‘You need your head examined.’
That was the common reaction when I said I was joining the Co-op in January.
‘You need your head examined.’
That was the common reaction when I said I was joining the Co-op in January. Indeed, the many lurid headlines that followed did make me wonder if I had been mad.
It’s not the first time, however, that this has been said to me, because I have a habit of going into difficult situations where I believe there is something good worth fighting for.
There is no doubt that the Co-op needs fixing. There is also no doubt that this is well recognised within the organisation, and now a process is under way to start making the changes needed.
Much of the commentary has been focused on governance, or how the organisation is run, and, in particular, on the make-up of the board – at present 100% elected members from various parts of the movement.
Prompted by Lord Myners’ colourful report, the consensus is that this entity is not fit for purpose and should be replaced by a Plc-style board comprising professional non-executives.
The arguments for this are straightforward. The Co-op is a large and complex business, employing some 90,000 people and comparable in scale to some FTSE 100 companies.
It trades in challenging, competitive markets. It has many problems to address. An experienced board of seasoned Plc directors would lead it competently and decisively, just what is needed. This is what Myners said, and many commentators agreed.
But the Co-op is not a FTSE 100 company. Its roots lie in a reaction to the developing corporate world of the 19th century, providing communities with an alternative model for doing business, with the emphasis much more on mutual benefit. In many countries co-operatives continue to provide a thriving alternative to mainstream business models.
In the UK, what a business stands for is increasingly important in winning customers. For example, things like environmental credentials and ethical behaviour regarding tax and employment policy are in focus.
Food retailing, now under serious pressure for the first time in more than a decade, is no exception. The major chains are struggling to find much real differentiation from each other. They also have to find an answer to the German discounters, which isn’t just price cuts.
In such an environment, a business with values such as the Co-op’s has a significant opportunity. It already has a heritage in good ethics, and its purpose is to use its profits for the benefit of members and their local communities. This can have very strong resonance with today’s shoppers.
But if it’s going to work, these values, and the differences from big retail corporations, have to be embedded in the brand and the business.
They have to be alive in the boardroom. So a purely Plc-style board will not do. Having representatives of the Co-op’s democratic heart sitting alongside the professionals will help to ensure that those values stay in focus and are reflected in the way the Co-op brand operates.
The key task is to settle these governance issues quickly so that everybody can then focus on that brand and rebuild its success.