Deep-level Cooperation

Spencer Thompson from the University of Cambridge in the UK recently published a paper outlining a new theory of the firm, taking the worker-owned business as its starting point. It is a fascinating paper at a theoretical level, but in it he also discusses a number of practical issues about the design of worker-owned firms.

One concept that is particularly intriguing is his notion of “deep-level cooperation.” Thompson explains that firms function through a combination two processes: coordination and cooperation. We can understand coordination as the vertical organization of a firm, its management. Workers have certain skills and know when and where to apply their skills because their work is coordinated together through some sort of management structure. Everyone in the firm has a role and all those roles are coordinated together to produce a product or a service.

But firms also require cooperation to function. We can understand cooperation as the horizontal organization in a firm. Workers aren’t just coordinated into a production process, but they must also cooperate together to produce the product or service. While distinct in theory, cooperation and coordination are closely intertwined in practice, and both are required for a firm to succeed.

Thompson’s insight is to further divide cooperation into two different levels: surface-level cooperation and deep-level cooperation. Surface-level cooperation is the kind of cooperation that can be specified in an employment contract. When you are employed, you agree to cooperate in a productive process in certain specific ways in exchange for a pay check. It is a market transaction, but as Thompson points out, surface-level cooperation is not enough to keep a firm going. Indeed, working to rule — where workers stick exactly to their employment contracts, doing no more than explicitly required — is a kind of industrial action, just short of an outright strike, and it can slow work down to a crawl. Without a culture of deep-level cooperation, firms can’t function well.

[…] whereas surface-level cooperation is achieved through organisational structures (such as property rights, pay schemes, and monitoring systems), which constrain individualistic behaviour, deep level cooperation is achieved through an organisational culture, which enables solidaristic behaviour. (p. 5)

The dark secret of capitalism is that all firms take advantage of our natural cooperative nature as human beings and depend on us ‘donating’ our deep-level cooperation to our employers as we do our jobs. Deep-level cooperation is all the cooperation we provide with our fellow workers that cannot be efficiently described in an employment contract, and Thompson suggests that worker-owned businesses may have a competitive advantage over capitalist businesses in this respect, in that worker-owners may be more likely to engage in deep-level cooperation than employees in capitalist firms because worker-owners are more socially invested in their businesses.

Thompson argues that there is a trade-off between coordination and cooperation. As firms grow and as management becomes more bureaucratic and vertical, coordination from above may undermine workers’ desire to cooperate at a deep level. No one likes to be bossed around, and the more bureaucratic our jobs become, the more likely it is that we will take a purely individualistic approach to our work, that we will see our jobs simply as a way to get a pay check, and the less likely it is that we will cooperate socially with our co-workers.

The practical implication is that in order to realize the full efficiency advantages of worker-ownership, cooperative firms should always aim to organize themselves as horizontally as possible. The more a worker-owned firms turn to top-down structures to coordinate production, the more they risk undermining their members’ intrinsic desire to cooperate at a deep level in the business as a shared project.

This is a particular problem as a firm grows. Many small worker-owned businesses manage to successfully structure themselves as completely horizontal organizations, often making all major decisions by full consensus, but as worker-owned businesses grow, they typically move to a more vertical structure, and particularly when they reach the size of a cooperative corporation like Mondragon, for instance, significant top-down coordination seems almost unavoidable.

The trick then would be to find ways to build as much horizontal decision-making as possible into the structure of worker-owned firms at all stages of their development and growth, and also to make certain that management is always meaningfully and transparently answerable to the democratic will of the worker-owners as a whole. As Thompson points out, democracy in a worker-owned firm has to be meaningful before it can inspire a culture of deep-level cooperation among its members.

[…] if the day-to-day experience of worker-members (and managers) is no different from that of employees (and managers) in conventional firms, abstract notions of equality and participation substantiated by occasional exercise of voting rights are unlikely to influence workplace behaviour. (p. 9)

I’d be interested to know what readers think about these ideas. In your experience, how large can a firm grow and still maintain fully horizontal decision making? Is there an upper limit? And what are some of the ways to maintain horizontal decision-making and meaningful democracy in larger, more complex firms?

Spencer Thompson. 2015. “Towards a social theory of the firm: Worker cooperatives reconsidered.” Journal of Co-operative Organization and Management, 3: 3–13.

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Interview: Greg Demmons, Real English Victoria

greg

As someone who teaches language every day, I have a particular interest in language schools that are organized as worker cooperatives, and so I was very excited that just a few days before spring break I got a the chance to speak to Greg Demmons, president and founder of Real English Victoria, a new worker-owned language school in Victoria, British Columbia. In addition to being a worker-cooperative, REV is unique for pioneering an innovative new language-learning pedagogy, and Greg and I spoke about how his particular approach to language learning lead him to the cooperative model for his new school:

Tim: It would be great to start, just to learn a little bit about yourself and about the beginning of the cooperative and why you decided to form this business as a cooperative in the first place. What led you down that path?

