Sunday, 21 November 2010

Humans are Not the Dominant Species on Earth

We have created artificial intelligence and it is destroying our world and the means of our existence. This chilling piece is from

"Unfortunately, we created corporations and gave them life before Asimov drew up his Three Laws of Robotics. The First Law was: “A robot may not injure a human being or, through inaction, allow a human being to come to harm.” The Second: “A robot must obey the orders given it by human beings except where such orders would conflict with the First Law.” We would be much better off today if all corporations – which, like robots, are man-made automata – were constrained by these laws.

Our legal systems instead put into these business automata a single urge – to seek profits. This one-track mind has made them take over commonly-held sources of abundance – from seeds, to land, to knowledge – and turn these into monopolies because it is profitable to do so. What they could not take over, they have undermined or sabotaged, to create artificial scarcity. Corporations have destroyed the fertility of our soils, substituting commercial synthetics in their place; they have stopped the natural flow of mothers’ milk in favor of commercial formula; they have bought out independent seed companies, to force-feed us with genetically-modified toxic foods, all in pursuit of profit. They have become, in Wolfgang Hoeschele’s words, “scarcity-generating institutions”.

We conceded to corporations legal personhood, turning them into a de facto man-made species of business automata. They have become super-aggressive players in our political, economic, and social worlds. Beating us in our own game, they have taken over governments, economies, and media. Having become masters in domesticating Homo sapiens, they now house, feed, train and employ tamed humans to serve as their workhorses, pack mules, milking cows, watchdogs, stool pigeons and smart asses.

Thus, I will argue, corporations are now the dominant species on Earth. They routinely ignore human orders, injure human beings and foul up ecosystems in violation of laws for automata; these man-made mammoths now occupy the top of the food chain and have become the greatest threat to our well-being and the survival of many species on this planet

We face, it seems, three fundamental and interrelated challenges in the twenty-first century:

First, we must reacquire a species consciousness as Homo sapiens and reestablish our connections with the natural world. With our conscious mind, unique intelligence and creative powers, the human, says a new story of creation, is the Universe’s way of looking at itself and appreciating its own beauty, origins, evolution and grandeur. For this, we carry a huge burden of responsibility to the rest of the living world, now dying under a great wave of extinctions.

Second, we must free ourselves from corporate control. This basically involves learning to keep ourselves healthy through the right natural environment, food and protection from the elements, and raising our young under the new mindset, without depending on corporations. We must rely instead on each other and on commonly-held sources of abundance we ourselves can build and maintain.

Third, we must reestablish control over corporations. This involves reprogramming them to obey Asimov’s three laws for automata, and hunting down disobedient corporations. Eliminating the disobedient from the corporate gene pool is the first step in reclaiming our role as stewards of the natural world and masters of our own creations.

Given the powers of the corporate species, these are daunting tasks indeed. But they are also tasks worthy of Homo sapiens."

Hmmmm that's thought provoking.

Redundancy Efficiency Creativity

For centuries human organisations and endeavours have sought to be efficient, to use as few resources as possible to achieve the ends desired. It is the number one goal in 20th century management theory, underpinning that whole systems theory based ideology.

But what if this was just a symptom of an age of scarcity? In nature, biological systems are rarely efficient in the way that Ansoff (the father of strategic management) or Taylor (of scientific management fame) would recognise. Millions of sperm but only one 'succeeds' to use 20th century thinking. Gazillions of bacteria, if they all succesfully reproduced we would be buried under mountains of them.

It is the reproduction costs that have caused our obession with 'efficiency'. If the reproduction cost of a book is several years of a monk's life, you want efficiency. You don't want lots of rewrites. When the cost of reproduction is zero or close to zero, as it is in this digital age, efficiency is no longer a determining factor. Or more importantly, a commercially significant factor in competitive performance.

Think about this. To be competitive in the 21st century, if you can change your business to be information based (and most can be shifted towards selling information with the hard goods being a decreasing part of the operation. The classic 70% customer facing ; 30% backroom personnel split), you no longer need to be efficient. Because it doesnt matter, because you aren't wasting anything. If redundant activity generates benefit, you are in net gain.

What is the advantage of this? Creativity and novelty. In nature, redundancy is the necessary by product of evolutionary change. Novelty arises due to inefficient reproduction. Not all sperm are identical. In some, reproductive mistakes have occurred to create variety and novelty. Just as Nature cannot predict which 'sports' (as farmers call accidental mutations) will be more 'successful' until they are tried in practice, the sperm which due to a 'malfunction' in its chemical pathways is able to swim a tiny bit faster than others, so we cannot predict what new ideas will be successful in business. Many have tried. Many 20th century strategic choice theorists, Michael Porter for example, have tried to design 'betting systems' by examining the form of the market and betting on specific directions for business development.

In practice, the evidence of the effectiveness of these games is slight. In my practical experinece (30 years across public, private and social economy sectors) they just dont work. They don't predict the future in any meaningful way. Analysis, review, hindsight, certainly, but looking into the future they are no better than good old MOTS (do More Of The Same). This is the view of post-systems management theorists such as Ralph Stacey and 'just do it' pragmatists like Tom Peters. Planning works for dinosaur businesses which can dominate markets but not for the little mammals trying to get out from under their feet. And when the environment changes......

