When was the first time you encountered a cooperative business?
Chances are, it was a food co-op, maybe a with a hippie or punk edge to it; or REI, the outdoor goods empire, a member-owned cooperative. As the movement grows, and more folks seek out more equitable and social justice-oriented ways of being in business, we need more education and conversation around the particular stumbling blocks that show up in these models.
Because any business can be worker-owned, co-ops aren’t just for selling granola.*
Below are a four common pitfalls and misconceptions particular to cooperative and democratic business models (that also apply to every model!)
Ownership does not equal management.
A lot of small business owners conflate the ownership and day-to-day management of their enterprises as well, because often, and particularly in small businesses, these are the same person.
In cooperatives, this often shows up as fear of management by committee or the misconception that all co-ops are managed in a collective and consensus driven-manner. Some co-ops absolutely are collectively run, consensus-based, and run in a rigorously hierarchal structure. Some cooperatives follow a more traditional management structure that includes different roles and levels of accountability.
Either way, having clear roles and responsibilities, that create a holistic support structure for the business will allow for a all workers to do better work.
The ownership governance will follow along the “one member on vote” rule, and all decisions that happen at the ownership structure can follow this democratic format, while the management may have a structure defined by clear roles and responsibilities.
The key, especially in cooperatives in which all workers are owners, is to know what hat you’re wearing — is it an owner meeting? A management meeting? A marketing department meeting?
The jobs and management of the business may evolve over time to include new roles, different structures or configurations; the ownership and governance structure create the container and oversight for those changes and evolutions to happen.
Cooperative is not your value proposition.
A cooperative structure of ownership is a lot of things: a reflection of a set of values, a way to dismantle hierarchical ownership structures, a way to create wealth; a cooperative is not, however the value offered and proposed to your clients and customers.
How you interact with the marketplace, what you sell and to whom and how, may also be influence by the same values that made you a cooperative in the first place, but your cooperative structure cannot stand in for the value you create in the world.
In other words, the cooperative business structure is not what you’re selling. Your business and value proposition need to hold up apart from the governance structure, or your business will fail.
Not planning for entries and exits.
Cooperative businesses must be set up to outlast the people who found them.
How will new worker-owners enter? Will there be a trial period? Do they need to invest in the business? Will all owners need to agree?
How will worker-owners exit?
If a founder decides to move on, how do you ensure that the campsite is left clean?
These are all questions that should be set out in the cooperatives operating agreement before launch.
Putting off deciding how to handle rogue operators.
Someone, at some point, is going to take more power and run with it. Cooperatives usually move slower than sole-owner businesses, and I see time and again situations in which one person decides to “go rogue” because they just want to get some shit done. Often they’re headed in the right direction, but at what cost?
Every business needs to figure out how to create a culture of accountability.
How will you address the person who shows up late to every meeting?
The person that makes decisions without looping in colleagues?
An argument over salaries?
Talk through these scenarios before shit gets heated and your crew will be in a better position to gracefully navigate the conflicts.
* Love hippies, love granola. No shade intended.