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WHAT MAKES CO-OPS SUCCESSFUL? by R.M. BasemanAssociate Researcher, Prout Research Institute of Venezuela
 There are a number of original articles, reports and conference proceedingsavailable on the Internet that discuss and give opinions on what makes a cooperativesuccessful. This report has looked at 175 proposed success factors from a number of different separate sources. By sifting through the various suggestions, answersand points of view, some clear conclusions develop. But before doing that, let us firstask the question: 
What Does Success
Mean
for a Co-Op?
 How is success for a co-op different than success for any traditional business? Theanswer lies in the difference between a co-op and a standard business.Traditional businesses (Investor Owned Firms or “IOF”s) and co-ops differ in manyrespects. It is far beyond the scope of this study to go into these differences in anygreat detail as they are involved and complex. But from the point of view of successthe following points are important: 1) A business is governed only by laws and the oversight of the board and investors;in addition to these, a co-op is also governed by commonly recognized “principles of cooperation.”2) The relationship between a co-op and its member-owners-customers is muchcloser than the relationship between a traditional business and its investor owners.For example, investors in a traditional business may not really be aware of, or careabout the long-term environmental impact of its business practices, as long as itavoids negative publicity and provides a good return on investment. However Co-opmember/owners live in the ecosystem and community where the co-op functions,and hence are very concerned about the effects on their families!3) Co-ops are run democratically by member owners, while traditional businessesare run by managers with limited oversight from a board and shareholders.4) In traditional businesses, managers decide how profits are recognized and used“to increase shareholder value.” Co-ops operate on a non-profit basis wheremembers decide how surplus funds are distributed and reinvested in growth, other cooperatives, community service projects, etc.
 
5) Because the goal of a traditional business is to make continual profits and returnvalue to the investor-owners, the only way to measure success is by longevity andcorporate growth.But success for a co-op lies in successfully meeting the needs of the member-owners (both their material and quality of life needs)
and 
promoting commonlyunderstood cooperative values such as this list agreed upon by the InternationalCooperative Alliance (ICA)1 - voluntary and open membership,2 - democratic member control,3 - member economic participation,4 - autonomy and independence,5 - education, training and information,6 - cooperation among cooperatives,7 - concern for community. 
How does Co-Op Success Contrast with Traditional Business Success?
 Over time, some successful traditional businesses grow into gigantic multinationalorganizations primarily serving their huge amassed capital funds. Managers whoseek to remain independent constantly grow “market capitalization,” defined asnumber of shares outstanding multiplied by stock price. Without any other principleto guide their actions, these corporate automatons persist forever, -- blindly servingthe cold mathematical needs of growth. By making decisions based only on increasing market share, corporations tend tobecome “runaways,” ignoring the social and political consequences of their actions.This problem is impossible with cooperatives, regardless of size, because of theprinciples of cooperation and because of direct democratic member control. Co-ops are designed to be beneficial (or at least harmless) to humanity and theplanet, while traditional capitalist businesses are designed to be indifferent to their effect on society and nature. Another way to observe the difference between a co-op and a capitalist business isafter the fact: A medium or large-size company ceases to exist if it becomes unableto earn a profit or is bought out by a bigger company -- it is no longer economicallyviable. But co-ops disappear for many different reasons: they may have failed toaccomplish their objective, they may have been organized for a temporary specific
 
purpose which is now accomplished, or due to changes in time, place and person,the co-op’s objectives may have become irrelevant and the members decide todissolve. 
Method Used in This Survey
 A passive Internet survey was conducted to find worldwide consensus on thequestion. Search engines were first used to find web pages and documentscontaining phrases like “successful cooperative”. Then the web pages anddocuments were carefully reviewed, and items which were copies, or secondarysources (i.e. referring to another primary source) were removed -- in this processmore than 50% of the material was eliminated. Then from the remaining originalitems, elements of advice called “success factors” were extracted, such as: “It is important to avoid creating too high expectations”“cultivates the support of both the members and the community at large”“clear-cut national cooperative strategy”“availability of technical training and technology” In some cases, inverse success factors – reasons co-ops failed were used, for example: ” (neg.)Inadequate communications among the members, board, manager, and thecommunity.”After reviewing the 175 success factors, they were grouped into 13 categories, andeverything was recorded in a Microsoft Access database, including1.
 
The category of the answer 2.
 
The answer itself (maximum 255 characters, summary if necessary)3.
 
The source URL of the document or web page4.
 
Information about the type of co-op being referred to (consumer, producer,single-project, financial, etc.) Having done this, the database of success factors can be queried and sorted andconclusions can be drawn from the overall body of knowledge. The database file iscontained in the accompanying CD and is called “success2.mdb”; in addition aversion of the data is embedded in this word document.
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