In my prevous blog I wrote about swarm intelligence, how ants use seemingly redundant behaviour, wandering about 'aimlessly' plus good communications to construct highly complex behaviour patterns. They find something good or bad, communicate it and provoke a collective response by communicating the information.

Humans have spent many years avoiding this. Stuffing our fellow humans into non-complex processes in factories or call centers, causing stress and unhappiness as a consequence. Because we can't use swarm intelligence? Because our class based society has a horror of redundant behaviour (if it costs the boss money 'stop the talking on the production line'. Even though much of this apparently idle chat may be about correcting the errors that otherwise clog up Quality Control at the end of the line.)

The problem for bosses is that self-initiating, self-directed behaviour undermines control. Who can tell what would happen if operatives were encouraged to talk to customers and suppliers and design their own work? Is this another reason why executive directed, elite controlled businesses are so 'last century'?

And what would businesses which behaved in this organically redundant fashion be constructed like? Instead of linear business information processing we would have to see 'at the point of need' flexible IT support with underlying and automated billing procedures. So that the operative/ marketeer wouldn't need to know anything about how the business admin is going to get payment or effect delivery for that little bit of extra business. If he did it would not be efficient.

So what should we be looking for as our guiding light in an age of redundancy and low/no cost production. Roberto Verzola, at the International Conference on the Commons, Berlin, Oct 31 – Nov 2, 2010, says it is reliability.

He says that in an age of abundance (of information, data, relationships, networking) what people now want is reliability. He says we live in a new age of information 'commons'. Unlike old style grazing grounds our e-commons cannot be degrade by over grazing (although Nobel prize winner Elinor Ostrom showed that the 'tragedy of the commons' was a fabrication if commons based economies were left to find an equilibrium). The more these new data commons are used the stronger and more sustainable they become.

Reliability means customers get what they actually want, when they want it and whenever they want it. Personal service, at their convenience, predictably for an indefinite future.

The law of requisute variety says that the onlt way to ensure this complexity of demand is satisfied is to use a systems controller of equal complexity, human minds. Any IT system must be less complex (the human mind is the most complex thing in the known universe).

Wasteful processes are often more sustainable because they are, like natural processes, more diverse. 'Duplication' that horror word for old style business process engineers, can actually be a good if it ensures there are alternative channels for production if the main one 'goes down'.

Many 1990s management studies highlighted the importance of social capital in maintaining sustainable business processes. The implicit knowledge actioned by participants in their organic relationships with colleagues, without thinking, that keep business processes running. For example, Jenny just knows that if Johnny is on holiday she had better check that Jilly knows about Jackie's foibles in how she wants her order. You can't keep track of the complexity of those kind of relationships. Implicit knowledge cannot be 'surfaced' and written down, Many attempts at doing so have failed.

These elements of the complexity of human thought and behaviour can only be practiced, they cannot be prefigured and designed. But we can design dehumanising production lines.

This is why business process re-engineering was such a disaster with 80% of BPR initiatives resulting in decreased performance, because it destroyed the social relationships and social capital that kept old 'inefficient' processes running. BPR is fine for production line drones but not for any creative customer facing business. In that you need the complexity of human behaviour to meet the complexity of human behaviour from customers.

In an age of redundancy and ever faster change, production lines are too slow to change. We must rely more on duplication and redundant behaviour to find new and better ways of doing work. Even work which is resource costly.

For example a warehouse collating orders for customers. It can be designed so that order pickers just do as they are told brutally efficiently. But what the customer wants is the best fit with their current requirements. A brutally efficient operation delivers what the customer thought they wanted when they placed the order. It is conceivable to have the order pickers wired up with real time stock levels for different products, new 'just in stock' products, and with access to the latest CRM information for specific customers, in real time communication with customers and collating their order in collaboration with the customer.

Undoubtedly many suggestions would be redundant but this active relationship marketing could generate far higher sales than the production line of 'old information' order fulfillment of today.

What would you do if the Amazon order picker rang you up on your mobile as you were on your way to work and said, I can give you your favourite author's new book at 50% off because I'm about to pick his old book to fulfill your order and the new one is in the next bin and did you know this author likes that music and you might like it too. This is already done by Amazon of course using IT intelligence at the ordering stage (when it is easy to ignore). Many other businesses could do it using humans, a vastly more complex tool than any software.

But the core of this argument is that prefigurative , simplifying, predictive, set, business processes are no longer fit for purpose, even in normal business, that is, outside of information reproduction enterprise.

Business which are class based, with controllers and controlled, are less likely to be able to adapt to this new redundant work style.

Thursday, 4 November 2010

Swarm Intelligence versus Production Line Repression

Networks not Processes

This article is about how we can choose different structures and organisation. What do we want? We dont have to accept just the one way of organising that is on offer.

Modern internet era IT enables new forms of organisation. Once it was only possible to control linear processes of production with a limited networking capability outside those production lines. Production and supply would be organised in a preplanned, pre-set arrangement and people would fit into that arrangement.

The Ford era production line is the idea with suppliers feeding in from the sides (a simple 'network'). This reaches its peak with the Dell mail order PC business model where the PC is built to a customer's unique order from parts sourced and organised from around the world coming together Just In Time for delivery. But it's still basically Fordism.

Fordist thinking underpins all manner of production today, not just cars but data handling, call centres, restaurants, hospitals and service providers, even solicitors, teachers, doctors and other professionals have been Fordised (?is that a word?). Karl Marx called it proletarianisation.

