Comms, leadership and the risks of Have Your Say

[This is a longer, more opinionated version of something I wrote that features in today’s Co-operative News]

The Have Your Say campaign shows a bold leadership style, but risks alienating members and employees if it isn’t a genuine opportunity for people to shape the Co-operative Group’s strategy.

The Co-operative Group recently launched its Have Your Say campaign. Supported by extensive advertising and media activity, it aims to get input from members, staff, customers and the public on where the business is now and, most importantly, it’s future direction.

For Euan Sutherland and the management team at The Co-operative Group, it is a bold statement. They are signalling that the Group is ready to break with the old and that it wants the views of people across the UK to shape what the new will look like.

Interestingly, in Have Your Say, the Group’s executive and Board also appear to be demonstrating an innovative approach to communication and leadership. As Euan Sutherland said in the statement accompanying the launch:

“We will be asking people up and down the country what they believe the Co-operative should really stand for. This is an unprecedented move for an organisation of the size and the scale of the Co-operative and the results will feed directly into our wider review of strategy and purpose.”

Arguably, most businesses faced with the difficult task of reinventing themselves and demonstrating a turnaround take a conventional approach. The Board and executive team work closely with a limited number of stakeholders to develop a new vision and strategy, which they then launch to the employees and public.

The foundation of this approach to leadership is sounding authoritative – setting out a clear vision, outlining the plan to get there and showing that the business is in a position to deliver. Appearing in control is everything.

There is the danger of seeming arrogant, though, and after the very public failings of The Co-operative Bank last year – and Euan Sutherland’s view that it has ‘lost touch with its members and customers’ – this is the last thing the Group wants.

It makes sense, then, that The Co-operative Group has adopted a different, more collaborative, leadership style. It appears to turn the standard approach to leadership on its head. Rather than announcing the business’s vision and strategy to the public, it is getting input from a huge number of people, which can then help the Board and executive determine the strategy.

As a communications device to demonstrate that The Group is not a conventional large business but one run by and for people, the Have Your Say campaign is outstanding. And, if the right questions are asked – and all the input is used effectively – The Group is likely to have significant information to shape the strategy.

But there is a serious risk emerging: that rather than getting the support of some of its closest and most engaged stakeholders – its employees and active members – the Co-operative Group alienates them.

A number of active members in the co-operative movement on social media are dismissing Have Your Say as a PR exercise rather than a genuine opportunity to shape the business’s future strategy.

Worse, others on social media and members and employees contacting the Co-operative News, think the big questions are loaded or even missing.

The Guardian’s leader comment the day after the launch argued that the questions about funding the Co-operative Party make it almost impossible for respondents to agree that the party’s funding should be continued. Others have pointed out that the big questions about the Group’s role in providing ethical leadership are not asked and instead the focus is on more local and community matters.

All this points to the concerns, amongst some, that the vision and future strategy of The Co-operative Group is in fact already decided. As one employee put it to me, Have Your Say is really intended to ‘manufacture a mandate’ for a new strategy that the executive and Board has agreed.

We cannot know whether or not this is the case. The challenge for the executive and Board, though, is to assure it’s employees and members that Have Your Say is more than an expensive communications exercise or an illusion of democracy. They need to demonstrate that this really a collaborative approach to leadership and a genuine opportunity to shape The Co-operative Group’s vision and strategy.

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Taking power from the people

Yesterday will surely go down in history as a day of distasteful investor news, a day when power was taken from the people.

The big news for those of us in the co-operative and mutual sector was that the Co-operative Bank’s rescue bid will result in the customer members of The Co-operative owning just 30% of the Bank, the rest being taken primarily by institutional investors.

The big news for the UK as a whole was that the development of nuclear power plant will be financed and owned by a consortium of largely overseas companies and investors. Regardless of views on nuclear, this erodes the (admittedly very abstract) principle that the people should have control over their energy power.

Why the Co-operative Bank’s problems matter

So, the Co-operative Bank’s rescue bid – which involved a partial flotation on the stock exchange to raise capital whilst The Co-operative Group retained around 70% ownership – has failed.

Following very difficult negotiations, it now looks like the majority of shares in the Bank will be held by institutions, with The Co-operative Group retaining just 30% ownership.