Greg: Oh boy, there you go! It might take your 20 minutes. I’ll just give you kind of the short version. Prior to becoming a teacher I was an investment adviser at the Royal Bank of Canada here. But I left in around the year 2000, and I traveled overseas to Korea, and decided to teach English there. I was just going to stay for a year but I ended up staying for five in Korea, and then I spent five more in Japan. During that time, I discovered a particular style of learning, through doing projects called project-based learning and enquiry-based learning in Japan.

I helped to set up a programme in a Japanese school that basically transformed the school and turned it into what’s now a relatively famous school in Japan for English speaking. When I came back to Canada in 2012, I got a job in the ESL (English as a Second Language) business, and then I kind of decided that I wanted to try to do what I had seen work very well overseas, but unfortunately the schools here were trapped in a corporate business model that didn’t allow them to make large scale changes, despite it being very obvious that this was the way to go, and helpful for their clients.

So I started investigating models that would allow me, with very little start-up money, to be able to open a school that was project-based and enquiry-based, and be able to do it in a way that allowed the model to be flexible enough to change on a dime, with enough support and feedback mechanisms that would prevent us from making large-scale mistakes.

About a year-and-a-half ago I began investigating co-op models, and then I discovered the worker co-op model. And then the school that I was working at at the time, although people at the school didn’t know it, because of my previous tenure as an investment advisor, I could see they had… well, it was very apparent in the figures that they were going to go under, so I began to recruit other teachers who were of a like mind and who were interested. In December of 2015 we started the process towards incorporating as a worker co-op, and we were basically, according to the CWCF, the Canadian Worker Co-op Federation, at their AGM last fall, we were touted as pretty much the fastest ever worker co-op start-up; from concept to start-up was from January to June 20th. Our incorporation happened on April 9th, so this is almost our first incorporated birthday.

Tim: Excellent. Could you talk a little bit more about that journey? You also mentioned initial start-up capital; how did you raise that? And what’s the legal framework in Canada you’re drawing on to structure your business?

Greg: What we did is, we kind of played around with roughly how much it would cost, with what kind of finances we would need… And actually what’s happening right now, this will inform you a little bit about our situation: We are relatively small. We’re trying to keep our school small because the model that we use, the pedagogy and methodology that we use doesn’t really allow for a large school; it has to be done in a small, kind of personal setting. And that sort of speaks to the financial part of it as well. We determined what we would actually need to start up and survive for the first six to eight months, and we worked our way backwards, and we had an initial member buy-in of $5,000 per-person.

We were kind of toying with the idea of whether or not we needed to — or whether we should — incorporate. It was a bit of an odd situation, or a process to go through, because we started to discover that even though incorporation probably was more expensive and really didn’t help our business model in the way that it would function on a daily basis, incorporation gave the financial institutions and the organisations that helped finance us at the beginning the confidence to support the model.

And so that’s kind of the initial start-up, and we started out, originally we had about 14 or 15 people that were interested, and in order to get people to be more serious about it, that’s when we announced the $5,000 buy-in, which quickly narrowed it down to 10 people, and then eventually once we got working on the model and so on we were reduced to 9. A couple of months later, we had some international folk that were involved, and the style of doing business in their country wasn’t really compatible with the way that we did things or the co-op model in general, so they ended up leaving of their own accord because they knew that they wouldn’t be able to fit into what was happening.

As far as the legal framework, for us we just really wanted to have a flat system. We have a flat pay system. I’m the president and founder, and a couple of other titles as well, but I get paid the exact same amount of money as teachers, and the administrators, and the advisors and so on. We wanted that democratic functioning on a daily basis, in particularly at the beginning. And now we’re at the point where we’re starting to divide up the responsibilities a little bit more. I’m spending less time now in the classroom, and I’m spending more time in the promotions area.

So yes, it’s been an interesting ride. I guess ultimately we’re not really businesspeople in the traditional sense; we’re really only interested in teaching. We wanted our outcomes for students to be the primary driving factor in our decision-making, and that can’t be done in a corporate business model where your primary focus is on returning shareholder value. This is our big thing with the co-op model, is that we don’t see how society can continue on utilising an inhumane model of success based on GDP and things like that.

We’re a very philosophical group in that way. And it didn’t necessarily started out that way. I guess we kind of bought that in to what we were doing more after we’d started it, if that makes sense. But that’s kind of my character. I don’t worry about failure; as long as the rationale seems solid to me, I’ll jump in. So far it’s been working really well. It’s been very stressful, but there’s all kinds of different stress, and our stress is based on running a business rather than wondering what other people are going to do with the business that we happened to be employed in.

Tim: You mentioned a little bit there that in addition to member buy-in, that you also had other sources of capital at the beginning?

Greg: Yes, well not at the beginning. We started basically with – this doesn’t sound like a lot – with $43,000. Then we just went to the Canadian Workers Co-op Federation, the CWCF, and then Vancity which is a credit union here in British Colombia. We opened on 20th June, we had $43,000, and we went through until late October when we finally received funding from those two sources.

Tim: That’s great that you got that support. Were either of those two organisations also helpful in terms of business advice?