Our ways of thinking are conditioned to believe this is the only safe way to organise and this is the theoretical basis of Value Chain Analysis and other popularBusiness Process re-engineering techniques which underpin most common management thinking.
The storyline goes "If we can only make the process more error free, more efficient, more responsive we will be ok" (but disregard the psychology of the people involved because that is too unpredictable to manage so pretend it isn't there.)

The internet and the communications technology we now have has enabled greatly enhanced networking inside organisation to the point where the concept of 'a production line' business process can disappear. We can have business structures which are more like the way we live the rest of our lives, in networks not in production lines.

Eric Bonabeau is an informatics engineer with France Telecom and a world expert on the application of swarm intelligence to computer systems.
While he deals with routing of information on the internet and in telecoms, the same principles of routing exist in all information and business process management systems i.e. in all human organisations.

He and other IT engineers have shown in practice that it is possible to organise communications in a better way. One that utilises the collected intelligence of the agents (people) in the network rather than suppressing intelligence into the obedience necessary to operate a business process production line (and then moaning about your workers for not obeying the rules).

The most serious problem with Fordist production lines is resistance to change, the investment of effort required to change is high, and it therefore lags behind customer and market changes. Change has to be reactive because it has to be planned and agreed in advance (i.e. not worth the hassle).

Fordism is fragile because it is dependent on experts and specialists who alone can control it and it is vulnerable to disruption, being linear, a blockage stops the line. (modern multi-lateral production lines like Dell's avoid the 'spanner in the works' blockage but are still vulnerable to shortages of key components produced by single factories). You don't have to have a physical production line to be Fordist, it can be virtual or spread out between departments or between sites. It can be manufacturing or service.

Fordist production dehumanises people working in it, alienating them from their behaviour, generating stress and negative reactions, and divides people into controllers and controlled. Worker coops struggle to manage these tensions.

Organisation based on swarm intelligence is different. It looks to the 'intelligent' behaviour of social insects, where non-intelligent single insects working socially, can create extraordinarily complex organisations - two way highways, brutally efficient foraging behaviour, organised defence strategies, bridges over obstacles, complicated division of labour and large and complicated physical structures like termite nests.

These organisations look like factories. The behaviour looks like efficient productive behaviour. It is not reliant on single pathways or single specialists or single resources.

To our Fordist eyes there seems to be redundancy. Ants exploring seem to wander aimlessly though they are actually following a search pattern. Once a food source or threat or job needing doing (clearing out the rubbish for example) is detected, the information is efficiently transmitted and colleagues easily exploit the new found resource, mount a defence or get it done. Opportunities are not wasted as they are in Fordist organisation where people (not ants) cannot try something new because they are too busy 'on the line' or 'on the phones'.

This is the key weakness in Fordism, that people's intelligence is not used, yet business managers cry out for better change capability while the source of improvement is there in front of them but frustrated by the organisation they impose!

Swarm intelligence based production systems are not as dehumanising as Fordist production lines. Strange as it may appear when we are looking at ant behaviour, swarm permits people to use their intelligence to try a new way of doing things, or try new possibilities. If they are supported by appropriate information systems (the human equivalent of the ants' pheromones) successful 'tries' are efficiently copied and the effort gets a good payback, and unsuccessful 'tries' get stopped PDQ.

But the key is that the 'changes' are small and build up to a bigger change if other people copy them. So production systems cannot be production lines where even small changes cause disruption. They have to be something like production groups eg as Volvo (used to) use, a team of workers builds the car in a bay with parts brought to them as needed, rather than standing alongside a line with parts brought to that stage on the line.

In the group, workers can show team colleagues better ways to do the work, peer review encourages quality and collectively demand better support from others eg parts distribution. On a Ford line, workers face the machine as individuals unless they all go out on strike together. There is little possibility of self-managed improvement (thought there may be suggestion boxes managed by management.) They are dependent on management to make improvements , to respond to feedback, to be persuaded to give them the time and space to try something new etc.

In a swarm organisation, this creative behaviour just happens. HR recruits, selects and trains people to work in this self-managed way but we then force ourselves to work 'on the line' instead.

Swarm isn't chaos, there are principles and boundaries. Ants normally behave predictably, but if something different happens, maybe they fall off a leaf, they can behave differently. Humans being intelligent are much better at taking initiative than ants but normally most people prefer a reasonable routine with an occasional challenge, just right for swarm organisation.

It would be easy to reorganise worker owned businesses as we want to, to fit how we clearly would prefer to work, in charge of the work rather than the work being in charge of us. The reason we don't do it, is because our information and business process management systems cannot currently cope with anything more complex and we assume the generic production line is the best and only way to organise.

So if we want our businesses to be more responsive to customers' changing requirements, automatically correct errors, based on team working rather than 'cloud' working (much work is a bit like being a wandering lonely cloud), which enables rather than inhibits continuous improvement, should we be looking at organising ourselves something like swarm networking or like a production line with pre-set rules? And shouldnt any new IT system we are designing, be designed to support swarm networking rather than to control a production line (because then we would still be stuck where we are).

Too often more modern systems analysis opportunities are not considered before the trusted old ways are chosen again. Value Chain Analysis and other similar Business Process Re-engineering methods were invented long before the internet so it's not surprising they are designed to improve linear or simple networked processes.

