MASS-SPECC Cooperative Development Center, Philippines as part of its 47th General Assembly organized the Coop Leader’s Dialogue on the Cooperative Identity. The thematic session looked at why this “distinctiveness” is important to the success of cooperatives around the world, particularly in the Philippines.
Dr. Martin Lowery, ICA Board Member and Chair of the Cooperative Identity Committee spoke on Deepening Our Cooperative Identity and Mr. Balasubramanian Iyer, Regional Director ICA-AP on Cooperative Identity: A Competitive Advantage or a Liability?
Dr. Lowrey began his address by praising the progressive Philippines Cooperative Code and the cooperative pledge. He congratulated MASS-SPECC’s vision, “All members enjoy better quality of life,” and said that it reflects the true essence and nature of cooperatives. He said that the Cooperative Identity matters for the survival of cooperatives, provides a vision, and addresses the dual nature of cooperatives. Cooperatives under the pressure of growth and their survival focus on the balance sheet and many tend to walk away from the identity. He cited contrasting examples of some cooperatives adhering to the identity and others moving away. Mountain Equipment Cooperative from Canada lost its way while Recreational Equipment, Inc. (REI) in the USA changed its name to REI Coop; the Cooperative Group in the UK downsized (fall of the ethical bank) while the SOK Group in Finland flourished. Cooperative values and principles have evolved, starting from 1844. While values have stood the test of time, the principles have evolved based on the evolving situation. Principle 6 and 7 have been added in recent times. The thinking is that the World Cooperative Congress in December 2021 will not be the final stop and that the dialogue would continue to get a view from as many members as possible. The need is to self-examine our situation, strengthen the identity, firm up our ethical values, promote entrepreneurial behaviour to meet our vision to “Build a Better World.”
Mr. Iyer began his speech by saying that in the Philippines there is great excitement when a cooperative attains billionaire status. He was not sure if the excitement was for the billionaire or the cooperative part. Many of these cooperatives started with very humble beginnings and have reached great heights today. The question which follows is are they still cooperatives? Being big is no disqualification for being a cooperative. We should celebrate this. At the same time, the question asked is also a fair one as these are the cooperatives one looks up to emulate and follow.
The Statement of the Cooperative Identity adopted in 1995 makes clear that the cooperatives have a dual nature (an association and an enterprise), the importance of values that were started by the founders of cooperatives and the principles which are a living document.
During the Regional Consultations, members highlighted that economic and social inequality has become a permanent fixture in society. Cooperatives with their values and principles are the ideal vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. However, there was a lack of focus in promoting and teaching the cooperative principles and values; there was more competition among cooperatives than cooperation; in many cooperatives, there was an emphasis on selling products and services and members viewing themselves as borrowers rather than as responsible owners.
Daniel Cote in his book, “Cooperative Management: An Effective Model Adapted to Future Challenges,” touched upon six structural changes - market failure, the concept of membership, ownership, the interpenetration of areas of activity of cooperatives and their many competitors, and isomorphism (similarity of structures or processes across organizations). Based on these changes, he came up with four quadrants to trace the evolutionary trajectory of cooperatives.
In Quadrant I the cooperative identity is the strongest as cooperatives are in the initial stage of creation to meet unmet needs and, accordingly, competition from other entities is virtually non-existent. In Quadrant II as cooperatives mature, they begin to lose touch with the needs it was created to meet as competitive pressures increase. The changes are not yet problematic from a cooperative’s survival perspective. It is in Quadrant III that as cooperatives mature and with time experience more competition from non-cooperatives and start to adopt and mimick the tactics and strategies of their investor-owned competitors to maintain and/or grow their competitiveness and market share. Competing cooperatives are most at risk of losing their cooperative identity and selling or converting to investor-owned entities (i.e. demutualizing). However, it is also at this stage that a cooperative has a significant opportunity to self-reflect, reinvent, and transform itself into a new and sustainable cooperative for the future. In Quadrant IV cooperatives that have rediscovered or reinvented their core purpose find new ways to thrive in intensely competitive markets. They are “Game changers” in delivering new products and services to meet previously unmet or under-met needs of their members and communities and thus (for at least a brief time) outstrip their competitors.
Beyond cooperative principles and rules, cooperatives need to take into account associative and business practices by understanding that the reciprocal influence of cooperative duality (association-enterprise) is reinforced by its purpose and values, its business model, and the optimization of cooperative difference for its stakeholders. Cooperative rules should serve a logic of use, as opposed to a logic of capital, which acts as a counterbalance to market pressures on members’ cooperative activities. There is a need for - coherent management practices that unlock the cooperative differentiation potential for members and the community; a demonstration that through economic action can generate unique results with added value for members; analysis of the core business of the cooperative and compare with capitalist competitors to point out; associative practices implemented that develop and sustain the unique meaning of the relationship between members and their cooperative; and ensuring strategic fit between governance and business dimensions.
The Regional Consultations have pointed out the need to present cooperatives as a modern way of doing business that brings cooperatives and the larger community common good; focus on membership aspect of cooperatives; go to volunteerism to open up spaces for youth; adopt new technologies as much as possible; develop indicators to measure the association and enterprise dimensions; for leaders of cooperatives to be role models and showcase examples that bring out the best of the cooperative way of doing business.