Greg: Oh, yes. The CWCF really does a lot to support us. They helped us with some funding to get co-op development advisors who helped us initially in the development of our business plan, as well as the governance modelling and so on. And then once our business plan was initially prepared, I actually did the business plan totally on my own with a little bit of help with those guys, but it was mostly formatting and those things. We were also really grateful to Vancity, a large BC Credit Union that has been focusing on social entrepreneurship for a while now. They put together a team of local business people and community experts to help shape our business plan, and then, in the end they recommended that we accept even more money than we had asked for, but with valid explanations as to why. They saw our model of education as being very unique and interesting, and that it actually looks to a non-expert in the field that this would be a very logical way for people to learn language. The head of the applied linguistics department at a major university here in Canada come up to me after a speech I gave at the university, and shook my hand, and told me that we had the school of the future. People can actually see what we’re doing and see how it works, and so it’s quite easy to sell ourselves actually.

Tim: What do you see as the next organisational challenges for your group in the future, and how do you think you’ll meet those challenges?

Greg: The next organisational challenge that we have is bringing in outside people to the board to kind of oversee or to help oversee the business with an objective perspective. And I also think that the second of those challenges will be resisting the urge to expand based on profitability, and trying to resist also the urge to use cutbacks as a way of improving profitability rather than sticking to our guns on the idea that if you build it they will come. So far we’ve stuck to our guns in such a way that we’ve actually probably lost some business, just because we haven’t really considered any other option other than if we provide really good service, and people get really good results, that that will result in a really good business.

Tim: If you did see the opportunity to grow, would you divide into two schools so that you could maintain the size that’s ideal for the pedagogy you’re using? What would you do?

Greg: That’s the challenge, I think. We would be more than open to helping other groups of teachers to do the same thing, and I mean, I’ll be quite frank, and people get nervous when they hear me say this – my goal is to destroy this industry as it exists right now, because it really focuses on extracting large amounts of money from international folks, and the model that they use for teaching is a model that keeps people in classrooms for as long as possible.

In contrast, all of our teachers here have lived abroad and have successfully learned other languages, and this is how we model our outcomes for students. I speak four languages. It took me almost a year to learn Korean, but I was able to understand conversational Japanese and get along in my job and life after six months of practice and listening at my high school job in Kyoto.

We’re actually now facing pushback from some local non-governmental organisations who operate on a volunteer basis, because we’re actually volunteering our services to teach refugees here, particularly Syrian refugees. And so our Syrian refugees are actually learning English probably two or three times faster than those people who are going to the non-governmental organisations. So the government is looking at them and going, “Uh…”

So ultimately I hope that other teachers will see what we’re doing and they’ll realise that we don’t get paid a lot of money, so we might as well be doing something good. Right now we’re in the process of helping another couple of teachers who are exploring the idea of doing this.

I see the co-op world as being a very literal thing, and I think in my own personal view it is the only way that the world can move forward. I know that sounds rather dramatic, but I don’t think, as a former investment advisor and someone who has a fairly good knowledge of the financial practices that we see in our systems right now, we’re not going to survive unless we switch to a cooperative model or we move back towards a more community-based system of doing business; businesses existing for community rather than communities becoming dependent on business.

Right now here in Canada, the co-op movement is really picking up a lot of steam, and so we’re actually hoping to find ourselves on a bit of the cutting edge of all the new system that we hope is emerging in the provinces here in Canada, where the government is now starting to look more seriously at supporting the co-op models. We work with a programme called Co-ops in Schools where university students from around the province work with our students on projects. We just want all the community to come together in these things. Ultimately it all comes back to that.

Tim: That is excellent. That’s actually a great place to stop. That’s really good. Thank you very much!

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Review: Making Mondragon

makingmondragonIf I had to recommend just one book on worker-ownership, Making Mondragon by William and Kathleen Whyte would be at the top of my list. The Mondragón cooperatives in the Basque Country in Northern Spain are the most successful group of worker-owned businesses in the world. In 2015, the Mondragón corporation employed a total of 74,335 workers world-wide and had a gross annual turnover of 11.37 billion euros.¹ Making Mondragon was first published in 1988, and then revised in 1991, and covers the early history of the group. The first Mondragón  cooperatives were founded in the 1950s under the leadership of “that red priest” (p. 29), the radical cleric, Father José María Arizmendiarrieta, and Making Mondragon documents in detail the development of the group over these early years: from its foundation in the 1950s, through a period of unprecedented growth in the 1960s and 1970s, and finally through the challenges of the Spanish recession in the 1980s.

While still very successful, the Mondragón group of cooperatives have faced a number of significant new challenges in the 25 years since Making Mondragon was last updated, and one could argue that this book is now very out of date, but in reality, I don’t think that that matters too much. As a social history of the early years of the cooperative group, this book covers the period of Mondragón history that would be of most interest to readers of this blog. The Mondragón cooperatives are responsible for modernizing the cooperative model, taking the basic Rochdale principles and elaborating on them to create a mature form of workplace democracy that can successfully compete with capitalist multinational corporations in the 21st century. Making Mondragon covers all of that early modernizing process.

As an introduction to worker-ownership, Making Mondragon is both informative and profoundly inspiring. There is plenty of practical detail about the design of the early cooperatives that will be useful to new socialist entrepreneurs, but it is William and Kathleen Whyte’s readable account of the origins and growth of the Mondragón group that puts Making Mondragon at the top of my list of favourite books about worker ownership. At the same time, this is a rigorous history. While the authors celebrate the successes of the Mondragón cooperatives, they also openly examine the controversies, contradictions, and setbacks the worker owners faced as their cooperative movement grew.