It's not surprising they focus on designing a production process into which people must fit (requiring management to make them behave according to the rules of the process, an unwinnable task in a worker owned business).

And its not surprising they create controllers and other people who are controlled (even if they democratically agree to be controlled) because that is what they are designed to do. A 2006 European study found the primary cause of degeneration of worker coops was capture by experts who come to dominate and control information. Creating controllers is not safe in worker owned or cooperative business.

Should we not be looking at 21st century forms of organisation and creating computer systems to support them rather than assuming the only option is the old way?

Swarm is just one example of a range of new ideas for 21st century business organisation. Why don't we take the time to reflect and review and research before we commit ourselves? Another case of the UK disease of acting before we think?

Businesses die when they fall behind in the way they are organised. Some worker co-ops are exploiting swarm type networking, Dulas in Wales is (arguably) and is growing at an astonishing rate. They will soon be bigger than Suma "the UKs biggest worker coop" which while growing slowly, remains stubbornly Fordist.

C'mon comrades, break free, you have nothing to lose but your production lines!

Monday, 4 October 2010

Break Free from Our Systems Prison

As a worker cooperator I have struggled for years to use 'normal' management techniques in worker co-ops. Often they don't work. Members don't like them even when they have agreed a business plan, they feel oppressed and trapped by their own agreements.

The biggest problem has been strategic development. While 'normal' operational (next week) and tactical (next year) management 'best practices' are ok, I have never seen or experienced a 'normal' strategic development method being successful in a worker co-op in the UK. After several years of searching I think I may have found the reason. 'Normal' management methods are fundamentally unsuited to our open, egalitarian cultures. Indeed at their core, they are designed to suppress workers and privilege the vested interests of their controllers.
So, you say, we knew that, but the depth of this ideology is the surprise.

Ralph D Stacey of the University of Herfordshire claims that all major management schools are based on the idea of organisations being systems. From 1920s scientific management to 2000s complexity edge of chaos ideas. Systems thinking requires a separation between controlled and controllers even if they are the same people (hence the bizarre feeling of being oppressed by your own business plan).

This idea is revolutionary. Furthermore the IT revolution is driving changes in business which are making systems based management methods unworkable anywhere. We are being pushed towards Stacey's alternative; to understand organisations as complex processes of relationships and communications between people, with little opportunity for prescriptive planning and executive control.

The picture of this "Complex Responsive Process" thinking in practice is much more sympathetic to collectively organised worker co-ops and other egalitarian workplaces. It encourages a much more co-operative way of organising and operating businesses which we can use much more easily than our investor owned or executive controlled competition.

What do we do? Stop trying to stuff worker co-ops into systems control and start to take advantage of the liberation of process thinking.

Because Stacey's work is full of complex philosophical argument, I have written a less academic introduction on how we can apply these ideas to worker co-ops i.e. which management techniques are process friendly and which are systems prisons. You can read this document on my CBC website
(you will have to copy and paste the url, blogger won't do a hyperlink grrr)

The paper was well received at the conference of the UK Society of Cooperative Studies recently. Delegates described it as a revelation of past mistakes and a clear path to a better way to govern worker co-operatives.

Thursday, 2 September 2010

The cult of the chief executive

The majority of chief executives are not value for money. In a strict HR sense they do not add sufficient extra value to cover their cost. In some organizations the remuneration and staff support costs of the 'leadership team' outweigh the investment in operatives. Too many chiefs indeed and no-one to do the work except to write reports for the leaders and respond to the leaders 'visions'.

In my long experience I have many times been involved in executive recruitment where I have said lets employ 4 operative workers instead of this deputy chief executive or 6 instead of this CEO and been met with incredulity. Yet 4 operatives working at 50% (say) of the value adding productivity of a good CEO work it out.

I know that teams can organize themselves, that management especially executive management gets in the way of good work more often than actively encouraging it. Most executives say No more often than Yes. We hear about the exceptional leaders in business media not the run of the mill conservatives.

There are good examples of No Boss enterprise , Suma, Rainbow, the hundreds of 'recovered factories' in Argentina and other collective style worker cooperatives. Circle hospitals use the motto ' no matter how clever are your executives, the brainpower of your workers is greater' and so they delegate most management to ward level.

Dr Paul Thomas ' the business doctor' encourages private and public sector workers to sack their bosses and co-organize their work effectively. Once they get over their inhibitions, his clients seem to love the experience of self-organization.
Ricardo Semler famously sacked the entire executive management of his company Semco and re-energized the business ( see his classic book Maverick) by forcing his workers to organize themselves. Baxi in its worker owned phase had eliminated executive management by vertically integrated work teams (but crucially didn't do away with the CEO role and it was a ' mistake' by the CEO that lost them the business).

Old cults die hard. Even though we promise ourselves 'We won't get fooled again' (1960s Who). Even though we prize Autonomy above all else at work (once the hygiene factors of money and security are satisfied) (modern motivation research) we seem to crave the comfort of a chief. Hierarchy is a superficial defence against uncertainty and the need for us to act into an unknown future but it's an addictive and costly tranquilizer.

We place too much faith in our leaders and then denigrate them when daddy fails to live up to our unreasonable expectations instead of having a mature co-responsible relationship with them. We choose charismatic actors and are disappointed when they cannot write the play for us (Blair?).

