For a cooperative development project to have a chance at
success, it must have individuals involved who are committed to the
defined idea. A critical mass of potential members should be
involved because having sufficient support for a proposed concept
is crucial. The specific number for a critical mass will of course
depend on the type of products involved, the scope of what the
business will do, and the economic resources that will be needed. A
smaller number of individuals who are fully committed to a project,
provided they have sufficient product, capital, or demand for
services, can have a higher chance of success than a larger number
who are only partially committed. Thus, the key is not necessarily
the number of people involved, it's the level of commitment they
have. Although when a development project is a complex endeavor
that will involve a highly technical processing plant (for example,
an ethanol or bio-fuel processor, or a meat plant or grain mill),
then having a larger number of committed people becomes very
important.
Clearly, commitment and loyalty to an idea cannot be overstated. It
can be measured several ways, such as attendance at organizational
meetings, positive potential member survey results, the amount of
willingness to become involved and personally invested in a
project, and financial backing when requested. Financial support
from potential members is perhaps the best measure of support. For
instance, are people willing at the start to contribute to finance
all or part of a feasibility study? Asking potential members for an
initial contribution can help sort out those who are serious about
the effort from those who are not.
The second step in the events for starting a cooperative outlined
in Appendix A indicates that a
steering committee of potential members should be formed from a
group for guiding the project. A steering committee represents the
larger group and takes the major leadership role in the
project.
Groups need people who are leaders to assume control of a project
and to be part of the steering committee. An important prerequisite
is that they be willing to join the proposed cooperative and commit
to financing it and using its services. Chosen or volunteered
leaders must be people that will be active participants in the
development process as they will ultimately be responsible for
making key decisions and plotting the project's direction within
the steering committee.
The steering committee must also ensure that all potential members
involved feel free to voice their opinions and viewpoints about a
project. Different perspectives are important considerations for
developing a new business, and if alternative strategies or options
are suggested and deemed important to evaluate, they should be
brought into play during the feasibility study process so they can
be properly assessed.
In USDA's Cooperative Service Report 54, "Creating 'Co-op
Fever': A Rural Developer's Guide to Creating Cooperatives"
(see references or http://www .rurdev.usda.gov/rbs/pub/sr54/sr54.htm),
author Bill Patrie mentions the following five characteristics of a
"project champion" who provides strong leadership:
Patrie defines these five characteristics (verbatim) as follows:
1. Credibility-Is the individual personally credible in his/her
neighborhood? They need not be the biggest farmer or the most
active in commodity associations, but they must be respected for
their judgment. Avoid individuals who have tried every new idea
that has come around and are suckers for anything new. I look for
people who finish what they start and can take a long-term
view.
2. Financial Stability-Is the individual capable of keeping his/her
house in order? Producers who have failed before (especially if
they have gone through personal bankruptcy) usually lack the
credibility with other producers and lenders to lead the project.
They must be able to devote time away from their personal business
to help develop the cooperative. This criterion is extremely
limiting because many producers lack the time it takes to do the
work without jeopardizing their individual operations. I once
worked with a cooperative whose interim board chair wanted to use
organizational funds to buy clothes. Her argument was that she
would make a better impression on investors if she could afford to
dress well.
3. Basic Knowledge of the Industry-Is the individual familiar with
the industry in a comprehensive way? Most value-added cooperatives
are also vertically integrated. The project champion must have a
basic understanding of the entire industry-from the first steps of
production through processing to marketing to the final consumer.
This is a tall order and can't be easily filled. The "Madison
Principles" *1 are critical at this stage of
leadership selection. Often, producers become enamored of a
manufacturing technology or an available building and want to
quickly close the deal to own the facility or the equipment. A true
project champion must lead the group through a market analysis
prior to analyzing processing facility and equipment needs. If an
individual can't be found who has this basic understanding of the
industry, then I look for a person who is willing to learn.
4. Willingness To Accept the Servant Leadership Role-The project
champion is often uncompensated. They will frequently be
criticized, often unfairly, and sometimes insulted. Thin-skinned or
quick-tempered people often do not last in the pressure-cooker
environment of creating a new cooperative enterprise. I look for a
project champion who has balance in her/his life. They must have
patience, people skills, a good sense of humor, and a sense of what
is ridiculous.
5. A Developer, Not a Promoter-This is development work, not
promotion. Promotion may get column inches in the local paper and a
30-second spot on the 6 o'clock news, but it won't build a
financially viable company. While enthusiasm is important, it can't
replace critical common sense and solid business judgment. These
five attributes are important in a "project champion" or leader of
a cooperative development project.
*1 The "Madison Principles" are 12 principles
for cooperative
development practitioners to follow. They were developed by the
members of Cooperation Works! in Madison, Wisconsin, in 1985.
See http://www.cooperationworks.coop/about/madison-principles.
Use of Advisors and Consultants
Outside advisors and consultants can be useful to a group during
the business formation process. However, outsiders, no matter how
well intentioned, should not be put into overall leadership
positions. If they are, the process often becomes more "top
down"directed rather than internally directed by prospective
members, and in this case, potential conflicts may arise and the
focus of the group's vision may be skewed.
At the same time, a group should feel free to seek outside
experienced consultants to help guide it through the development
process, or perhaps to aid just a specific aspect of the process.
For example, extension agents or lenders that interact closely with
a group may be willing to help; accountants and lawyers may provide
assistance in specific areas such as bookkeeping, legal structure,
and drawing up legal documents; and advisors, such as USDA
cooperative development specialists or development practitioners
from a cooperative development center, can help the group with all
or some aspects of the development process, and may even provide
direct technical assistance with feasibility studies or business
plans.
Outside consultants are useful because of their experience and
expertise with the development process and because they also work
in an objective manner to ensure that all potential members' ideas,
thoughts, and concerns are considered and that assumptions and
information are accurate and realistic. (See the " Feasibility
Study Key Actions" chapter for more information on choosing a
consultant.)