June 15, 2020 at 1:24 pm #8163Les EllsworthParticipant
I would certainly not see taking on the debt of the CCC Co-ops as legitimate when you already know you have two big competitors in your trading area that is new and attractive to the consumer. It would be very difficult to compete with even if they had a small profit versus debt.
As a part of CCC Co-ops, I definitely would not see CCC’s Governance structure as legitimate because it is not in keeping with the Co-op’s founding model and good Governance Boards for Co-ops. They moved from a Co-op model board to an advisory model were they really had no say in how the CCC would operate.
The CCC certainly wanted to be a big player amongst the competitors, but looking into the future they took on more than they should have without the resources to back them up. The competitors could go along time with low pricing even at a loss versus the CCC with already incurring debt and little or no support moving forward. It was destined for failure from the start and when a decision was made to only have advisory boards versus the Coop model they also lost support amongst its members who no longer felt that they had input in to the decisions. The plans going forward was not shared with the members in a way that they could still feel they had some say thus they shopped elsewhere. The members had disagreed with the structure from the start and a part of the failure was certainly legitimacy.
Recently our Local Coop had to make a decision wether to renovate a convenience store or shut it down because of competition. After Management presented 5 different options to the Board it was unanimous to renovate because of strong membership support and area the store was located in to serve the membership. It wasn’t a decision taken lightly, but looking into the future we believe, we believe we have a good market share and the improvements would maintain and possibly increase the share. We work closely with our FCL advisers and certainly do not rubber stamped management proposals/decisions. We have a diverse and strong opinionated board that have allowed us to make good decisions on behalf of our members. We also communicate with our members, staff and FCL into what services should we look into offering to maintain/grow our membership in the future. Good governance on boards is imperative to its success.3+
June 19, 2020 at 11:56 am #8213Lori SandersParticipant
I agree 100% that good governance on boards is imperative. Your decision to renovate a c-store, although a tough one, was made correctly, reviewing options, working with FCL and knowing your membership. There are hard decisions made by boards, but with good communication and strong, knowledgeable directors, good choices will be made.2+
June 20, 2020 at 7:46 am #8224Dianne BrownParticipant
Totally agree with both comments, as I worked my way through this study I am reminded that in our model every member being an owner is still very important and ownership comes with responsibilities. The membership may not hold us accountable at an AGM if we, the governing board fail them, they have so many options in todays market place, we can quickly loss their trust and loyalty if we are not legitimate. As the size of North Central Coop grows and the number of communities that we serve increases we are focusing on a process that will keep us in touch with the membership, with the specific focus of sharing information and getting their feedback(not a survey). A ‘coop community councils’ process that will engage them at a level different then the non -member consumer. Hopefully giving them some tools so that they help shape the future, as their role in the strategic interdependency of their Coop.2+
June 20, 2020 at 12:28 pm #8229Jen BudneyParticipant
Great comments folks, and good to hear about your board’s decision, Les.0
June 21, 2020 at 8:54 pm #8241Ward WeisenselParticipant
I cannot add a lot to the good comments made above. I can definitely see the difficulties faced by Atlantic Coop and it could not have been an easy time. Unfortunately, it is easy to see how the decisions that were made alienated the local members and how this ultimately led to the failure of the coop.
As has been indicated by others already, I believe the first mistake was the move to the discount model as it made it easy for competitors to emulate with greater resources. As coops we need to be focussed on what makes us sustainably unique from our competitors. Atlantic Coop lost sight of this. They had early successes but ultimately the vision led to the failure of the coop.1+
June 21, 2020 at 9:47 pm #8242Jim RossParticipant
You wonder if the ccc did an adequate feasibility study as outlined below. Could there have been another way to recover any remaining equity and start fresh.
Information guide on cooperatives
Step 2: Conduct a pre-feasibility study
Conduct a preliminary market review.
Identify available technical and financial assistance.
Assess receptiveness to the co-operative business idea in the local community.
Evaluate if the co-operative is the best legal framework to use or if the kind of co-operative selected is the most suitable.