This is much more than simply fat cats defending their privilege though that is definitely a factor. We would see through that self interest.
Organizations which have no privilege hierarchy, like worker cooperatives recreate poor copies of executive leadership management. It arises spontaneously. It meets a deep need.

There are surprisingly few critical studies of the cult of leadership. One academic who encourages pragmatic debate is Ralph Stacey. In 'Complexity and the Experience of Leading Organizations', Douglas Griffin and Ralph Stacey examine where this ideology comes from and allow CEOs to describe how even their attempts to introduce participative management were met with opposition by staff, the same staff who feared them when they were behaving 'as expected'.

Stacey has a process and relationship based management theory which could be the answer to our self imposed executive prison.

Wednesday, 19 May 2010

european worker coops to help uk rise to the cameron challenge

At the CECOP meeting of European worker coop federations in Brussels today we asked for assistance to respond to the Cabinet Office policy announced today to promote worker coops for public service delivery. And we got an enthusiastic response from Italy and Spain where they know all about externalising public services into coops.

That's the spirit. Cooperation between cooperatives. Our Principle 6 secret weapon (see International Cooperative Alliance principles)

uk government officially promotes worker coops

UK cabinet office today released their Big Society plan and state:

"section 4. Support co-ops, mutuals, charities and social enterprises

We will support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and support these groups to have much greater involvement in the running of public services.

We will give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver. This will empower millions of public sector workers to become their own boss and help them to deliver better services."

The challenge has been made. The cooperative movement must rise to it. Not just the UK standing alone. We will be calling in assistance from cooperators from across Europe.

coops and offender training, help from Italy

Confcooperative, one of the large Italian cooperative federations offered to assist UK cooperators to set up social cooperatives to deliver training, support and re-integration into employment help for offenders and prisoners.

Social cooperatives are cooperative social enterprises and Italy has more experience of these multi-stakeholder cooperatives than anywhere else. I was asked by people trying to do something similar in the UK and I'm pleased to say that Confcooperative have enthusiastically offered help including visits to their organisations in Northern Italy.

I am the Coops UK representative to CECOP the european federation for worker coops and social coops and I am happy to make links like the above. Let us stop re-inventing the wheel and learn from our coop colleagues 'over the water'.

Tuesday, 18 May 2010

worker coops beat the credit crisis

Statistical assessment and surveys show that worker coops have been more resilient than conventional enterprises in withstanding the economic crisis.
Social services did better than manufacture & construction
Worker coops used flexibility and innovation to better overcome the crisis. better than conventional enterprises.
Worker coops had better reserves and less dependent on external finance than conventional enterprises.
Led to better sustainability of employment in worker coops.
The worker coops that failed were already in trouble. Few healthy worker coops failed.

More evidence that worker cooperative is a better model of organisation for SMEs. Over to you David Cameron, Nick Clegg and Vince Cable. Will you promote worker cooperative as the number one SME model?

Monday, 17 May 2010

Social Cooperatives - Cameron's Cooperatives?


Suddenly we find ourselves with a government intent on externalising NHS services into worker cooperatives. I share other worker coop people's unease at the thought of groups of workers working for one monopoly customer and pocketing NHS money as profits.

Is there a better solution?

Multistakeholder coops in Italy run externalised services. Type A are care coops with workers, users and others as members. Type B are employment inclusion with permanent employees as members and temporary training members. A majority or a large proportion of directors are elected by workers but their self-interest is tempered by user representatives and others from funders, trade unions etc.

Very successful, number some 7000 now. We do have multistakeholder coops in the UK. Greenwich leisure, GLL Ltd., is the best example and Somerset Cooperative Services have written UK specific model rules for multistakeholder IPS but they have not yet been as popular as social coops in Italy.

Social cooperatives are a solution to the problem of bureacratically inefficient state services and the potential misuse of public funds in the private sector. Social coops use public money to provide services. They are proper cooperatives with full democracy. Think social enterprise but cooperative. So executive salaries are agreed by the members and the organisation remains locked into its local community and does not become a detached corporate plaything of its executives.

CECOP (the European Federation of worker and social coops) and CICOPA (the world federation) are developing a world definition of a social cooperative to help other countries to develop legislation and regulations to use social cooperatives to safely use public funds for social purposes.

In a global survey of social enterprise and cooperative legislation by CICOPA, it was found that the majorityof states which had social enterprise laws used a cooperative model and not the corporate executive led model which dominates the UK. The CICOPA definition will be agreed by the ICA as a guide to these and other states, and for national cooperative associations.

Confcooperative , one of the Italian cooperative federations are happy to help us in the UK to introduce the concept of social cooperatives to our politicians and civil service. As the UK representative to CECOP and CICOPA (from Cooperatives UK) I will be trying to link them up with the appropriate people in the UK.

Friday, 23 April 2010

Cooperatives and Social Enterprise in Europe

In March, I was at a European meeting between cooperative representatives (, european social enterprise representatives and officials of the European Commission. Our task was to find common understandings. Not easy!

In the rest of Europe, it is commonly accepted that social enterprises are democratically governed. In many countries they have to be cooperatives eg Italy which invented the 'Social Cooperative' to provide local community social services under contract to state funders.

