Geof Cox's Blog

A conflict common to many co-operatives...

I've been asked to help resolve a familiar situation in a co-operative:

A founding group has put much time and effort into building a successful business, which now has the opportunity to expand rapidly - which will require admitting new members.

Some of the founders are happy to do this, but others do not want to dilute their own control and investment (mainly time - but obviously it does have a financial value).

Luckily it is a share structure and it is possible to reward the 'sweat equity' - but it is also a one-member-one-vote structure so although there will be a probationary period ultimately control will be shared.

Obviously I'm aware of both the technical mechanisms that can mitigate problems like this - that's why it's a share structure! - and also the arguments for bringing in others to allow and boost growth (it's better to have a smaller share of something really valuable than the lion's share of very little).

However, for those who are happy to share ownership and control, the disagreement has raised questions about the others' commitment to co-operative principles - perhaps they were never heart felt principles at all - just a convenience to cohere a good team?

Given that this is such a familiar difficulty - which I know has broken co-ops in the past - I wonder if anyone knows of case studies, or just has their own story, of how co-operators involved in such conflicts have dealt with them - more especially how they have dealt with the feelings involved?

Social Enterprise in Albania

Monday 10th May     Tirana to Shkoder

In addition to my social enterprise development work for Oxfam in Russia, I'm also now helping to restructure the Oxfam country operation in Albania as a social enterprise.

To give me some idea of their work here, this morning Oxfam drove me out from the capital, Tirana, to the far northern town of Shkoder (pronounced Shkoddra) where we transferred to a big Landrover Defender – there are no made up roads out to the isolated villlages where Oxfam works – and subsequently to the even bigger and more rugged Landrover of one of Oxfam's partner NGOs, the Albanian Permaculture Resource Centre (which Oxfam actually set up). We were soon among horse and donkey-drawn farm traffic and – despite the valley heat – snow-peaked mountains.  Little boys with sticks encourage solitary cows along the track that challenges even the Landrover, until we abandon that too alongside the most beautiful river – the water turquoise under the white rock and sun. We make our way on foot across the valley, over a bridge only passable in summer (though in Albania this is most of the year!) - where you look far down into a deep gorge under the water - then up the other side of the valley to the little farm we are visiting here.

Back to Moscow

Despite appearances, and perhaps reputation, Russian food is in fact delicious...Despite appearances, and perhaps reputation, Russian food is in fact delicious...

Read from the first of my February 2010 blog posts from Russia here.

Russian restaurants, outside the big cities at least, are very different from those in Britain. In the evenings most have live music, and everyone - all ages - dances. It was in such a restaurant that we spent our last evening in Rybinsk, and drank vodka Russian style.

Victor was the master of ceremonies. He doesn't usually drink vodka in fact, but this restaurant had a particularly fine Siberian vodka – unfortunately not available in the the UK – for which he made an exception. First, a small glass is filled with vodka, and a second larger one with tomato or orange juice (most Russians prefer tomato). Then the toast, made in turn by anyone present who feels moved to initiate it, and the vodka is knocked back in one, followed straight down by a large gulp of juice. The other essential, after a few of these, is water: Sergey had the forethought earlier to give us all a bottle of water for our rooms - I drank the whole litre as soon as I got back, and woke up the next day feeling fine.

Day Two in Rybinsk: -18°c

By way of background I gave Helen a copy of the Wikipedia article on Rybinsk – unfortunately her eye was drawn unerringly not to the town's illustrious past or many architectural treasures, but to the article's apocalyptic warning that...

the giant Rybinsk dam, which holds the Rybinsk Reservoir (until recently the largest man-made body of water on Earth) places the town in imminent danger of the dam breaking and the reservoir flooding the city

Hopefully the fact that the reservoir, and most of the huge span of the Volga, are almost entirely covered by ice at the moment makes the danger a little less imminent!

Many people in Rybinsk have other pressing problems. In soviet times this was a closed town, and they still manufacture aircraft engines and components, but during the collapse of the soviet system in the 1990s most military work here ceased, and about 80,000 people lost their jobs. Only about 20,000 new jobs have been created over more recent years – this in a country where welfare benefits are not really enough to live on at all, let alone achieve any quality of life.

