Cooperative corporations thrive

By Howard Rheingold, published at 10 May 2007 - 8:12pm, last updated 10 years 21 weeks ago.

(Via Emergic)

Strategy + Business has a new article about cooperative corporations:

Four times a year, as many as a thousand clients of each local branch of Rabobank, a leading Dutch institution and one of the world’s 25 largest banks, assemble to discuss business. They are not typical shareholders who have convened to hear speeches and garner information about profits. They are citizens from the local municipality — lawyers, accountants, contractors, shopkeepers, schoolteachers — with equal voting power in the governance system of that branch and a keen interest in the daily workings of the bank. As members of their local Rabobank cooperative, they collectively affect local decision making. And because each local Rabobank board takes part in decision making at the central bank’s governance council, they have influence at the highest organizational level as well.

“That’s thousands of your clients coming to you,” says Bert Heemskerk, chairman of Rabobank’s executive board, with evident enthusiasm. “These members discuss whether they think the bank did well or not, and they have an interest in voting on the issues raised at each local board.”

The members of the bank took part recently, for example, in voting on whether to merge some of its branches. That is the kind of crucial decision usually made by top management. But at Rabobank, it was the focus of long debate among all the members. It took Rabobank’s central organization nine months, many personal discussions, and two general assemblies to build consensus throughout its vast constituency on the consolidation issue. By the end of 2006, the number of Rabobank member banks will drop from 400 to 200, a move seen as crucial to retaining a competitive edge.

At first glance, Rabobank’s lengthy and diffuse decision-making process may seem complicated, unwieldy, perhaps even preposterous. But this all-inclusive operating style is typical of businesses with a cooperative structure — of which Rabobank is a forward-thinking, massively successful example. Today, Rabobank is among the largest financial-services providers, with d475 billion (about $575 billion) in assets, 9 million customers, and operations in 37 countries. Rabobank has a consistent triple-A rating from the top rating agencies (Moody’s, Standard & Poor’s, and DBRS), rare among financial-services institutions. Mr. Heemskerk is clearly proud of the member-by-member engagement policies that enable such economic feats. It leads him to boast that “We are Rabo, and Rabo is for us.”

That phrase is echoed about 1,000 kilometers south in Florence, Italy, where a major retail advertising campaign announces “La coop sei tu” (“Co-op is you”). The slogan, put forth throughout Italy by a consortium of regional retail cooperatives under the brand name COOP, has become a national catchphrase — one that is backed up by the fact that in Tuscany alone, cooperatives in general count 1 million members out of a population of 2.5 million.