Digital transitions: Can co-ops pioneer a new way of doing business?
Investing in digital transformation can help businesses thrive but it can also be challenging for small co-ops that lack the necessary capital.
Last week’s Global Innovation Co-op Summit in Paris explored some of the advantages of digitising, including the use of platforms.
Smart, a platform co-op founded in 1998 in Belgium, is one such example. With 30,000 members across eight European countries, the co-op had invoices for €160m in 2021. Its members are freelancers, artists and creative industries professionals who by joining the platform are able to pool entrepreneurial resources and risks to establish sustainable working conditions. The platform also allows the co-op to gain access to data to understand how its members function and what are their needs.
Sarah de Heusch, international affairs officer and chair of Smart’s ethical committee, called on other co-ops to “go digital”, adding that co-operatives could bring more democracy and a people-centred approach to the digital revolution.
“As a co-op world we need to create this ecosystem,” she said. “It’s complicated because there is a cost of maintaining tools, not just developing and implementing the tools. If data is the new oil, how do we use it as the co-op world? How do we think of the ownership of data, use the value generated by it and distribute it?” she said.
VME Coop, a worker co-op with offices in the UK and Malta, which provides software to retail co-ops in the UK, is exploring developing an app to order from retail co-ops, collect and connect with other co-ops in the area.
Aaron Stewart, general counsel at VME Coop, explained how during the pandemic many co-ops did transactions with well-known private sector delivery providers. “When you do that you lose your connection with members,” he warned, “and you give those providers your members’ data. As a co-op when you lose connectivity with members it’s the beginning of the end for that co-op.”
VME, which is governed via sociocracy principles, is also working on a new product to enrich membership conversations, which will be available in 40 languages.
And the co-op is the driving force behind Co-op Exchange, a start-up platform co-op that allows anyone to invest in co-ops, from anywhere in the world.
To develop the right solutions, said Stewart, it is vital to take an enterprise’s purpose and mission into account. Digital solutions must then be tailored to that purpose – which avoids the risk of having the new digital solution dictating an organisation’s strategy.
In Canada, the Cooperation Council of Ontario (CCO) is working with local retail co-ops to help them stay competitive through digitisation. Michael Norris, senior director of CCO’s Impact Team, described the challenging environment facing co-ops in the grocery sector, which is dominated by a small number of players. This means that grocery co-ops are often supplied by their competitors.
To address this, CCO recently launched Revolution North, a pilot project that seeks to democratise access to innovation for small businesses and agricultural organisations in Northern Ontario.
Norris recommended that co-ops go back to their members to develop bootstrap solutions, looking at what resources they can mobilise and then determining what works best for them. “The bootstrap model can provide advantages and cost efficiencies,” he said.
Investment remains the main barrier to adopting new technology, particularly for smaller co-ops.
Alban Aucoin, public affairs director of France’s Crédit Agricole Group and a board member of the European Association of Co-operative Banks (EACB), suggested sharing services as a potential solution to this challenge.
Throughout the Covid-19 crisis, co-op banks across Europe continued to serve customers digitally. Aucoin said banks need to digitise at the rhythm imposed by clients and members – but not without losing their values. Digitisation can also exclude of some clients, he warned, and co-op banks also need to realise economies of scale while remaining people-centred businesses.
“The digital tools only complete the human relation,” he added.
Hanan El-Youssef, lead strategist, Movement Strategy at Wikimedia Foundation, said co-ops have a lot to offer to Wikimedia space and other similar communities in terms of knowledge, ownership and governance. But “the pursuit of platforms must be subordinate to meet a need,” she added. “Platform co-ops are not an end in itself, just a means.”
Creating platforms for co-ops is not without risks, said Greg Dinsdale, president and CEO of LBMX Inc in Canada, a software company that provides digital platforms primarily for co-ops. He gave the example of a purchasing co-op in North America which, having opened a distribution centre for its members, who paid US$50,000 for it, had to shut it down because another private distribution centre offered better prices.
“Nobody is going to come to a platform because it’s a co-op platform,” he added. “They will come because it adds value, solves a business problem; but they’ll stay if they embody the values they want.”
Anita Gurumurthy, executive director, IT for Change, India, argued that while people may not come to a platform just because it is a co-op, “it’s important for the social and economic narrative to understand that we can do things differently because we have a platform.”