Consumer/Producer Cooperatives in Modern Finance: Changing the Focus of Worker Cooperation
A post to the Cooperatives Professionals Guild
This is a post to provide a reference resource for those interested in my CICADA (Consumer Initiated Community Affluence Development Action) cooperative incubation concept and how the concept can impact workers who are members of historically disadvantaged groups. As explained further in other (some are future) posts, it would seem to me that the real opportunity to benefit anyone, including workers from historically disadvantaged groups, runs through the check-writers (consumers) and localities.
Below is an email post to the Cooperative Professionals Guild introducing this topic. I will be posting further as feedback is received.
Hi Colleagues,
First time posting a new thread!
I have been tinkering in the cooperative (consumer/producer cooperative) space for quite some time while being severely distracted with prior career obligations. However, I have been gaining insights via an affiliation with the pros at Pathlight Law and also exploring consumer/producer cooperative formation within my entity that I characterize as a Cooperative Design Center. I am now hoping to test some ideas with this group.
I'd like to begin the conversation with the conclusions I have reached:
Consumers could organize around the acquisition of common needs as easily, if not more easily, than workers can organize around producing the solutions to fill that need,
Sales and marketing success can be enhanced while expenses for sales and marketing can be reduced via incentives for membership recruiting,
Equity capital is incidental (unnecessary) in numerous consumer areas,
Modern finance makes debt capital freely available to good management with a critical mass of members committed to buy - thus making equity capital even more incidental,
Diversified Community Investment Funds (advocated by NC3 and introduced to me by Brian Beckon, Kim Arnone and Sarah Kaplan at Pathlight Law) further diminishes the relevance of equity capital.
The equity in consumer businesses (what an investor/owner hopes to sell on exit) stems from customer acquisition and retention and providing the service (efficiently - management counts!) merely represents the trigger for payment and wealth creation,
A consumer/producer cooperative network that incentivizes membership recruiting and retention creates circumstances where:
Anything (almost) can be sold by
Anyone (almost) to
Anyone (almost) at
Anytime (almost) and
Anywhere (almost)
"Anyone," as far as recruitment and the associated earning of the incentives is concerned, includes individual members of disadvantaged groups for whom wealth creation opportunities via establishment of worker cooperatives is sought,
In this system, the coordination costs (toil and trouble) of assisting any "one" of the class of workers sought to be benefitted via worker cooperative formation is substantially less than would be the case of the coordination costs of coordinating the activities of two to form an actual worker cooperative. And coordinating two is substantially less than coordinating three. And so on...
Geometric increases in the costs of coordination forecasts disappointing results in the aggregate.
Due to arithmetically certain lower transactions costs, focus should be turned towards partnering with the "check-writers" and the creation of an individual opportunity for workers. This forecasts exciting results in the aggregate.
In short, if one wants to benefit members of historically disadvantaged groups then take the path of least resistance. Organize the check-writers instead of the check-cashers. By definition, the check-writers want the firm to be the best at what it does at a worthy price point. That is a view that most favors improved prospects for motivated and conscientious workers. And then communicate the opportunity to workers and facilitate a transition into their individually owned (i.e., worker co-ops of one) sales/marketing business.
I look forward to the feedback!