The field of values in business has been growing in importance for some time and it is a genuine milestone that we can now welcome the UK’s first dedicated Chief Values Officer for a major business.
Pete Westall will take this executive team role at the independent co-operative Midcounties, a diversified retail business that employs 8,500 staff and is co-owned by 700,000 members.
Culture and values have long been seen as the soft side of business, but are now widely recognised as key to commercial success over time. The UK Corporate Governance Code for listed companies last year set out expectations that every Board should take action to set and monitor goals around organisational culture and values.
But who should lead on this? If it is HR, then how do you ensure that supply chains and external relations are covered? If it is risk and compliance, then how do values make their way into product and service innovation? If it is the CEO, then how do you avoid this being swamped by other demands on their time?
Midcounties has a long track record of firsts. It was the first business, alongside a handful of other co-ops, to publish the details of their tax, under the Fair Tax Mark. It was first to offer consumers full traceability on their local food sales, through QR codes and a new app, Happerley. With member backing, plastics are on their way down and Midcounties is one of only a few businesses to be rated five star by Business in the Community. Through Co-operatives UK, Midcounties was named Leading Co-op of the Year in 2018.
The first Annual General Meetings – for mediaeval guilds – took place on Saints Days, so there was time off and a feast to share. It can seem a tougher gig nowadays, but it is the Annual General Meeting in Manchester of The Co-op Group this weekend and for the past few years, this has been a wonderfully uplifting event.
Five successive years of like-for-like growth in food sales means that there is a spring in the step of The Co-op. Alongside trading, there is an increasingly ambitious and far-reaching programme of reinvestment in the communities in which The Co-op is located.
Being owned by members and not by shareholders means that The Co-op can do things that benefit their 4.5 million members and their communities across the UK rather than a small number of institutional investors in the City of London.
Under the leadership of Steve Murrells, for example, The Co-op was first to back British farmers by sourcing all meat from them – everything from the fresh cuts you’d expect to be British to the ready meals, the sandwiches, bacon and sausages. It wasn’t just an ethical thing to do, it was also smart business. With Brexit, others are having to catch up, with their overseas supply chains less secure.
A key theme this weekend is likely to be about how to make this reinvestment visible, so that it is clear to people that when they pop to the Co-op in their community, the community benefits.
With the High Street under pressure, shops being undercut because they pay taxes that online businesses avoid, the challenge at a community level is greater than ever. The data around this is set out in a new Community Wellbeing Index developed for The Co-op by the Young Foundation (named after Michael Young, one of the great innovators and co-operators of the twentieth century).
One pound spent in a Co-op store brings an added forty pence in benefits to the local economy. We know this from work we have done at Co-operatives UK tracing how customer spending has a different impact in retail co-ops to other businesses, where the value is extracted for outside, whether headquarters in the UK or for some, tax havens overseas.
As one colleague at The Co-op puts it:
When you buy from Co-op it does good. The more you, your friends and family shop with Co-op, the more good we can do in our communities. Good things like investing in community spaces, improving wellbeing and helping people develop their skills.
Every community needs an economic and social base for its health and increasingly we see co-ops and social enterprise, large and small, as catalysts for this urgently needed form of community economic development.
So, yes. Where we shop can make a real difference.
Every business has its story and the birth of Lilac, an award-winning young community housing co-op in Leeds, has been told many times. Built with straw bales for sustainability and warmth by a vibrant, can-do community of people, Lilac has become a poster child for a different model of housing in the UK.
It was such a pleasure to visit Lilac today, for the first time, after a trip to the Yorkshire Building Society and to see the progress of this practical, visionary settlement, converted from a former school, closed down many years before.
As a sign fixed humorously by the path reads, this way lies utopia.
I am grateful to the members that welcomed me in and showed me around. The first residents moved in in 2013. There is a profound sense of community and of values which comes across in all the detail, as well as a sense of constant and active problem-solving. “We love showing people around as we love living here“, I was told.
Here is one of the best annual reports I have seen of any organisation – an overview of who did what and how it went over 2017-2018 on one single poster size piece of paper, up in the Common House in Lilac Grove that is used for shared meals, shared events… and collecting the post.
In a Mutual Housing Ownership Society, the members make an investment and in return, they get equity shares in the society and the use of one of the homes. The society takes out a collective mortgage and costs can be spread across members according to the ability of each to pay. Equity shares are linked to the mortgage and if you leave you can sell them.
As a community led project, when the planning application went in, there were twenty seven responses from the neighbours, all in favour, with no objections.
Lilac takes many of our most insuperable contemporary challenges, of sustainability, of isolation and of inequality and shows how to tackle them together. This Lilac is in bloom.
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.”
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.
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.
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.
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.
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.