But the UK is very different. Our social enterprises tend to be chief executive led and not democratic. In the UK we therefore see rapid growth and very large social enterprises which are 'corporate' rather than 'community' focussed.

This was my contribution:-

Bob Cannell, Cooperatives UK (UK):
There is a need to understand our (Cooperatives and Social Enterprises) differences and to harmonise our understanding.
It is possible to harmonise some of the principles. We are not going to get one working definition.

In the UK, the “chief executive social entrepreneur” is the norm.

What does “social” refer to? To governance? To goals and outputs? There is a very different understanding of this word.

If governance has to be social, then the cooperative is the model.

If the goals and outputs are to be social, we are talking about a very different type of enterprise. It gets confusing if you interpret “social” as referring to the goals.

The response to the economic crisis should be local. But corporate social enterprises have no local links. There are two possible responses:

1/ Local community response: responding to local needs (employment, etc.)
2/ Corporate response: incentives by the state for corporate social entrepreneurs to take over public services (for example, the reform of the NHS in the UK ).

Contract negotiations are incredibly complicated; there are economies of scale in contracting hence the big fish get bigger and the small ones get squeezed out. Consequently, local links get broken in the process.

We must emphasise democracy and participation. In the UK, we did have a wall between social enterprise and the cooperative, but both movements are now talking. We should prioritise the definition of general criteria: in this perspective, a loose definition is needed, not a tight one. We should make sure that large corporate do not dominate community-based response.

The cooperative movement and social enterprise, franchising models, cooperating with each other, is a challenge for us. Private investor corporations will be moving in, it is so easy for the State to contract with those people to provide services, but that is not what we cooperatives and social enterprises want at all.

Can Cooperatives Control Capitalism?


A recent article by me in Social Europe Journal.

My argument is that capital has become so liquid it is threatening the 50 year old EU model. A model which balances the demands of capital (business investors), organised labour (the trade unions) and the state together to create social democracy. But the banks have become 'vampire squids' to use a current buzz phrase, sniffing out stored capital in businesses, latching on and using private equity funds to suck it out to use as betting chips in the global casino of capital speculation.

To prevent capital (investment for business as well as stored financial reserves and the capital infrastructure underpinning our societies) disappearing and dumping us in the capital famine that typifies the Rust Belt inner cities of the American mid west, we need to find business models which lock down capital and put it under democratic control.

The ideal model, which works well in a competitive capitalist market, is the cooperative model.

Thursday, 1 April 2010

Community of Interest or The Common Bond

Labout arguing for citizen control and Tories for employee ownership in the 'new mutuals'.

As Carole leslie from Baxi says "The debate shouldn’t be about theory, it should be about practice. What works for one organisation might have to be adapted, developed or completely reinvented for another."

And the best way to determine what will work is Stakeholder Analysis. Which group has the strongest Community of Interest ( or Common Bond to use a credit union term). That group has the strongest drive to make the organisation work. If more than one, a multistakeholder model might be best, like GLL, but weighted as in GLL to the stronger interest group, in their case the workers.

On Radio 4 yesterday Will Davies from Demos confirmed that Labour do not support employee ownership and cited the Foundation hospital trusts as an example of Labour's preferred model of citizen control.

The rushed introduction of the foundation trust model is a classic case of not identifying the communities of interest before imposing a model. Hospital trusts are stuffed with special interest activists banging their specific drums. Democracy is a sideshow to central government control via the executive managers.

This is precisely NOT what we want in New Mutualism. It seems Labour is still prejudiced against employee control even where it might be more effective.

This prejudice runs deep and long since the 1919 Fabian takeover and banishment of syndicalism and guild socialism from the Labour Party.

But the Tories can only see share based employee ownership. A 21st century version of Thatchers popular capitalism but using Employee Shareownership schemes. This is not cooperation as we worker coop enthusiasts see it. We want to break free from the corrupting influence of individual share ownership for the benefits of collective ownership of capital. We see ourselves as the stewards of capital created in the past, which we can use to generate a present income, but must hand on to the cooperators of tomorrow, hopefully enhanced.

There is a danger that worker cooperatives will fall between these two theoretical shibboleths, executive driven neo-consumer cooperatives a la Labour and the joint stock holding 'little masters' of Tory dreams.

Wednesday, 31 March 2010

co-operative, what's in a name?

from the Companies House list of Prescribed Words in Company names.

"Co-operative - To use this word the company should normally be limited by guarantee with each member having one vote and include a non-profit distribution clause in the articles of association. "

Why does it not say you need the permission of Cooperatives UK? Why the needless restriction on profit distribution when the ICA Principles limit it in a cooperative?

"Mutual - To use this word you must obtain the written support of:
Financial Services Authority, Perimeter Guidance, Email: perimiterguidance@fsa"

You have to get the FSA's permission to call yourself 'Mutual Ltd.' but not 'Sweetness and Light Cooperative Ltd.' You can call yourself a coop and profit take by inflated salaries so long as you don't distribute declared profits.

So to be an honest cooperative company (or LLP)you have to be more restricted in what you can do. But charlatans can abuse the title anyway. s'not fair.


This is not allowed in the multitude of countries which recognise Cooperative as a form of association and protect the word properly by means of a Cooperative Law.

We don't have a Cooperative Law in the UK which makes us the odd one out in most parts of the world. Continental Europe, the Americas (North and South), Africa and Asia, legal protection for cooperatives is the norm. Japan has just introduced a new worker cooperative law.