The idea of founding a worker-owned business is certainly daunting, but the story that the Whytes tell in Making Mondragon demonstrates that with smart collective effort, we can create organizations that not only survive, but that grow and diversify. Successful Mondragón cooperatives can now be found in almost every sector of the Spanish economy: in banking, manufacturing, high-tech, service, retail, and agriculture. In this book, the Whytes describe a group of collectives that serve as a real-world example of how a thoroughly democratic economy might be built. Both practical and inspirational, Making Mondragon is far-and-away the best book on worker-ownership I have read so far.

White, William Foote and Kathleen King Whyte (1991) Making Mondragon: The Growth and Dynamics of the Worker Cooperative Complex. Ithaca, NY: ILR Press.

¹  Mondragon Corporation (2016) Press Release for the 2015 Annual Report. [Accessed 27/2/2017].

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Interview: Elisabeth Barton, Echo Adventure Cooperative

echo-team

Echo Adventure Cooperative is a new worker-owned outdoor guide company established by four experienced guides who are based in the Yosemite wilderness in California. The new cooperative had the opportunity to take advantage of some recent legislation in California aimed at normalizing the worker-cooperative model in the state, and I had a chance to interview founding member, Elisabeth Barton, about how they got together and how they set up their company.

Tim: I guess the first thing I’d like to do is ask you if you could briefly tell me a little bit about the history of your cooperative, and maybe about some of the motivation behind starting a cooperative, about why you thought of doing it in the way that you did?

Elisabeth: Yes, great question. We incorporated in early August, and then operations began on the first of December, so it’s still really new.

It was an exciting adventure getting to this point; there are four of us that started this coop, and we had all come out of awkward job experiences. Guiding in and of itself is a relatively exploitive industry. A lot of people don’t realise, but oftentimes guides are making less than minimum wage and living in tents behind the homes of the owners that they work for.

So we had all experienced these exploitive practices and we were looking to transition, so then it just sort of happened over coffee, beer and a few conversations. Maybe within a month we were legitimately looking at incorporating, so it was very quick.

We always knew that we wanted a cooperative, or what we thought a cooperative was, so that guides could have a better chance at having a family and a career at the same time. We didn’t quite understand what it took to get there, so that’s why there was such a long time between when we incorporated and when we began operations.

Tim: Excellent, could you explain a little bit about what you learned and why it took so long, and what you had to adjust to?

Elisabeth: None of us are MBAs. I’ve worked in management for years, specifically recreation management, so I had that side of it on lock-down, but I’ve never started a business. Our CFO, William Holtsman, has been in finance for years, but he’s never seen terms like non-member profit and member surplus. Everything about the cooperative model is the opposite of traditional business, from profiting to terminology.

So we had to relearn an entire subject, or not really relearn, we had to learn an entire new subject. It was tedious for sure, but when we spoke with our lawyer for the first time, this amazing guy that helped draft the California Worker Cooperative Act, he laughed and said, “You guys know way too much about this. You’ve done most of my job for me.” So we may have over studied. (laughter) I’m realising now that not everybody needs to go as in depth as we did.

Tim: What were some of the resources you used to learn about starting a cooperative? What did you take advantage of?

Elisabeth: There were three things in particular. It began with a lot of web searching, and in that process we found a really amazing website called California Center for Cooperative Development. We didn’t know at the time, but the California Worker Cooperative Act had passed in 2015 making Worker Coops a legitimate entity. The CCCD had done a really wonderful job at translating the Act and putting it on their website. So all of the sudden we had a relatively new document that we could read, and learn what the expectations were for our structure, and then decide if that’s how we wanted to go forward.

Then we had the Tuttle Law Group. Sushil Jacobs is our lawyer, and he helped craft the California Worker Cooperative Act, and this is all by coincidence. I don’t know if it was his first opportunity to apply the new law to a new business, but he definitely couldn’t have been more excited for us and couldn’t have been more helpful.

Tim: Excellent, so then can you explain a little bit about your organizational structure? I noticed on your website that each member is also a member of the board. Could you talk a little bit about that and how, through this new California law, your coop structure is designed?

Elisabeth: We’re legally considered a Collective Board Worker Cooperative Corporation, organised under the California Cooperative Corporation Law, an obscene sentence! (laughter) What that means is that anybody who comes on, after they go through a six-month vetting process, they become a board member with full access to all of our information and documents as well as full voting rights. Eventually we hope to have our bylaws, our articles of incorporation and everything on our website for anyone to see, but right now our members have full access.

In this industry in general, guides give up a lot to live their dream, so the four of us felt like this was another step in becoming a productive member of the community. Being a Board member gives guides full access to their company and the opportunity to make decisions about how the company operates in the community in which they live. What other questions do you have in terms of our structure?

Tim: I think that explains it pretty well. I also noticed that you have a very transparent process on your website for joining your cooperative, and that struck me as particularly remarkable. Could you talk to me a bit about how you envision that process working?

