If you design a boxing ring, then what you get is a fight…

With Lord Myners resigning from his Board position this morning, it continues to be a tough time for The Co-operative Group – among the worst in its long history. Yet for all that, our research shows considerable goodwill at a public level with people hoping that the business can pull together.

By and large people are aware that this is just one co-operative and the wider mutual model is one that still carries a high degree of trust. There are over six thousand independent co-operatives across the UK, with a turnover of £36 billion. Only 6% of UK adults say, in polling research, that what has happened will change their view of co-operatives in general.

The financial results now due for the Co-operative Bank, like all audited accounts, will look back, but, however its final capital call is resolved, the bank itself is looking to the future. It may be a slow recovery path but it will remain distinctive in terms of its ethical position and will of course retain close connections with the wider co-operative sector.

As with The Co-operative Bank, The Co-operative Group has indicated that it will cut core costs in order to compete more effectively and this is a critical part of a wider business recovery plan which is now firmly in train. Any successful business needs effective governance, with change where needed, but in the short term, it is the performance and financial state of the Group’s businesses that matters most.

What we are seeing within The Co-operative Group are the pains of change in a much more public setting than you would in any other business. When you are owned by seven million people, what you do will always be of public interest. Business, in this case, has become a spectator sport. Ultimately that transparency is a good thing, for public trust, but of course what happens is framed in part by that public and media coverage. If you design a boxing ring, then what you get is a fight.

In reality, we have much more agreement than disagreement on the next steps. The principle of reform is accepted, so there is indeed now a consensus for change. But how to change is not yet agreed and that’s not unreasonable. There are pressures to move fast, but I have always said that there can also be unintended consequences when you move to something entirely new in governance terms, which is what the proposals of the independent review led by Lord Myners represent. The way to manage overall risk for The Co-operative Group is to test, refine and get the governance right.

Lord Myners, who will still complete his independent review of governance this month, proposes a ‘twin peaks’ model, with an expert Board, focused on commercial performance, and a wider Membership Council, focused on social goals. He wants to bring The Co-operative Group into line with the practice of other consumer co-operatives of having direct elections to the Board from the full membership. But he has not published the full proposals in anything but outline form, so it is not unreasonable for there to be debate on how something like this could work in practice.

It is true that this may yet spill over into conflict or into gridlock, if we move into megaphone debate, with critics taking aim at each other, saying that this is the end of the business or the end of its mutual values. The Co-operative Group will survive if it successfully navigates both challenges.

The traditions of co-operative action, which are about listening and dialogue, ought to help.

What I am confident will emerge over the next period is a strategy for a transitional process of getting the business from where it is to where it wants to be. It doesn’t need every single actor signed up, but it does need sufficient consensus – failure to take people along on this journey could simply create a new set of problems down the line.

It remains a relatively simple step, once Lord Myners has reported, and if the leadership is there to start this, for dialogue among the key representatives to lead to a governance reform package that is timely, best of class and fit for purpose for a modern mutual.

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One thought on “If you design a boxing ring, then what you get is a fight…

  1. “a ‘twin peaks’ model, with an expert Board, focused on commercial performance, and a wider Membership Council, focused on social goals” – I fear that this may be an entrenchment of the so-called “old settlement” where the commercial managers are allowed to run amok so long as they deliver a nice profit for the elected members to spend on social goals. The co-operative renaissance happened in part because of the dismantling of that settlement as the group grew, with a greater emphasis on doing good through commercial activity, such as the bank’s ethical policy or the food stores’ now-slowly-eroding anti-GM stance. We must not retreat to the bad old settlement and I hope these plans are shaped to avoid that.

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