Define the intended benefits of the co-operative for members (e.g., quality, price) and characteristics:
products and services offered (consumer co-op)
or products and services marketed (producer co-op)
or jobs and working conditions (worker co-op)
Evaluate the project’s potential to attract the minimum number of members required.
If this preliminary study is not conclusive, the group should re-evaluate its business idea. If this study shows that the planned co-operative is feasible, the group can proceed to the second phase.1+
June 22, 2020 at 3:31 am #8244James MacFarlaneParticipant
It is indeed interesting looking back at Co-op Atlantic as a whole or even local co-ops and finding the problems in leadership or decision making. When many years ago our local co-op began to struggle and built a new store across a major highway, I don’t recall looking at product line, quality of produce or meats as being significant but they were. Sobeys not Suoerstore was really the only competition. My father’s reaction when direct buying or bulk purchasing did not materialize drove my parents more consistently to Sobeys. What they saw was no dividend and higher prices and more local debt by the co-op..
As in Les’ case the process was long and tough and derived with the future in mind while ensuring that location was maintained and ease of access not interrupted. Currently my involvement is in the financial sector and there are some good consultative decisions being made but yet we sometimes lose sight of the bigger picture and become a bit self serving or do not want to give up a little control. There are many strategic interdependencies at play nationally which always come into play and do we respect that?
There is a much bigger picture out there.1+
June 22, 2020 at 3:57 pm #8252Bev CochraneParticipant
Yes agree complete, what sense did it take on this huge debt in a highly competitive market. As soon as they created the CCC structure, the Co-ops lost all sense autonomy and the membership followed.1+
June 22, 2020 at 5:03 pm #8253Janet TaylorParticipant
It sounds like your board and management used good decision making when deciding to renovate or not, Les. Offering 5 options must have meant doing a great deal of research into the market, user profiles, community needs, etc. Considering the needs and wants of your users will add legitimacy to the decision.1+
June 23, 2020 at 5:26 pm #8268Jen BudneyParticipant
Great comments, everyone. You have addressed the legitimacy of co-ops on two levels – the legitimacy as viewed by individual members for their local co-op, and the legitimacy of the second-tier as viewed by member co-ops. I do want to point out that the number of individual members is not always a good indicator of legitimacy or success in grocery co-ops – as James points out, members don’t typically find it too hard to shop elsewhere if they think they can get better prices or service at another place. So for the individual retail co-ops, they need to know what they are offering that is different and that members value (what is their co-operative difference?), as Jim discusses, and then make sure they consistently deliver on that difference. For the second-tier co-ops, legitimacy is arguably more complex, at least most of the time. My question for you is: how can a board or management of either a first- or second-tier co-op assess its legitimacy in the eyes of members? What processes should it use, what measures, etc.? Are they different depending on the type of co-op?0
June 26, 2020 at 12:39 pm #8291Jan O’BrienParticipant
I’m on the Boards of two coops in the financial sector — one is Central 1, the second tier coop mentioned in this module, and the other is a large credit union. As the discussion in module pointed out it continues to be extremely difficult for credit unions to coalesce in a single organization. It is difficult for the second tier to overcome past legitimacy issues. Individual credit unions have long memories. Rebuilding trust is the critical component. It can’t be achieved in one leap but instead requires small steps that illustrate good faith. Gradually, trust emerges and decision-making by the second tier becomes legitimate.1+
July 12, 2020 at 10:06 pm #8339Cheryl WallaceParticipant
The challenge of legitimacy in today’s climate is challenging. There truly are not really any switching costs for customers. Typically it is easy to change FI’s/ where you shop / even how you shop. There are so many choices in today’s environment for almost everything. I believe there is also a link to generational differences. Some of the older generations are more committed and loyal to organizations that they work for / where they shop and etc. Some of that is age related in that change is not as important or can be scary. The younger generation does not have the same loyalty to careers / organizations and etc and it is vice versa. Organizations don’t have the loyalty to them. Most organizations are too profit based.
There needs to be the education on how being loyal to a co-op based organization can be beneficial even if it is at a higher cost. Just like buying local has a big push right now.0
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