Elisabeth: Yes, I should say that our guiding agency is really the next step in guiding, so somebody who is in finance or is a professor or maybe an amateur birder, we’re really not the place for those people to step in and to begin a career in naturalist activities… I guess in Europe naturalist means nudist doesn’t it?

Tim: I understood what you meant! (laughter)

Elisabeth: In a career in the natural world, maybe I should say. We’re really here for those guys who’ve been around for a while; they’ve done their time in their tents. What we wanted to do was provide two things. First, our requirements help eliminate those that are not experienced or serious. For example, we tried to make the amount of money to join the cooperative as low as possible, but still be just enough money to be serious. People wouldn’t just throw down $2,000 for nothing.

Then we also wanted to give a map or a blueprint for those people who were stepping out of their old careers and heading into this industry. It’s important for us that somebody can come to our website, without feeling awkward or having to call and ask questions, and read the information and know exactly what they need to do, what decisions they needed to make in their career to eventually either create their own cooperative, which would be awesome, or join ours.

Tim: Yes, I noticed that you mention different certifications that you wanted to see and so forth. That’s really interesting, that you’re kind of pitching your new cooperative at people who have some experience anyway, so they kind of know about the industry and what you do, is that correct? You’re not so much envisioning that you’re going to be training new guides?

Elisabeth: Exactly, however, that being said, one of our goals in the near future is to have mentoring programs for people who are either just out of high school or college, or maybe making a career change. Having these details on our website is just the first step. Eventually we want to offer mentoring and volunteer opportunities, beginner job referrals to local B-corps like Evergreen Lodge and Rush Creek, and a comprehensive a guide school.

Tim: Excellent. Stepping back a little bit, could you talk to me a little bit about the philosophy of your group? What appealed to you about the cooperative model and why was starting a worker coop something that your group decided you wanted to do?

Elisabeth: That’s such a great question. I think ultimately all we knew is that we didn’t want to be exploited, and we knew that we didn’t want to exploit. People in this industry always start out with really wonderful intentions, saying, “I’m going to profit-share and I’m going to give these huge bonuses at the end of the season.” Then, for one reason or another, they don’t and guides are left with, “But I thought…”

So from the beginning we wanted to build in egalitarian approach to business, as well as goals and guidelines for things that we wanted to accomplish in the future. It was really important to us that no matter how we structured our business, that our stake holders and the things that we’re the most passionate about were always considered. That’s our community, our environment, our member guides, and our guests, the people who pay for our service.

It was difficult to cement those ideas into our business model when we started to look at traditional corporate structures. So when we found out that worker cooperatives had just been established in California as a new legal entity, it was so perfect, because it gave us this blueprint for including those four stakeholders and gave us opportunities and ways to work towards protecting or enriching those four things.

So I guess the short answer is we wanted to build in protection for when we’re really wealthy and famous, and our company is known around the world (laughter), that we would be forced by the way we are structured it to continue to look after our four stakeholders on a daily basis.

Tim: Looking back over the last few months, and as you’ve been putting your business together and organising yourselves, are there lessons you’ve learned that you would like to share? If you were talking to other people who were thinking about starting a cooperative, what advice would you give them?

Elisabeth: Totally! The first one is just do it. We desperately need more cooperatives. This is something that I say all the time, but we really believe that coops are to the service industry what unions were for manufacturing. The only way that we’re going to have the kind of impact that unions had on manufacturing is if there are more of us.

And it really is easier than it appears at first. I guess that would be the second thing I would tell people. When you go out looking for your cooperative model, don’t expect to find a step-by-step guide for how to create your cooperative. The thing that makes cooperatives so beautiful is that they are a reflection of the values of their shareholders or their members, so each one is uniquely different

I think that gets a little overwhelming when people first go out there and start looking, because they really want to find their LegalZoom.com template, where they can plug in their information and simply print out a business plan and their articles of incorporation. It just doesn’t work like that, but again, that’s one of the most beautiful things about it is that your cooperative is solely a representation of what you’re passionate about.

So I would keep those two things in mind, and don’t get discouraged! Really just keep moving forward, and make it happen. It’s so much easier once it’s done. You’ll look back and say, “Oh, it’s done. OK. Cool. Let’s go!”

Tim: That’s really inspiring. That’s excellent. That’s perfect because we’re just at about 20 minutes and this a good place to stop. Thanks so much Elisabeth for sharing this.

Some links:

Text of the California Worker Cooperative Act AB 816

A helpful summary of the Act

Pictured: (the Echo team, left to right) Jamie Plouffe, Bryant Burnette, William Holtsmans and Elisabeth Barton

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Interview: Constance Laisné, Altgen

constancebeagAltgen is an educational workers’ cooperative based in the UK that aids and advises new worker-owned start-ups, and as such, their work is very close to the topic of this blog. Altgen was founded in 2012 by Constance Laisné and Rhiannon Colvin, and Constance has kindly agreed to answer a few questions by email about Altgen for the Socialist Entrepreneur. Constance and Rhiannon have been interviewed before and have also written a number of articles about how they founded Altgen and about why they think worker-ownership represents a better alternative for young people who are just establishing themselves new careers, and I will add links to those interviews and articles at the end, but here I would like to take the opportunity to ask more about the nature of their mission and how they help worker-owned start-ups get off the ground.