But not the 'home' of cooperation (as we like to call ourselves) the UK.

In all the current cooperative enthusiasm amongst politicians, would it be possible to get them to commit to clearing this obstacle to cooperative development in the UK? After all they couldnt legislate quickly enough for Social Enterprises (Community Interest Company 2005).

Without a proper legal definition and distinction of cooepratives, we cannot ask for preferential treatment in recognition of the social benefits of cooperative enterprise (and the consequent limitations, such as less mobile capital, we accept on our business behaviou) because anyone can claim to be a coop at present.

Wednesday, 24 March 2010

Why Coops and not Capitalism?

In my last posting, I wondered why all the Parties, even and especially the Tories, are suddenly promoting coops. Maybe its because BigCapital has gone somewhere else, into international speculation, and left us to play with the remains of the machines (private businesses) it formerly used to generate wealth for itself.

Here's an extract from The Workers Paradise Feb 23 2010
The Cleveland Model is a worker cooperative development project to set up worker owned businesses providing local needs in Rust Belt cities in the USA.

"The Cleveland Model is a significant development given the devastation wrought by capital abandonment, not just in Cleveland, but all throughout the Rust Belt. Capital abandoned the inner city in favor of the suburbs. Capital abandoned the north in favor of the Right To Work south and west. And when the imposition of neo liberalism in developing nations allowed capital to sidestep local labor and environmental laws and regulations, capital abandoned the United States."

Tuesday, 23 March 2010

Employee Ownership Effect launch, London

EOA 22 march 2010 Westminster Hall, London

Went to the launch of “The Employee Ownership Effect: a review of the evidence” and “Model Growth:Do employee owned businesses deliver sustainable performance?” The latest in a line of reports from the Employee Ownership Association. PDFs can be found on the EOA website. I was very pleased to be invited as a worker cooperative representative.

The first is a meta-review of several hundred research papers and the second the results of a questionnaire survey of EOBs (employee owned businesses) and nonEOBs. Worker cooperatives were not surveyed because worker owned cooperatives cannot unfortunately be members of the Employee Ownership Association. EOBs are businesses which are substantially owned by their workers. Many have external investor part-owners – unlike cooperatives.

We (me and Sion Whellens from Calverts) being the worker Coop representatives present, lobbied the EOA board members to agree to joint working with CoopsUK and to allow worker coops to join both organisations. Worker coops have so much in common with EOBs.

I told them that in Spain COCETA (the worker coop association) and CONFESAL (the employee ownership association sit together when they have joint interests but respect each others differences and the same in France and Italy and many other countries (eg the USA). Only in the UK are worker coops and EOBs at odds with each other like this. There is history between the organisations (although the forerunner of the EOA actively promoted worker cooperatives) but we have too much to gain to allow old arguments to keep us apart.

Although worker cooperatives were not studied in this research, we can take these results as relevant. Luckily we do have an academic hopefully about to do a comparative study of worker cooperatives in the UK. Prof. Virginie Perotin from Leeds University Economics dept. has studied French, Italian and Spanish worker coops' business performance. So we will be getting an international comparison. Nothing like this currently exists in the UK, shamefully. As Patrick Burns from the EOA says 'If you have no research to back up your claims, you cannot ask for policy.”

The EOA meta research shows that EOBs perform equally or better on all of the business performance indicators measured. Productivity, growth, commitment, absenteeism, retention, employee engagement, innovation, health, wages, investment returns

The positive effect was more where there was more employee participation in decisiomaking. But employee enthusiasm diminished over time.

EOBs had far greater sustainability and life spans than nonEOBs. Capital was locked into local communities far better.

There is no research on customer satisfaction but a large amount of anecdotal evidence that it is higher.

The questionnaire research looked at growth. It found that small and medium size EOBs grew better than larger ones and better than equivalent nonEOBs. That employee engagement and comparative business performance was better in smaller but equally as good in larger EOBs which actively decentralised decisionmaking and had less centralised business planning.

It seems that when businesses EOB and nonEOB empower front line staff, customer and competitor information circulates more freely enabling higher growth rates. Centralised control is associated with lower growth rates.

Worker owned businesses which install 'proper' management in an attempt to be more efficient will likely be achieving the opposite effect, losing their employee ownership advantage.

EOBs faced more regulatory challenges but employment law problems were not investigated, only financial. Worker coops face major issues with unfair employment laws. Yet again an employee ownership study looked at the business structure but not the relationships between the members of the business. Does this show a 'business bias'?

People issues are commonly ignored in business research even in people based businesses. So many times expensive 'technical fixes' are brought in (restructuring, new IT, new technology etc) with little effect because it was the relationships between workers that were the real problem.

All the respondents were Chief Executives and equivalent. So there could well have been some CEO bias in the answers given. In my experience the stories told by EOB 'employee owners' can be quite different to the official line.We outsiders only get the good news from a CEO.

This is one of the differences between the EOA 'line' and the UK worker cooperative position. We want to go beyond the cult of the chief executive and develop direct networked democratic management. CEOs can and do get in the way of genuine employee ownership and control. Worker coops don't see the need for an 'officer class'. We would rather have organic growth than the explosive and alienating CEO driven growth, of EAGA for example, where it has been difficult to induct the hundreds of new workers acquired along with their businesses into a shared ownership culture.

