24th August 2012

An imagined Memo from the Chair of the Co-op to his CEO

I met with the above named yesterday to review our recent progress. The meeting was informative and encouraging.

As you will know the three individuals were all original members of the Co-operative which they, with others established in Toad Lane, Rochdale in December 1844.

There was a good deal of interest and excitement with regard to the new premises in Manchester and some reflections regarding the contrast with their original premises which had been fitted out on, as they recalled a wing and a prayer.

Our visit to the Piccadilly Store also evoked memories and discussion when they looked at the range of goods on display, Mr Smithies commented that our simply value range reminded him to a degree of the simple display of essentials such as butter, sugar, flour and oatmeal with which they started in Toad Lane, tea and tobacco coming later as they built up their capital.

During the meeting we reviewed some aspects of our current business and membership offer, concern was expressed by both Mr Greenwood and Mr Smithies that the membership offer was being affected somewhat negatively by two factors.

The first of these, of course, is size, we currently have some six million members and my visitors were clearly impressed by the way we have grown the business, but as they observed it is hard for people to understand themselves as ‘owners’ of such a huge enterprise. Equally however they recognised that a membership on this scale gives is an enormous advantage in both buying power and in our ability to meet the needs of our members across the range of the family of businesses which we operate under the co-op brand.

The point that they emphasised was that the larger the membership the smaller a cog the individual feels in the overall scheme of things.

The other problem they noted, was that our competitors have introduced loyalty cards which are easily confused with our membership card so that members perhaps don’t realise that their ‘share of the profits’ is in fact the equivalent of the payment a share-holder of a business might receive.

There was a suggestion that we might stop calling people members and introduce the idea of being a share-holder in the co-op. This could of course be emphasised by holding share-holder meetings with voting rights to replace the current practice of membership meetings which are largely for sharing information and are generally poorly attended.

Mr Howarth raised a further question about education and whilst recognising and welcoming our investment in our co-operative Trust Schools and Academies he observed that our ‘education’ for members was largely focussed on our elected members.

We had a considerable conversation about we might extend opportunities for education to the wider membership.

To this end we explored some possible partnerships that might be developed with for example the WEA and U3A which would allow us to roll out educational opportunities into local communities, community centres and associations and evening classes in schools and colleges.

I found the meeting to be quite challenging as my visitors referred back to their own business model and the principles which underpinned it.

A particular challenge arose from their reminding me of the fifth principle. At first I was a little uncertain as to what they meant when they referred to adulterated goods as of course we maintain the highest standards in sourcing our raw materials and in the production of our finished products.

However both Mr Smithies and Mr Howarth referred to the modern appetite for foods which can be high in sugars, salt and saturated fats and low in fibre.

These foods are often associated with the increasing epidemic of obesity leading to diabetes and heart disease.

I pointed out that all our foods carry a traffic light warning which will indicate the levels of additives and provide an objective measure by which customers can select healthier foods if they so choose. However all my visitors were of the opinion that we had a similar responsibility with regard to healthy foods as we do with for example fair-trade.

Overall however the meeting was positive in spirit and I want to pass on to you the compliments of my visitors who were delighted to recognise that from the early beginnings their initiative has been developed into a business which more than holds its own in the market place, that the relationship between the varying elements of the business are clearly set out and that our members feel themselves to be part of an organisation which is committed to continuing their original mission of creating a fairer and more just world.

To this end of course the translation of our values and principles into the goods we sell in our stores and into our membership proposition is crucial as we seek to take the business forward in an extremely competitive and in some ways, still hostile environment.

Those of us on the membership side of the business are of course still members and earn our place on regional boards and even on the group board as a result of being elected by the wider membership.

Any democratic organisation is only as effective as its initial membership  proposition and for this reason I invited my visitors to reflect a little with me as to how they saw membership in the early days compared with today and of course as we look into the future.

The original proposition remains crucial. It was both political and philosophical. It challenged both the owners and those with a vested interest in things staying the same.

Their original thoughts as they invited people to become members was to create a fair and open society and for this reason they insisted that membership was open to all and that each individual member had an individual vote.

Whilst that remains true today there is less commitment to active participation in the democratic process either nationally or locally or indeed with regard to membership of the co-op.

However as the meeting went on my visitors emphasised a number of points.

One was the idealism of young people, we see this of course in our Trust Schools and Co-op Academies and it is essential that we continue to emphasise the need for debate and discussion of global values and principles as contributing to both the day to day governance of our schools and to pedagogy. In this way as my visitors commented we will build up an increasingly literate and engaged cohort of young people prepared to play their part as co-operators.

Geography mitigates against attendance at regional meetings and not everyone has access to technology, so maybe we should be giving more thought to ensuring that our meetings are more local. After all we recognise that our core business in each store will be local, people travelling a relatively short distance to shop, so maybe we could consider holding our local meetings in local community centres linked to the location of our stores.

It will be time consuming and demanding on staff but it is essential that being a member of the co-op is an altogether different proposition than being a customer.

We have tried divi, we have issued stamps, now we have a card which to all intents and purposes feels like a loyalty card. Perhaps what is needed is to raise the stakes whilst promoting the excellence of our financial services by issuing a combined bank, cash and shareholder bonus card.

My visitors recalled that it was a basic principle of their initial offer that all purchases were to be made in cash, but they also recognised that today there is a movement toward society in general becoming ‘cashless’, especially with the new generation of intelligent cards.

I believe that we should task our financial services people to make this a priority.

The Chair