Tim:   Constance, could you explain a little about the day-to-day work of Altgen and what sort of advice and aid you provide to aspiring worker-owners?

Constance:   We inspire youth groups and young isolated freelancers to re-think work and our current economy. We run participatory workshops, either at universities, or in our Altgen space in Borough where we invite them to identify their common issues with today’s work reality for the young generation, such as: zero-hours contracts, not enough jobs for people, not enough meaningful jobs, extreme competition, unpaid internships, neither sick pay holiday pay nor maternity leave for freelancers, isolation, loneliness, etc.

We also facilitate the coming together of groups that already work together informally. We reach out to people and get to know them through networking events and meet-ups that we organise. We invite them to think about how they could turn their projects into co-operative businesses. We go through the reasons we find co-ops are so relevant for youth in today’s precarious work environment and how workers’ co-ops can turn the current economy and system inside out, how they bring back democracy, equality and solidarity at the workplace. We explain and explore the principles of the democratic workplace, of common ownership, and of economic participation, and their practical and tangible impact on the social and political well-being of our communities.

And finally, we support groups to set-up their own co-ops by going through the essential steps with them. We use design thinking and graphic design to go through the co-operative development methodology. We use the DNA. We have made it really easy and fun to go through. It’s not about spreadsheet, but at Altgen it’s a nicely designed handbook. The jargon has been translated into young people’s words.  We go through the essential questions: Do you have a team, a vision, an aim, a mission statement? Do you know how you want to achieve this aim through tangible objectives? Are these objectives achievable by the current team? Does the team have the skills and capacity to achieve those? Etc. We run sessions with the new teams where we act as facilitators, mostly to answer questions about the tasks that the teams have to complete, and to keep the timing tight. We team up with co-op development co-operators such as Siôn Whellens, who is a treasure, both for legal-business knowledge and for co-op registration.

We are constantly asking the co-op movement to fund it (as it is education; not business) but it is a real challenge to be constantly chasing up bits of funding. It takes time of from the amazing work we do. The Solid Fund (a new amazing fund for workers’ coops) is supporting our new series of workshops and meet-ups on freelancers co-ops. This is real, practical solidarity, in spite of the fact that the worker co-op movement is far from being the richest of movements. Co-ops UK is helping us to find some funding for this project as well. We are on very good terms with Ed Mayo that has shown is support in the past and continues to support us. We are talking to established, philanthropic co-ops all the time, encouraging them to help us renew the movement by sponsoring our workshops. I really think that the movement should have a common pot, a fund for education. It shouldn’t give to charities at the end of the financial year, but give back to the movement. The movement as a whole should be accountable and should stick to Rochdale principles five and six.

We also get paid for talks and conferences by universities and institutions. We do consultancy work, helping established co-ops to think about their organisational and democratic structures and of ways of collaborating to be more relevant to younger generations.

We provide a service that no one does, and as it is led by young people (we are still young at Altgen! and we make sure that we are), we understand the problems of our generation in a more inside way. As we have experienced these problems of work and capitalist exploitation first-hand, we also know how we want to learn and to be taught about the co-op alternative. We basically don’t want to be taught; we want to co-create and co-produce. We are talented, and probably faster than the previous generation, more agile. We are not patient enough to be lectured. We need to participate and we google stuff all the time. We are a collaborative generation that grew up in a very fast changing technological world.

Tim:   Excellent. Following on from that, in your experience, what is the biggest challenge that young worker-owners face when setting up a new cooperative and what sort of advice do you give them to help them face that challenge?

Constance:   Well, with all new worker-cooperatives, there are always issues with raising start-up capital, but here I would like to highlight issues of membership: the initial and continued engagement of members with the co-operative way of approaching work that is both democratic and collaborative. Cooperative self-management requires a special openness, a willingness to learn and improve and accept the others in your group, who are not your bosses, but equals, and to give and accept constructive criticism. Being actually entrepreneurial in a flat hierarchical organisational structure like a cooperative takes a new mind-set — there is a process of unlearning hierarchy and learning to take the lead on stuff. We were part of setting up the Young Co-operators Network a year and a half ago. We just had our winter gathering last week-end, and I can tell you that those guys know how to co-operate. They have the right approach to collaboration. It’s all about how we do it. We don’t talk about the seven principles; we practice them all the time.

So yes, overcoming the behaviours and modes of thinking associated with hierarchical organisation is the key to successfully making cooperation happen, and thankfully that’s what we’ve specialised in in our educational content, when we run workshops in universities. So we have the materials for educating ourselves inside the co-op — and Altgen is all about how we become co-operators — but it is still a massive challenge to find the time to re-educate ourselves while coping with the day-to-day pressures of running a business. It is difficult but I think we manage well.

