their story is told in this short video from the National Rural Electric Cooperative Association, which brings together 900 enterprises.

One of the leading national initiatives in the UK that has drawn on the US story, shaped by Malcolm Corbett and colleagues, is the Independent Networks Cooperative Association (INCA). INCA has been remarkably successful in recent years, shaping national policy and carving out space for its 120 plus business members, including B4RN, which are independent network operators.

“Together, the independents form the UK’s third digital infrastructure competitor, alongside BT and Virgin” explains Malcolm.

INCA has also proven again the worth of the approach, which is that if you are dealing with a natural monopoly, then the benefit of the co-operative model is that it offers a way of ensuring voice and fair practice by enfranchising those who depend on the monopoly. If the problematic monopoly provider Openreach had been converted ten years ago to a co-operative of network operators, Britain would arguably be far further ahead in terms of world-class, ‘gigabit-capable’ internet speeds right across the UK, for better connectivity and faster downloads.

This is the infrastructure that Britain now needs for economic development. It used to be the case that towns and cities flocked to build business parks, to serve and attract business to an area. Now, land is expensive and more useful anyway for housing. It is more digital infrastructure that new businesses need, not more business parks.

But how can this be done? In market towns or rural areas, there is a need to join key groups together – it may be hospitals or town halls or housing associations that would benefit from the latest digital infrastructure (and increasingly healthcare and wider public services will need that anyway). But acting alone is uncoordinated and contracting to a company creates cost and dependency. Under EU State Aid rules, anyway, public money should not be benefiting private firms by giving them control of the infrastructure. When Amsterdam upgraded its city networks to shiny new and fast, it had to separate out the network into three levels, each reflecting a different layer of technology (and scope for commercial value): passive, active and service level.

Well, the answer could be co-operative.

Working together to build infrastructure at lower cost is the logic behind a new co-operative I visited in Aston-under-Lyne, at the invitation of the serial digital co-operative entrepreneur Shaun Fensom. This is the Tameside Digital Infrastructure Co-operative, which is successfully rolling out fibre in the area.

The co-operative allows all the different players to pool access to their properties without handing over the keys of ownership. It is, says Shaun, “a thin layer mutual.”

This allows for the re-use of public assets and extends fibre access, open to all. It solves the subsidy question as it avoids giving any state aid. It cuts out the costs and waste of competing private networks, by promoting collaboration at the ‘passive’ level, leaving competition to work at the ‘active’ and ‘service’ levels: whether they are national telecoms names or indeed local providers.

The Tameside Co-op model, chaired by Tim Rainey, has been recognised as an innovation by national Government, and late last year an event took place in Federation, the digital hub in Manchester across from our own home, to promote and test the model more widely.

Praise for the Tameside Co-op from the Department for Digital, Culture, Media and Sport at an event at Federation, Manchester

I met with the co-op in the stunning venue of the Ashton Old Baths, a listed heritage beauty that has been lovingly converted into digital enterprise incubator.

A number of other parts of the country are exploring whether to join in, from major city regions and coastal towns in the North to rolling rural hills in the South. This can only grow. It is, one would think a natural, for localities that are part of the Co-operative Councils Innovation Network.

Of course, it is still early days. Should there be a national programme and a common co-op to join or a spread of local co-ops?

But the idea that we can go faster, by connecting together… is taking root.

How the Co-op became the most loved business in the country

Across one hundred of the largest businesses in the country, the Co-op is loved by four out of five people (84%) in the annual survey by IPSOS.

And the country? It’s Norway.

I have written before about the vibrant and active cooperative sector in Norway, following work with our sister body Samvirke Senteret. I focused then on the farming, forestry and fishery co-ops. The Co-op, a sister to the UK Co-op, is a consumer owned retailer with 1.6 million owners in Norway.

As a mark of confidence, the Co-op has produced a wonderful, funny set of three short videos – about a Silicon Valley sharing economy start up funded by investors to make their next billion that reinvent… the co-op.

The first is set in Silicon Valley, where the team come up with the idea of sharing profits – co-operation- as the next big thing in the sharing economy.

The second is a pool party, where the investor gets cold feet when he realises he will not be the only owner.

