Common Enterprise
Development Corporation
Presents
Creating Co-op Fever:
The Hard Lessons Learned
.
Presented by: Bill Patrie, Executive Director, CEDC
This presentation is brought to you by:
The Cooperative Foundation
CHS Foundation
The material in this presentation is the opinion of the presenter and not of the sponsors.
Creating Co-op Fever: The Hard Lessons Learned
What is Co-op Fever?
• Between Aug. 7, 1990, and July 1, 2006
104 development projects
$800 million in total investment
30 enterprises created and still exist today
.
Resulting in…
Hundreds of millions per year in new revenue
Employment of several thousands of workers
Creating Co-op Fever: The Hard Lessons Learned
The media took note…
Creating Co-op Fever: The Hard Lessons Learned
Declining Development
Business Entities Dissolved
4000
3500
Number of Entities
3000
2500
For Profit Corporations
Cooperatives
2000
Nonprofit Corporations
Churches (nonprofit corporations)
1500
Credit Unions
1000
500
0
1995
1997
1999
2001
2003
2005
2007
Creating Co-op Fever: The Hard Lessons Learned
North Dakota Business Entities
14000
12000
Number of Entities
10000
For Profit Corporations
8000
Cooperatives
Nonprofit Corporations
6000
Churches (nonprofit corporations)
Credit Unions
4000
2000
0
1995
1997
1999
2001
2003
2005
2007
Creating Co-op Fever: The Hard Lessons Learned
North Dakota Business Entity Statistics
14000
12000
10000
8000
1995
6000
1997
4000
1999
2000
2001
2003
For Profit Corporations
Cooperatives
Nonprofit Corporations
Creating Co-op Fever: The Hard Lessons Learned
Dissolved
Merged Out of Existance
New Registrations
Dissolved
Merged Out of Existance
New Registrations
Dissolved
Merged Out of Existance
New Registrations
Dissolved
Merged Out of Existance
New Registrations
0
Churches (nonprofit
corporations)
2005
2007
“As it is we live experimentally, moodily, in the
dark; each generation breaks its eggshell with the
same haste and assurance as the last, pecks at
the same indigestible pebbles, dreams the same
dreams, or others just as absurd, and if it hears
anything of what former men have learned by
experience it corrects their maxims by its first
impressions, and rushes down any untrodden
path which it finds alluring, to die in its own way,
or become wise too late and to no purpose.”
-Santayana
Creating Co-op Fever: The Hard Lessons Learned
Lesson 1
Es ist zweifelhaft, daß Ihr oder andere sehr viel
von mir erlernen - Sie gerade haben nicht die
Zeit.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 2
Cooperative behavior is instinctive in humans
Identify the leaders…
“13% of people have the cooperator gene”
-Robert Kurzban
Find the joiners…
63% of people generally fit the category of intolerant
reciprocators. (Kurzban research)
Avoid the free riders…
Design your cooperative with absolute transparency –
give the free riders no place to hide
Creating Co-op Fever: The Hard Lessons Learned
Lesson 3
The mortal enemies of
cooperatives are greed and deception
• The twin pillars of evil are the love of money and
deception—They are mortal enemies of cooperation.
• Deception is so easy and seems so innocent but the
consequences are evil and deadly.
• Cooperation is a better model of exchange for goods
and services than competition—it produces a better
system of determining value
Creating Co-op Fever: The Hard Lessons Learned
Lesson 4
The myth of free markets as the best way to
distribute goods and services is perpetrated by
those who intend to monopolize those markets
• The system of exchange of goods and services is a
human, not a divine, convention.
• Free market domination not competition.
• The myth of the free market has been used to
explain why health care must be run through the
fragmented, disjointed, inefficient system we
have in America.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 5
Anger is the first signal that
a system change is needed
• Anger may be a catalyst in cooperative formation…but
it only works as a call to action.
• Appreciative Inquiry, or asking positive questions, is the
required action.
Appreciative Inquiry involves the art and practice of
asking questions that strengthen a system’s capacity to
apprehend, anticipate and heighten positive potential.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 6
There is no easy “cookie cutter” approach
to creating cooperatives
• Don’t ever start a cooperative without trusty local
leadership already in place.
• As democratic organizations, cooperatives will
elect their own leaders, not ones selected by
experts.
• There is no easy way—government mandated
cooperatives are hardly voluntary associations.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 7
Without a compelling vision,
cooperatives are not sustainable
• A vision is the answer to
the question, “What do
you want to create?” –
Peter Senge, The Fifth Discipline
• Make no small plans,
for they have not the
power to stir men’s
souls.” – Howard Cowden,
Source: www.dakotagrowers.com
Dakota Growers Pasta Company
Carrington, ND, Plant
Farmland Industries
Creating Co-op Fever: The Hard Lessons Learned
“I have a dream.” – Martin Luther King Jr.
Source: www.newsday.com
President Barack Obama’s Inauguration
Creating Co-op Fever: The Hard Lessons Learned
“The people of Fargo and Moorhead think they are going to
win – and I won’t bet against them.” – Sen. Byron Dorgan
Source: www.ndsu.com
Source: www.eileenparker.com
Creating Co-op Fever: The Hard Lessons Learned
Lesson 8
Cooperative formation is cultural and
parallels the cultural values of social equity
• Cooperatives thrive in areas of high social capital
resources. Lower crime, better health, better
education, higher incomes, higher levels of civic
engagement. It is within this culture that cooperation
thrives.
• The touchstone of social capital is the principle of
generalized reciprocity.
• A single federal program with the same measurable
outcomes will not be effective. The cultural resources
that support cooperation are missing in some regions
of the country and abundant in others.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 9
There is no surrogate for local leadership
• Cooperative educators and developers must find
ways to work on the local level.
• “Getting the right people on the bus is a CEO’s
first job.” – Jim Collins, Good to Great
• A cooperative developer doesn’t control the local
leadership selection – only influences it.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 10
There are no perfect leaders
Source: www.flickr.com
John Calhoun supposedly said that although Henry Clay was brilliant,
he was also corrupt and “like a rotten mackerel
in the moonlight he both shines and stinks.”
Creating Co-op Fever: The Hard Lessons Learned
Lesson 11
Courage, intelligence and honesty are more
important leadership traits than charisma
Cooperatives that last are led by humble board
chairs who focus on delivering a member
benefit in a clear, straight-forward way.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 12
Cooperatives can be hijacked
under the guise of demutualization
What makes cooperatives vulnerable is the
drifting of intent from adding value to a
commodity to adding value to money.
Creating Co-op Fever: The Hard Lessons Learned
Lesson 13
Discipline
• Madison Principles advise development but do
not enforce regulations.
• Cooperatives must have internal discipline.
• Development needs to be a long-term view
Bank of North Dakota, 10 years from inception to
funding
Power plants, 10 years from permit to site
• “Discipline, gentlemen, discipline!” – Jim Rainey, CEO,
Farmland Industries
Creating Co-op Fever: The Hard Lessons Learned
Lesson 14
Adopting a sustainable life philosophy
If people do not share a metaphysical dream, they have
no sense of place and are not a part of something
larger than themselves…
A group of egotists coming together to form a
partnership does not form a community…
- Kent Kedl, associate professor of philosophy, South Dakota State University
Ideology and partisanship and egoism have imprisoned us but
we can get out. We can rekindle the dreams of a better life
and people will use that dream to change the world.
Creating Co-op Fever: The Hard Lessons Learned
Questions?
Bill Patrie
Common Enterprise
Development Corporation
(701)-663-3886
[email protected]
Creating Co-op Fever: The Hard Lessons Learned