My advice would be look at some stuff from Seeds for Change, to go on trainings on power and privilege, to go on an Altgen trainings on Why and How co-ops. I think that we have radicalised young people already, inspiring them to change their practices. We must kill these persistent competitive behaviours that are ingrained in our thinking, the thinking of the neoliberal generation, and start practicing solidarity and collaboration. It is political, but we are a collaborative generation! If you think about the internet, we were born with it you know. So it is a paradox. It is incredibly exciting. I think that we are a new type of human being and the revolution has started already with the way we share knowledge on the web and the way technology is deconstructing the old ways, the old hierarchies. And to come back to our workshops, we build them on the idea that the personal is political, and the way we run co-ops is all about changing the way we communicate with each other, and to understand that alone we are nothing; it’s all about the collective and the commons. It’s not about the individual entrepreneur; it’s about the network of co-operators.

So yes, the challenge is that there is a massive need for a cultural shift, and it must start at the work place. It’s great because it’s practical. It’s not theoretical. We are making change happen while creating sustainable livelihoods. It is about social and economic change in one go.

But this is connected to another challenge: democratic participation. Again, in our lives, typically we haven’t learned what consensus is. We haven’t learnt how to learn together, either in our families or in educational institution. It’s all about patriarchy. There is nothing in my life that has taught me how to express my needs and feelings, how to disagree in a constructive way, and how to be sensitive and listen to the needs of others. So at Altgen, that’s what we are trying to learn through doing it: consensus decisions making processes and collective, distributed leadership. I am not sure exactly what you would call it, but it requires lots of human skills or people skills. I think everyone is able to do it; we just need to switch it on. We may not have done it before and certainly is not how things are done in our current political system.

Tim:   Thank you. Finally, I would also like to ask you a question specifically about Altgen as a cooperative. Founding and running a successful educational cooperative must be very different from founding and running other types of cooperatives, such as retail cooperatives or manufacturing cooperatives. As a cooperative with an educational mission, what advice would you give to others who are thinking of setting up a similar venture?

Constance:   DO IT — and make sure that you have a committed group of people that will stick to the same mission and values. Make sure that you inspire each other and that your mission is tackling one of the social/environmental issue of this world. Make sure you have the skills around the table and the capacity in terms of time and emotional determination. Make sure that you care for each other. Setting-up your own co-op business is a challenge, it’s not the easy path but it feels amazing to be part of social and political change, being part of something bigger. And then I would say: join the Young Co-operators Network where it’s about friendships and business relationships, a powerful combination. We are a group of dedicated co-operators of the young generation, supporting each other, sharing best practices, that insists on going dancing together at our gatherings!

Further information about Altgen and their approach:

The young co-operative campaigners fighting for a fairer economy

Diary of a young co-operative startup

Diary of a young co-op startup: the importance of collaboration

AltGen Are Giving Hope to Depressed Students at Careers Fairs

Altgen on Facebook

Altgen on Twitter

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Cooperative Incubators in Brazil

I often wonder why there aren’t more business schools for socialist entrepreneurs? There are some (for example, see here and here), but they are not common, and that definitely limits the growth of the cooperative economy. Classic business-management programs are expensive to set up, expensive to attend, and cater to a very specific type of student. If, in order to expand worker-ownership throughout the economy, broader opportunities for cooperative business education are needed, are there examples of cooperative business schools that are more egalitarian than classic business programs and that could be replicated relatively rapidly?

Well, it turns out, there may be one such example of cooperative business education flourishing just now in Brazil. These business schools are called ITCPs (Incubadoras Tecnológicas de Cooperativas Populares; Technological Incubators of Popular Cooperatives), and in several respects, they are very different from the classic model of a capitalist business school offering MBAs:

First, they are practical. They don’t just educate; they are also directly involved in setting up new worker-owned businesses. They aim to both incubate new worker-cooperatives, and at the same time, give new worker-owners the skills that they will need to succeed.

Second, they are radical cooperative education projects established as extension schools at traditional universities in Brazil, allowing academics who study management, entrepreneurship or cooperatives to get their hands dirty and use their expertise to practically assist in growing the worker-owned model.

And third, the ITCPs explicitly target the poorest communities in Brazil, helping economically disenfranchised Brazilians start their own worker-owned businesses as a concrete strategy for ending poverty and empowering marginalized communities.

The first ITCP was started in 1996, at UFRJ (Universidade Federal do Rio de JaneiroFederal University of Rio de Janeiro), and there are now 42 ITCPs throughout Brazil. Since its founding, the ITCP at UFRJ has incubated 125 new worker-owned businesses. These businesses average 50 to 100 employees, so that would be something like 6,000 to 12,000 new jobs created by just one cooperative incubator.

You can read more about ITCPs in the following article:

Leca, Bernard, Jean-Pascal Gond, and Luciano Barin Cruz. (2014) “Building ‘Critical Performativity Engines’ for deprived communities: The construction of popular cooperative incubators in Brazil.Organization 21(5): 683-712.

Unfortunately, the article is behind a paywall, but there is also a copy on ResearchGate.net which you may be able to access. As you can tell by the title, the authors use the example of the ITCP as a vehicle to discuss their particular school of sociological theory, in this case, critical management studies. The first section is slow going and full of insider jargon, but if you skip to the description of the ITCP at UFRJ on pages 691–697, the jargon mostly drops away, and the authors discuss in some detail how an ITCP actually works.

