Robb on Cooperation

Three secrets of success in New Zealand co-ops

Posted by Alan Robb on 29 September 2009 | 0 Comments

Recently I was asked “What makes New Zealand co-ops successful?” In my experience there are three main secrets which apply not only to New Zealand cooperatives but around the world: successful co-ops are:
● responsive;
● responsible; and
● innovative and proactive.

Let me explain these in turn.

Firstly, responsive co-ops respond to members’ needs. Co-ops exist to serve members, not vice versa.

Historically, cooperatives were founded because investor-owned companies failed to provide good quality products or services at affordable prices.

Ravensdown was founded because of dissatisfaction with the poor quality fertiliser being sold to farmers. Read The Gumboot Takeover by Bryan James and you will quickly see how widespread the need was for quality, affordable superphosphate.

Ashburton Trading Society was founded because farmers needed better value for money in farm supplies.

The success of both Ravensdown and ATS is because both have kept close to their members and have responded to their changing needs. The same is true of other successful NZ co-ops.

Responsive cooperatives also respond to the market place. Successful co-ops must be business-like, and the essence of successful business is adaptation to changing circumstances.

The three Foodstuffs cooperatives operate in one of the most demanding sectors of the economy – the grocery sector. The reason that Foodstuffs is a successful cooperative, in contrast to many grocery co-ops overseas, is that it has responded promptly and effectively to changes in the market place.

New Zealand co-ops, like most other NZ businesses, enjoy virtually no protection and no subsidies. This is not so in some overseas countries.

It is small wonder that overall their co-ops are less successful than ours.

Secondly, successful NZ co-ops are characterised by a sense of responsibility.

They are responsible to local interests. There is a closeness between members and managers, between members and the board. The latter is of course closely linked to the fact that most directors are members – but as co-ops grow they face a real risk that the board will lose touch with members.

The successful New Zealand co-ops work to increase contact with members. This can be by having regular functions for members, by conducting focus groups to ensure that members’ needs and concerns are being attended to, and by staff training which encourages employees to address members by name and recognise that they are the owners of the cooperative.

All successful NZ cooperatives practice a policy of supporting the local community – it’s sound common sense and good business sense too. It demonstrates that in a global economy a local co-op can serve the community better than a business that is answerable to unknown overseas investors. It provides the personal touch which enhances the quality of community.

Thirdly, successful NZ co-ops typically are innovative and pro-active.

PSIS was the first financial institution in NZ to provide telephone banking and cellphone text banking.

Tatua Cooperative Dairy Co developed the concept of ‘whipped cream in a can’.

There are other examples which could be quoted.

This is not to suggest that all co-ops in New Zealand are shining lights, or that nothing can be learnt from overseas. There are many lessons that co-ops here can learn from those overseas.

For example, the British Cooperative Bank introduced an ethical policy in 1992 which has been a world leader in demonstrating that business does not operate in a vacuum.

The bank’s policy has been influential in helping other businesses consider how to act ethically. They have turned down several hundred million pounds worth of business because it would have provided financial support for such activities as the arms trade or the extraction or production of fossil fuels.

These were all areas of concern to members and society.

Looking at what the Cooperative Bank did, they were truly responsive, responsible, innovative and proactive – and successful.●

— from the August/September 2007 Cooperatives News