Co-op democracy can slow down progress, says Co-operative Group CEO

CO-OPERATIVE Group Chief Executive Peter Marks has expressed concerns that Co-op democracy is sometimes a brake on progress for large retail societies.

He also emphasised the importance of profit-making and called on co-ops to become more efficient and commercially oriented.

In a round-table discussion in Quebec, Mr Marks recalled that, prior to the wave of mergers that brought about the modern Co-op Group, the UK Movement was fragmented and in “slow painful decline”.

He said tough competition from the large supermarket chains had put pressure on co-ops, but he also believed that internal democracy had delayed progress.

Talking about the need for consolidation, he told delegates: “How do you bring change about in a democracy? It’s very difficult. A few of us decided we needed to confront this issue and get people to recognise that change was necessary.

“We needed one co-op society in the UK to generate the scale necessary or to even start to compete. We haven’t got to one society, but we have got to 95 per cent and we have eliminated massive costs.”

Mr Marks said he didn’t agree with speakers who, he claimed, talked about profit “almost like it’s a dirty word”. He said profit is the lifeblood of any business, and, while agreeing that “we shouldn’t maximise profit at any cost”, he insisted: “We must still make a profit”.

He added that among the challenges he faces as Chief Executive of the Group was the democratic structure of the society. He commented: “Democracy is a force for good, but it’s also a force for weakness. It takes us too long to recognise the changes happening in the world.

“I think we’re in too many businesses, but our members become attached emotionally to them. If I say ‘we need to exit this business to get capital’, I get an ‘our members will not like that’ response. We have to somehow create an entrepreneurial spirit. It’s a real dilemma. We have to be as entrepreneurial as our competitors. Just because we are a co-op doesn’t mean we’ll automatically succeed.”

And, quoted in the McKinsey Co-operatives report (see below) released during the summit, Mr Marks commented: “The co-operative business model, and what we consider to be its superior governance, can only be the icing on the cake, or the tie-breaker. We need, first and foremost, to be efficient and commercial, to give customers the right product at the right price at the right time.

“What has held UK co-operatives back in the past is that they have often failed at these basics. But if we do all this as well as the competition, then we can use our strengths: the concepts of trust, transparent governance, and a longer-term outlook as a potential differentiator.

“But co-operatives shouldn’t think that customers are going to come flocking to our door just because we have a different model of governance, because that won’t happen.”