University of Wisconsin Center for Cooperatives
Year in Cooperation: A Cooperative Development Magazine
Published by the Minnesota Association of Cooperatives
Spring 1996 -- Vol. 2 No. 2
Are We There Yet?
Are cooperatives preparing for the future?
By William Nelson, President of The Cooperative Foundation
Cut to the quick, a central theme at conferences for cooperative board
members during the past few years has been the exploration of ways to keep mature organizations
young at heart.
This isn't a problem only for the food and farm supply cooperatives. It's true of
all companies competing in the broader agricultural industries throughout the industrialized world.
There's plenty of evidence to say it's true of basic, consumer products manufacturing and some
parts of the
high-tech fields as well.
What has emerged in the industrialized world are "mature" industries. Battles for market share in
mature markets usually mean narrower margins on operations and lower profits for the bottom
line. So nearly all business organizations are searching for ways to expand their portfolios of
products, reach new markets, diversify and discover more value-added or higher-valued markets;
and do all this both at home and abroad.
Given this environment, cooperative board members do raise questions at conferences and
training sessions that start to have a familiar ring. They are seeking ways to revive or renew their
organizations within their cooperative traditions while making use of new technologies and
information systems that make change possible.
One of the challenges facing today's cooperatives is the need for professional and specific
technology management. It brings into question how traditional co-op boards deal with the
management of their business.
Cooperatives have become successful in part by drawing on the experience and know-how of
other kinds of business
organizations. But all such organizations have succeeded and now find themselves
in mature markets. Many of these
organizations -- or companies -- have reached a point where their structure and continuing
operations may be limiting their ability to adapt in a rapidly changing,
For instance, setting a goal and establishing a management-by-objectives system may be an
effective way of achieving a specific goal for the company. But this
carefully defined or rigid structure may fail to ensure opportunity for multiple goals or outcomes.
The limitations of traditional planning systems may especially handicap
a cooperative because of its unique
As John Gardner described this problem in his book, Self-Renewal:
"As it matures [an organization] develops settled ways of doing things and becomes more orderly,
more efficient, more systematic. But it also becomes less flexible, less innovative, less willing to
look freshly at each day's experience. Its increasingly fixed routines are congealed in an elaborate
body of written rules.
Perhaps there has been no time in a
cooperative's history when flexibility was so important for management. Or more impossible to
define in a management-by-objectives company strategy.
"The problem gets serious: In the final stage of organizational senility there is a rule or precedent
for everything. Someone has said that the last act of a dying organization is to get out a new and
enlarged edition of the rule book."
Members have the same problem.
It isn't easy to define their responsibilities in tandem with their need for flexibility.
Any cooperative can look back through its history and find early leaders with vision, dreams and
perspectives that rallied the members around what the future could be. These leaders believed
they could influence what the future could be by organizing a cooperative. But members were
flexible and shared the vision, the dreams and perspectives, and they also believed they could
control their cooperative's future while enhancing their own well being.
The future facing our cooperatives going into the 21st Century is very different from that faced by
the cooperative pioneers.
Not only are conditions of the global marketplace unique to this time, but the changes we
anticipate in technologies
such as electronics, communications and biological engineering have far-reaching consequences.
The opportunities for cooperatives are
as great as the threats to their future. As the Nobel laureate economist Douglass North notes in
the new book, International Market Power of Cooperatives, which was discussed at
the Regional Directors Workshop in January, the computer may be the greatest invention in
history to reduce "transaction costs" -- or the costs associated with doing business and fulfilling
contracts. Since this technology is readily available to cooperatives, producer-owned businesses
are now in excellent position to provide transaction cost services by supplying business partners
with more value-added products and by reaching a broader base of customers.
David Hughes, a food industry business professor at Wye College, the University of London, says
most changes in the world food system are consumer driven. And since most consumer demands
at the supermarkets are for fresh produce the year around and more convenient, nutritious foods,
cooperatives must be more product oriented than they've been in the past. Being the low-cost
producer -- a service of successful farm cooperatives -- isn't enough, Professor Hughes says in
Farmers must now provide the products
the consumers want -- regardless of
How do co-op members shift, or become flexible in their thinking, to allow their cooperatives to
become consumer oriented businesses?
Jerker Nilsson, the cooperative business economist at Uppsala University in Sweden, suggests in
the same book that members must be active participants for a cooperative to function during
"I have experienced that as long as the members are involved, nothing can really go wrong with a
cooperative, despite the... challenges," he said. "In Sweden, involvement of the members varies
between 30 percent up to more than half the members. If, however, you are facing a membership
involvement of next to zero percent -- such as in many cooperative banks, in agricultural
cooperatives in France and in consumer cooperatives in Germany, Austria and Sweden -- then
you are really heading for trouble."
Because of technological advances in electronic communications, member participation will
present extraordinary demands on cooperative boards and managers. And it will also open new
opportunities for the flexible cooperatives.
Electronic communications already allow governments to sample citizen
reactions, akin to instant referendum. Modern telecommunications are opening the world for
The cooperative will have the same tools
to invent methods for members to participate and be involved in shaping their cooperative future.
Mr. Nelson has been speaking, writing and teaching on the application of futures
studies in agriculture, business, cooperatives, and career education for nearly 20 years. Projects
have included the educational development program "Taking Agriculture to the Year 2000," a
Humanities Commission program on "Technology and Change in Rural Minnesota," and a Mutual
Service fund project on "Cooperative Careers in Transition." In 1993 he assumed his present
position as President of The Cooperative Foundation. He is also a Cooperative Education
Specialist with the Cenex Foundation.
This material has been reproduced in electronic format with the permission of Year in