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Published: May 30, 2006

 
 

A Cooperative Solution

• Better communication. Maura Latini of the COOP group in Italy feels it is essential that co-ops maintain “communication as an internal element. We need to be as strongly linked as possible to the resources that are the reason for the co-op’s existence. These resources are its members and its employees.” Having learned to communicate more effectively, cooperative leaders find it easier to draw on the skills, talent, and enthusiasm of people throughout the enterprise; they enjoy an enviable degree of customer loyalty as well.

• Leadership development in the company and community. Ms. Latini began her career as a cashier; her climb from entry level to executive leadership is characteristic of co-op culture. Since the days of Robert Owen’s infant schools, cooperatives have had a built-in incentive to focus on developing leadership and entrepreneurial skills, within their organizational boundaries and at large in their communities. This in turn gives them a broader base of skilled people to draw upon. For example, as writer Cole R. Gustafson has pointed out, “Rabobank has the commitment to hiring local management and staff when it establishes operations in a new region, and profits earned reside in that area and are not siphoned off overseas.”

• Long-range planning and experimentation. “Being a cooperative,” says Rabobank’s Mr. Heemskerk, “you can take your time. There’s not such an immediate pressure of quarterly results. Obviously, we have to perform well financially and remain solvent. But we don’t feel the pressure of showing a 20 percent return this year. If we have 10 to 12 percent, it’s acceptable, as well. And invest, invest, invest, invest.”

• Openness to learning best practices. By its very nature, co-op culture is hospitable to learning exchanges. Maura Latini visited Norway to see its “co-op sales points” and was inspired by discovering that “all aspects relating to the environment, energy saving, and recovery in actual ecological terms are very advanced with respect to Italy.” She feels there will be more opportunities for collaboration in the future. “If two different realities are compared,” she says, “there’s always a lesson to be learned.”

• The social dimension. The “cooperative advantage,” as former International Cooperative Alliance Director-General Karl-Johan Fogelstrom calls it, is particularly effective in aiding emerging economies. Co-ops provide a framework for increasing the economic competitiveness of a territory. They provide opportunities (and pragmatic examples) that help the disadvantaged improve their living and working conditions. And they help build and promote a business-savvy society. “In this sense,” according to a 2004 white paper from the Commission of the European Communities, “cooperatives act as schools of entrepreneurship and management for those who might not otherwise have access to positions of responsibility.”

How influential will cooperatives become, and how far will they go? This depends in part on how well the cooperative leaders continue to innovate and compete. The rewards include financial viability — and another kind of personal satisfaction as well.

“I still remember myself as a boy of 8 years old,” says Bert Heemskerk. “My father started a small shipping business and a gold trade business, and his first loan was in 1918. From my brother, I got my father’s savings and loan book. It was from the local Rabobank. Anybody in the Netherlands who started their own small business back then was doing it with Rabobank. I feel I’ve gone back to my roots.”

Reprint No. 06209

Author Profiles:


Riccardo Lotti (lotti_riccardo@bah.com) is a vice president with Booz Allen Hamilton based in Rome. He is responsible for the firm’s pan-European marketing initiatives. He has helped large consumer and retail corporations change their organizational models to efficiently deliver against their strategy.

Peter Mensing (mensing_peter@bah.com) is a senior vice president with Booz Allen Hamilton based in the Netherlands. He has served major corporations across a range of consumer and service companies on strategy and organization-related topics.

Davide Valenti (valenti_davide@bah.com), a principal with Booz Allen Hamilton in Milan, has helped large consumer and retail clients transform their operating models to improve commercial effectiveness and operational efficiency.
 
 
 
 
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Resources

  1. George Cheney, Values at Work: Employee Participation Meets Market Pressure at Mondragon (Cornell University Press, 2002): In-depth sociological study of this famous long-term co-op, its Basque and Catholic cultural roots, and its adaptation to the global economy.
  2. Commission of the European Communities, On the Promotion of Co-operative Societies in Europe, February 23, 2004: European Union policy proposal supporting cooperatives; source of statistics for this article, with many links to background sources. Click here.
  3. Cole R. Gustafson, “Rabobank’s Offer to Purchase Farm Credit Services of America — A Case Study,” Department of Agribusiness and Applied Economics, North Dakota State University, December 2004: Fascinating case of the paradoxes of globalization as Rabobank attempts to expand in the U.S. Click here.
  4. International Cooperative Alliance Web site, www.coop.org: The world’s most established co-op group, with 222 member organizations in 90 countries.
  5. Japanese Consumers’ Co-operative Union Web site: Comprehensive site for Japan’s co-ops. Click here.
  6. Rabobank Web sites:  Overview, with a link to its financial rating reports (Click here.), and succinct history from its American member company (Click here.).
  7. For more business thought leadership, sign up for s+b’s RSS feeds. Click here.
 
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