(EID-033) “A NEW LOOK AT COOPERATIVES”

Many cooperatives have failed over the years, because of internal conflicts mostly about financial and management practices. I am one of those who have been discouraged over the failures of the cooperative movement, but now I am rediscovering the potential of this approach, and I have come across new ways of solving the old problems, ways that would ensure the success of cooperative businesses.

Indeed, a cooperative is a business, and there is no other way except to run it well as a business, following good business practices or using good governance in every way possible. Just like the government, cooperatives are also prone to corruption, and just like the government, the cure to corruption is no other than good governance.

In many ways, a cooperative is very much like a corporation, except that it is structured to be operated through a more democratic and a more participatory framework. Unlike in a corporation where investors would have to put in large amounts of money to participate, anyone could be part of a cooperative, with very small amounts of money involved.

It’s no big discovery, but I found out that one of the main reasons for the failure of cooperatives is the absence of professional managers at the operational level. This may be a chicken and the egg problem, since many officers of cooperatives usually decide to run the day to day operations themselves, wanting to save money. If only they would hire professional managers, they could probably make the money they want.

Since the law actually requires cooperatives to hire professionals, all they have to do really is to comply with the law, and they would have the essential element of having good management, which is the key to good governance.

Going back to basics however, I think that the real key to the success of cooperative businesses is having a good product or service, just like a corporation. Next to this is having a good marketing program, just like a corporation, because if there are no revenues, there is nothing to sustain.

Over and above good marketing, cooperatives need good technology to make more money on one hand, and to save more money on the other hand. First on the list are good information and communications technologies, which should be made available to them at affordable prices. This is where socially oriented companies could come in to help.