There is – and will continue to be – an inquest into the causes of the problems that led to this. Hubris, failed expansion plans, disengaged members, executive failings and much else will surely turn out to be factors.

But what perhaps hasn’t been said, in simple terms. why it matters. For what it’s worth here, I think, is why it matters.

To society. The Co-operative Bank has been arguably the biggest force for good in the UK banking sector for the last 20 years – a prominent ethical bank that led the way on ethical investment and sustainability. Without it there will be less of an ethical counterpoint to standard banking practices.

To customers. The Co-operative Bank provided an alternative for customers, offering them an accessible mainstream bank where they could feel good about what their money was being used for. There are other ethical banks, but all are small and niche; there may be no easily accessible alternative anymore.

To co-operatives. The Co-operative Bank was perhaps the defining brand of the co-operative sector in the UK – when people think about the word co-operative they think about an ethical leader. In the short to medium term, this association will be damaged by the Bank’s problems.

To the economy. The tragic unfolding of events stem from a deeper problem – that the institutions governing banks and business favour one model of banking, despite the fact that the model has been shown to fail since 2008. Specifically, in this case, Standard and Poor’s downgrading of the Bank was partly a consequence of the rating agency ignoring the capital available to The Co-operative Bank because it was owned by a much larger Co-operative Group. A major catalyst for these problems was the blinkered view of acceptable banking practice.

The Co-operative Bank and the co-operative economy

Until a month ago, when the Co-operative Bank’s problems began to surface, it was regularly said that co-operatives are enjoying a renaissance. A new report on the co-operative sector shows that the recent difficulties at the Bank should be seen as an anomaly, not an example of the UK’s co-operative economy.

There are two arguments forwarded as to why co-operatives are enjoying a renaissance. First, customers are turning to known, trusted businesses and co-operatives exemplify this, both in the UK and elsewhere. Second, co-operatives are showing stronger financial resilience because they are not owned by outside investors and therefore are able to think long term rather than bow to short term shareholder pressure.

Both are simplifications of a complex business landscape, but as shown in Co-operatives UK’s new report,Homegrown: The UK Co-operative Economy 2013, both contain kernels of truth.

The recent revelations about the Co-operative Bank – which pulled out of a major deal to buy Lloyds bank branches, was subsequently downgraded by Moody’s to ‘junk’ status and then revealed a capital hole of £1.5 billion that resulted in a partial stock market flotation – has put both of these into question.

The Co-operative Bank is, after all, an iconic UK co-operative brand with very high levels of trust precisely because it is a mutually owned bank. Although it is a small part of the co-operative sector, accounting for only about 6% of the sector’s turnover, the knock on effect of the Bank’s high profile problems for other co-operative and mutual businesses are potentially huge.

Homegrown, though, shows that regardless of whether or not the Bank’s problems are significant as reported in the press, we must not extrapolate from the Bank to the wider co-operative sector.

– Co-operatives, the annual report shows, have grown year on year since the start of the credit crunch. Since 2008 turnover has grown by 23%, the number of members by 36%, and the number of co-operatives by 28%. The sector is growing at a startling rate in a terrible economic climate.

– It shows that trust in co-operatives is high. 52% of people describe co-operatives as trusted, whilst only 7% – yes 7! – say the same of PLCs.

– It shows that this can’t be down to one or two businesses. There are over 6,000 co-operative businesses. High profile examples like The Co-operative Group and John Lewis, but other also other large yet less well known businesses like Milk Link, First Milk, Midcounties Co-operative, Unimer, and many others.

– And it shows that co-operatives aren’t working in boom industries – the vast majority of the co-operative sector is made up of retailers and farmers, hardly two sectors you’d put money on to thrive over the last few years.

Clearly, co-operatives are no panacea for a struggling economy. They need to compete, financing growth is difficult, they suffer from many of the management issues other businesses have. The Co-operative Bank illustrates that.

But even the Financial Times, one of the papers most critical of the Co-operative Bank’s bid for expansion, recognised that the Co-operative Bank is an anomaly, not an example of the co-operative economy:

“Co-operative businesses grew in number, turnover and jobs last year, underlining the movement’s resurgence despite the travails of the Co-operative Group.”