The third has the team visiting the richest country in the world, Norway, in search of new investors – only to discover that someone has ‘stolen their idea’ with Co-op stores all across the country.

The CEO of Coop Norway is Geir Inge Stokke. He says:

“Our employees work on a daily basis to ensure that our customers, who are our co-owners, have good shopping experiences. Our own measurements lately have also shown record high customer satisfaction. Nothing gives us a bigger boost than coming top of the most loved list.”

Co-ops rank high in other countries too, such as Italy and the Netherlands where co-operatives are in the top ten brands. In the UK, the Co-op has been named by ICM as the number one campaigning business.

One of the strengths of the consumer co-operative model is the extra connection that being a member owner can bring. You are not simply a customer. Beauty, perhaps, is in the eye of the owner.

After floods and storms, co-ops pick up the pieces – a story of international solidarity

When trouble strikes, it is to your family you turn first. When the news of floods and storms emerged late last year, co-ops in the UK acted as a global family in raising funds to go to local co-ops in the affected regions, to help support their members.

Two years after a spate of devastating rains, for example, Nepal was hit again in 2017 by catastrophic floods and landslides. Relentless rains affected 35 districts of Nepal. 75,000 families were hit by flooding.

I have told the story before of how the UK co-op sector rallied together late last year to raise funds to be channelled through the International Co-operative Alliance (ICA), prompted by Southern Co-operative, with leadership from The Co-op and contributions from a wide range of co-ops, large and small. This is the story of what happened after…

Working through two national networks in Nepal, a programme of support for farmers has been established over 2018 through sixty local co-operatives in the districts of Saptari, Morang, Bardiya and Banke. This has supported 500 members to rebuild buildings, reinstate their farms and restock their livestock. This is invaluable help, deeply appreciated.

Alongside this work, led by the Asia Pacific Region of the ICA, Co-ops UK commissioned a research report by the Co-operative College on good practice for disaster relief through the co-operative sector. Report author, Dr Sarah Alldred comments that:

“The importance of the global co‐operative movement in post‐disaster reconstruction is that it has the solidarity to act together to join forces and mobilise the required resources, whether that be materials, funding or knowledge, skills and people, to rebuild the communities and livelihoods of fellow co‐operative members and their families.”

In the Americas, the preparation has been slower, but with a focus on area with high needs, the State of Oaxaca in Mexico. An earthquake of September 7th 2017 – 8.2 on the Richter scale – destroyed homes, public buildings, markets and churches. Over a year later, the area is still suffering with an estimated twenty thousand people still living without shelter and safety.

One of the targets for support is the coastal municipality of San Dionisio del Mar, with a population of 5,165 (for half of whom, their first tongue is an indigenous language). With resources raised from members of Co-operatives UK, the development work is with three groups of fishermen, associated with the Confederacion Cooperativa Pesquera de Mexico.

The co‐operative movement has frequently played a significant role in responding to crises around post‐disaster relief and reconstruction. Previous examples include:

  • a response in Haiti following on from the 2010 earthquake that killed 316,000 people, left 300,000 injured and made 1.3 million homeless as well as catastrophically damaging infrastructure.
  • In the USA electricity co‐operatives were quick to mobilise and provide disaster relief assistance to isolated and vulnerable communities when over 1.5m electric co‐operative members were left without power after Hurricane Irma struck in 2017.
  • Israeli co‐operative development organisation AJEEC‐NISPED has contributed to relief, reconstruction, and co‐ operative development projects in locations such as Sri Lanka after the 2005 tsunami, Burma after the 2008 cyclone, Haiti after the 2010 earthquake and Japan after the 2012 tsunami, as well as the ongoing refugee disaster in the Middle East and Europe.
  • The Swedish co‐operative development agency We Effect works in the field of sustainable international co‐operative development, but focuses on post‐disaster reconstruction work to support co‐operatives rebuild for example in cases such as where farmers’ fields have been destroyed in the severe floods in northern Vietnam.

The journal Stir to Action has an excellent recent issue, describing some of these, including work by Co-operatives UK in support of co-ops in Asia affected by past tsunamis.

On the back of all of this, I argued at the recent General Assembly of the ICA in Argentina that it is time for the ICA to explore a more consistent set of arrangements for co-operative action in the context of disasters.