The CEO management model in EOBs certainly cause terrible succession problems. plc CEOs are ten a penny (umm no, 1 per million pounds more like). Their job to enhance share value is simple compared to the many factors that an EOB CEO has to learn, many of which are unique to that business. Replacing one of these charismatic EOB CEOs is very difficult. The CEO management model is a fragile model. Far better to find a more robust nonCEO management model, like the Suma network governance model. Because CEOs who revert to type, destroy employee ownership (Baxi for example and all the 1980 employee owned bus companies).

A 2004 european study of privatisation of worker coops found that the No.1 cause was executive capture. The chief executive and top team taking over and privatising the business. This has happened in many employee owned UK businesses. I find it odd that Employee Ownership enthusiasts merely seek to lock up shares in trusts (asset locks) rather than resolve the cause, alienation of worker owners to the point where they are prepared to 'sell their birthright for a mess of pottage'.

In cooperatives we try to maintain the commitment to the collective ideal rather than alienate member workers by centralised expert planning and asset locks.

Some quotes from the speakers (paraphrased where I didnt get the exact words)

Patrick Burns the director of the EOA

“The dominance of investor owned business has to be tamed. A bigger employee owned sector would help.”

Mark Field MP for westminster.
“We need mutuals, building societies mark 2, Northern Rock as a mutual.” A critic of the joint stock company (the plc). “Has it run its course after 150 years?”

(He is the conservative MP for the City of London!)

Ali Parsa, Circle Health

“The intelligence of the many is always greater than the intelligence of the few, no matter how smart they are. So let the many take the decisions in their jobs and work.”

and the most extraordinary, I had to pinch myself at what I was hearing,

Andrew Lansley, shadow minister of health

“The American Centre for Employee Ownership says 'The case is closed. Findings this consistent are highly unusual – employee ownership plus participative management result in higher business benefits.' Its no good having just ownership (that's a dig at the EOA).

Managers and management get in the way. Only 1/3 of NHS employees say they are consulted or listened to by their managers.

The Tories will make it far simpler for NHS staff to take control of their services as worker cooperatives. But not by top down orders. 20% improvements in productivity are possible like Circle health make. (Circle are a CEO led EOB.)

They all need leadership but leadership by the many not by a few.”

That's a pretty radical point of view from a likely future Secretary of State for Health. Yes I know there are big questions about 'coops in the NHS' but its the thought that counts.

There really does seem to be a shift in the zeitgeist from CEO and investor domination to participative employee ownership. When a prominent front bench Tory is more radically democratic than the Employee Ownership Association!

The meeting room in the Palace of Westminster was full of Chief Executives of EOBs. Maybe full democracy is a step too far for them which is why they won't let worker coops be EOA members. The owners of capital may have fled the scene (see below) but the 'little owners' are still clinging on to their privileges.

It's a major opportunity. Why do we have it? After 150 years of fiercely protecting the ideology of labour vs. capital? Is it because Big Capital has left the arena? The masters of the universe are away playing global financial speculation and have lost interest in the capital generating potential of productive business. The corporate investors have followed them into the stratospheric world of complex financial derivatives and their betting shop ilk. (Its just gambling really).

The cat is away and we mice are allowed to play with the scraps left behind. Will the cat return when she runs out of pickings or are we on our own now?

In 1866 at the International Working Mens Association in Vienna, Karl Marx said “Tell the working men to invest their efforts in producer (worker) cooperatives rather than consumer owned cooperatives (like t'Coop). The latter merely scratch at the surface of capitalism while the former undermine its foundations.”

He'd have a big smile on his face under that beard if he'd been listening to these MPs

Sunday, 21 March 2010

welcome to my blog

hi, i'm very active in the wonderful world of cooperatives and i want to share my experiences so i have started a blog. i hope you find it interesting.

and i hope you will share your cooperative experiences with me.

why am i so enthusiatic about cooperatives and cooperation as a way of humans living together?
because , unless we learn to cooperate we are in for a very nasty future, or our children are.

we have exploited all the the available land, we have run out of fossil fuels, we are running out of water. multinational corporations have become 'suicide capitalism'. we have reached the Pacific, there is no more Wild West to ravish and throw aside. we have to learn how to live on finite land with finite natural resources without resorting to horrible violence, as we have done so many times before.

but there is enough food to feed us all. and enough water and energy and all the other basics of life. if we learn to cooperate and share together. by we, i mean the human race. you, me everybody.

so this isn't a trivial twittering blog. it will contain lots of positive news and information because i am optimistic. i see lots of signs that humans are beginning to build a global village where we care enough about each other to cooperate.

hundreds of millions of us already do. 1/5th of the worlds population are members of at least one coop. more people earn their living in a coop than work for all the multinationals. most of these people live in the developing countries and dont have much economic or political power.

us in the industrialised states have not needed coops for a long time, since our great and great great grandparents got together to buy clean food through coops. because it was 'cooperate or starve'. in the 21st century we are realising that our economic power is waning and unless we want to go back to the grinding poverty experienced by those ancestors, we had better start working together again.

and lots of us are starting to do just that. a new wave of cooperation in the west.

ok see you again soon

bob cannell

suma workers cooperative uk
cooperatives uk
cecop - the european confederation for worker and social cooperatives
cicopa - the world confederation for worker cooperatives