My social enterprise development sessions – which sometimes seem to revolve entirely around discussions of the impenetrable workings of Russian customs – are thankfully interspersed with Helen's story development workshops.

2010 social enterprise visit to Russia - 1

When I got into the car in Rybinsk this morning Victor pointed to the temperature displayed on the dashboard. Although it was a beautiful sunny morning and not even particularly early – about 9am – the outside temperature was still only -16°c. Victor told us about a previous visit to Rybinsk, when even he had found it so chilly he ran to the car. When the dashboard lit that day the outside temperature read -42°c.

Over the last two years I've been advising Oxfam on the role social enterprise might play in their anti-poverty work in Russia. At first this was focussed on strategy: understanding the legal/financial environment for social enterprise, the resources and capacity of the NGOs for disadvantaged people Oxfam is working with, what external support might be available, and so on. Now at last the work has moved on to what for me is a more exciting phase: real social enterprise development work.

The kind of felt character that first caught my eyeThe kind of felt character that first caught my eye

A typical question...

Here's a question I received in an e-mail last week:

I'm going to the SE conference in Cardiff next week. On their registration form they have Charities and Social Enterprises listed in different delegate fee categories. I thought that Charities (or more specifically their trading arms) are SEs? Am I easily confused?

I get a lot of questions like this at workshops and seminars, and you can read my own attempt to cut through the definitions confusion here: What's all this about social enterprise?

But this particular asking of the question did make me think a bit harder - because it came from a lady who has worked for years at a high level in social enterprise - actually for one of the employee ownership apex bodies - and who is currently researching her Masters in Ethical & Responsible Tourism.

Do we just have a definitions mess - or is there a bigger tragedy going on here? Have we actually succeeded in taking our wonderfully clear and simple and popular message - that you can do business to do good - and muddying it up so thoroughly that hardly anybody can now understand it?

Sounding like David Cameron...

I was in a meeting with a well-known social entrepreneur today who was most disturbed when somebody said he sounded like David Cameron. Are we turning Tory? Or have they finally worked out, in the aftermath of the financial world collapse, that business models based on greed and exploitation really don't work?

Here's what I think is happening...

The historic alliance of Big Business and Conservative Counties has collapsed. Globalisation with its reduction of market town high streets to bland uniformity and replacement of human contact with automated switchboards is no more acceptable to Middle England than it's ability to move production to China is to Trade Unionists.

It's obvious to all now that unfettered competition doesn't lead to real diversity and choice – to the local and individualistic and quirky - but to the illusory choice of colourful wrappers around international monoculture and financial institutions too big to fail.

We may have different views on where to put windfarms, but we can all see that using more and more energy on making more and more stuff we don't really need, spending more on advertising them than making them in the first place, and transporting them half-way round the world, is just plain crazy.

Do structures stymie social enterprise?

At a recent social enterprise investment conference Financial Times enterprise editor Jonathan Guthrie said that although social enterprise was 'an attractive-sounding phrase', one of his worries was the 'vagueness of the structures'. According to Guthrie, this presents problems for funders - and in the end funders will impose what they see as appropriate structures. Nick Temple from the School for Social Entrepreneurs, who shared the podium with Guthrie, disagreed with this.

I think this disagreement is over two sides of the same coin: the positive side of the diversity of structures we have is being better able to develop exactly the right structure for purpose; the negative side is how confusing and difficult the choices involved in this can be.

Funders have always, and will always have specific requirements on legal/financial structure: grant-giving trusts and foundations have them, banks have them, and now specialist social enterprise funds have them. This is not a problem in itself - a big part of developing the right structure has always been anticipating the scale and type of funding that will be appropriate - though getting the optimal structure to meet funders' criteria, plus all the other constraints of business model, scale, mission, values, and so on, can indeed be difficult. I was involved a few years ago in a research project for Social Firms UK that revealed that over half of all the social enterprises surveyed were disatisfied with their legal structure!

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