With the support of the European Union, the ICA has built a strong infrastructure of activity around co-operatives for development. But, there is as yet no agreed system for practical global action in the context of disasters, evident in the slow response in the Americas region. A draft protocol was developed a decade ago at a meeting of the Committee for the Promotion and Advancement of Cooperatives which links to the United Nations system.

This needs to move from ideas into practical reality. A good model exists in the system proposed in the research by the Co-operative College

In a climate-stressed world, disasters are on the rise. After emergency responses have faded away, typically we find local co-operatives who play a key role in picking up the pieces of reconstruction, focusing on the livelihoods of local people and accountable to them. Co-ops excel at this kind of localism, but the best co-ops are at the same time open and even global in their associations and outlook.

Co-operation prompt us to see a common humanity beyond differences of culture and distance: self-help and mutual aid are powerful tools for any who want to see a sustainable world.

Lets get democratic in business

Information is power. Governance is control. So what do you do if you want a democratic system of decision making and a distributed system of power?

The paradox of hierarchies is that the more layers there are, the poorer the information that results, whether it is lost in the noise, not shared or distorted. Shann Turnbull has estimated that loss at 98% in an organisation with five layers of hierarchy. There is a case therefore that democratic governance, networked governance, can do better.

Slide1

The co-operative model is a proven model of business, based on principles of economic participation – ownership is by people involved in the business – and equality – member owners have an equal vote.

But, as it happens, we don’t have a systematic and cross-cultural account of how governance works in practice. We have been working on that, with research by Johnston Birchall on large co-operatives and in the coming week, we are running a deep dive workshop on co-operative governance in the Netherlands with sister networks from Holland, Sweden, Denmark, Finland, Belgium and Germany.

At a recent roundtable in Westminster, convened by Graham Allen MP,  I listened to Professor James Fishkin, Director of the Centre for Deliberative Democracy in the USA. His recent book, Democracy when the people are thinking, talks about distinct forms of democracy, including:

  • representative democracy – the most widely accepted concept of democracy, based on electoral competition
  • participatory democracy – emphasising mass participation of the people in decision making
  • deliberative democracy – involving deliberation by the people before key decisions are made

The co-operative models of democracy, particularly at scale, have leaned traditionally towards the representative model. But this is changing. Participatory practice – everyday democracy – and deliberative and open models around strategy and innovation are on the rise.

involveAt a personal level, I have learned a huge amount in my time as Chair of Involve, the democracy charity – time which is coming to an end as we look for new trustees and a new Chair.

My contribution to the workshop this week is to give this presentation, now up on Slideshare, on Information Design in Democratic Governance – ten steps towards a richer conception of governance in a co-operative.

The governance design at Rochdale Boroughwide Housing is a great example, using information in a liberating and participatory way.

Slide1As the late Paul Hirst said “democratic governance does not consist just in the powers of citizen election or majority decision, but in the continuous flow of information between governors and the governed, whereby the former seek the consent and co-operation of the latter.”

Co-operative Argentina – visits to a hotel, a bank, a theatre, a restaurant and a print shop

Hugo Cabrera enjoys teaching printing skills to young people coming out of prison, because he has been on the wrong side of the law himself.

In 1992, he and fellow workers at the Grafica Campichuelo print works occupied the site, in protest at its closure by the government and in defiance of an expulsion order from the police.

Forty three of the workers, with the active support of their trade union, came together to bid to save their livelihoods by saving the machinery and the business. To end the conflict and perhaps because they thought it would fail, the Government allowed them to reform as a worker cooperative.

Eleven of those founders, with a workforce now of fifty, are still with the business, which holds the contract for printing car registration documents.

Bringing new people in, without sharing the context of that extraordinary start, took time but they were committed to operating in an open way as a cooperative. “To begin with,” explains Hugo “young workers would watch debates at our Assembly like a crowd at a tennis match. To change that, we moved to decision making in smaller circles, giving new people a chance to participate and build their confidence to contribute and to challenge.”

Hugo has retired now, with the benefits that the cooperative had been able to build up, and now leads the social programme of the business, a foundation which supports training and work skills for people who are homeless or ex-offenders.

Grafica Campichuelo is one example of a recovered or recuperated enterprise, where firms went bankrupt and once abandoned, were taken over by the workforce as a coop.

Hotel Bauen in Buenos Aires is a second example. With a coffee shop, Utopia, and artwork on its walls, the hotel provides free space for solidarity groups, such as recently the annual meeting of the human rights collective that formed during the Dictatorship years. The Mothers of the Disappeared (of the Plaza de Mayo) are now grandmothers and great grandmothers, but their spirit is undimmed and as economic challenges mount up again in Argentina, they carry the torch for democracy and human rights.

Ana Martina of the US Worker Coop Federation at the Hotel Bauen

A hotel, a bank, a theatre, a restaurant and a print shop are among the co-ops I have had the chance to visit over three days in Buenos Aires, alongside the programme of the International Cooperative Alliance. (I have written a report of the Assembly of the Alliance for Co-op News, which you can find here.)

As the President of the national Cooperative Bank, with 250 branches and 1.5m members, put it to me: “our job is to combine efficiency and democracy and to demonstrate that the result is a better bottom line”.

Can organisations have courage? A story of brave hearts and values led organisation

This week, on 18 October 2018, it is World Values Day.

The first World Values Day was soon after Routledge published my own book, Values: how to bring values to life in your business in 2016 and it has been wonderful to see the

world-values-day

day grow and spread. There are millions of organisations working worldwide that are led by values – not least 2.9 million co-operatives that are bound by a common, global statement of values and principles. By chance, the same day is International Credit Union Day, of financial co-ops around the world.

There is a short introduction to World Values Day by Charles Fowler in a blog for the RSA. The day in short is an opportunity to think about your most deeply held values and to act on them. Staying true to our values and acting on them has never been more important and this year’s core theme is around one core principle of co-operatives, shared with many others, which is about care for the community.

the-value-of-joy-expressed-with-a-smile-at-joy-village-in-nigeria

Residents of Joy Village, Nigeria

One of the less recognised values that I have looked out for since my book was published is that of bravery. I had the chance to ask a number of key people involved in one such organisation at an event with former colleagues on consumer rights in Edinburgh. The organisation was the Scottish Consumer Council which lasted for around forty years until merged and disbanded a decade ago.

The Scottish Consumer Council was fearless in championing the interests of the consumer against some formidable industry interests, including lawyers, farmers and financiers. Yet it was never a campaigning organisation, fuelled by self certainty or self righteousness. Its reports were careful in their detail and considered in their findings. What the organisation had, under Chairs such as Dames Barbara Kelly and Deirdre Hutton and Directors Peter Gibson, Martyn Evans and Trisha McAuley, was courage.

How can a lawyer ever be his own judge - Sarah O'Neill SCC Scotsman 6 September 1999 2To be threatened with legal action by the Law Society in Scotland or shouted down in a room with hundreds of farmers took personal courage, but key was the extent to which the organisation stood behind the individual on the end of that. It did pay off, such as work starting with the 1986 report I’m Not Happy with My Solicitor, which led over time to basic information on the costs of legal advice and the formation of an independent complaints system for lawyers across the country. The history of the organisation is told in a report funded by the Peter Gibson Memorial Fund.

A culture for courage I learned was down to the following:

  • the encouragement at staff level of fierce and forensic internal debate
  • careful review and decision making by the Board before going public, and then
  • complete loyalty across Directors and staff teams to those making the case in public.

This means maximising internal diversity, to anticipate tests and challenges that could come up in the outside world, and drawing on the confidence such a principle engenders to commit from the top down to external unity, whatever the pressures were that emerged.

We should not confuse courage with marketing – it is easy for companies to claim to be bold. And we should not confuse courage with recklessness, at least if you are an organisation and you want to succeed over time. Courage is an individual attribute, so for different individuals across an organisation all to share courage as an organisational value I think requires the opposite of recklessness.

Organisational courage is the creation of a space for shared safety in which people can be courageous, because they are prepared for what is to come through a process of learning.

The most courageous organisations are those that have a commitment to foster internal challenge and dissent, in which fears are anticipated, opportunities tested and lessons learned.