See also: Universidade Federal do Rio de Janeiro (English); Universidade de São Paulo (Portuguese); Universidade Federal do Paraná (Portuguese); Fundação Universidade Regional de Blumenau (Portuguese); Universidade Comunitária da Região de Chapecó – Unochapecó (Portuguese); University of Vale do Itajaí (Portuguese).

If you know of any other online sources of information about ITCPs, particularly in English, please share them in the comments!

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Interview: Rich Bartlett, Loomio

Rich portrait beagLoomio is a fascinating project. The web and the internet have fundamentally altered how people around the globe network and share information, but up until now these technologies have not much changed how people make democratic decisions together. Loomio is a new online tool that aims to fill that gap.

Loomio was created by a group of Occupy activists, social entrepreneurs, and software developers who met at Enspiral. Their aim was to create an open-source tool that would allow disparate networks of people to communicate, and then to turn that communication into radically democratic plans for action.

As such, Loomio might be an interesting tool for worker-owned start-ups who need an online space to communicate and to make decisions, but Loomio is also of interest because it is being developed by a group that is itself a worker-owned start-up, one that is structured as a radically democratic, horizontal cooperative.

To learn more about this cooperative and how they organize themselves, I spoke on the phone to Rich Bartlett, one of the founders.

Tim:       So the first question I have is about capital. Raising capital is one of the central problems for new worker cooperatives. You’ve raised capital for your business in a number of innovative ways. In the beginning you held two successful crowd funding campaigns and then more recently you raised half a million dollars from investors using redeemable preference shares.

Rich:      Yes, that’s right.

Tim:       I’m specifically interested in that second financing instrument. Could you explain a little bit about how these shares work and maybe talk a bit about the risks involved in this type of financing with respect to preserving worker ownership and control, and also how you try to mitigate those risks?

Rich:      Sure. It’s one of the most important questions, right. The way that we have approached the capital question is in keeping with the way we’ve approached every question about how we structure ourselves and our business model. Being the kind of personalities that we are, we have a reflex to reject everything that already exists, and then to start from a blank slate, to ask: if we could do everything with a pure commitment to our ethics, how do we do it? Then we go on a research journey and try and balance our idealism with some pragmatism and come up with something reasonable.

That process last year landed us on the redeemable preference shares, which I had  never heard of ― I don’t know much about investment ― but when I actually got talking with people, it turns out they’re not so rare. They have a long history and people were more or less familiar with them. Obviously, they’re not super common in the start-up financing world, but in co-ops they are. I’m not an expert, but as I understand it, here is a handful of people who have invested in us, in a social mission that they care about deeply, and in a group of people that they trust to be credible, a group of people with a track record that makes them think that we’ve got some shot of delivering social impact in future.

In mechanical terms, it’s basically a very generous loan, a loan on very generous terms. There’s no trading of investment for governance rights, so the governance is still 100% with the workers, and the risk remains with the investors. If we default for some reason, then the risk is on them. It’s extraordinarily generous. As for the risk of losing ownership, losing worker control, this is a relatively small financing round as far as they go. To some members, I think it’s probably a ‘getting to know you’ kind of loan. The investors might be up for some more in the future, but I would expect that they would only be up for more if they can have more of a stake in the governance. We’ll design that relationship according to our principles and balancing idealism and pragmatism when we get to that. We’ve got a constitution that is pretty explicit about putting our social mission ahead of any other kind of mission, so we feel pretty confident about that.

The other component is that the product we’re building lives in the commons, so it’s open-source software. The decision to put the software in the commons really says, “look if at any point in the future the community feels that we’re not doing an effective job of stewarding this product, then anyone else can just take it, fork the code and do their own version.” This creates quite a strong incentive on us to maintain our ethics.

I can certainly imagine at some point in the future that we might do a different kind of investment or we might change the terms in some way that gives the investors a seat at the board or a role in some other kinds of decision making spaces. We will just have to design that in a way that is in alignment with our principles. It is a never ending challenge of being an enterprise that puts social impact over financial impact. You’ve just got to continuously be evaluating the impact you are having in the world and the resources you need to get there and try to make your best judgement calls about designing systems that work for you and still make progress every day.

Tim:       Excellent. I think it would be worth it at this stage asking a second question, and that is, from the beginning, your business has had a radically horizontal structure based on direct democracy and consensus. Could you talk a little bit about the benefits first of this type of organisational structure and also about the challenges this structure presents and how do you work with those challenges?

Rich:      The benefit would be … it’s a long list. Because we have a central organising principle that no one can tell anyone else what to do, we’ve excluded force from the equation. That creates a fundamental shift in what the organisation looks like in practice and it’s quite a big thing. It’s hard to just summarise into a bullet point, list of five benefits or something like that. When you exclude force you immediately get to the question of what do people want to do and why do they want to do it and how do we align what we each want to do into something that’s actually more or less coherent, and productive and progressive? As far as I know the only way to do that is for the individuals involved to actually care about each other. So our organisation sort of requires people to care about each other in a way.

I mean there’s a real emphasis on care and it’s just a lovely place to be. It’s tremendous for us to be in an environment where everyone really cares about each other, where your feelings are legitimate information that is taken into consideration in decisions. Compared to any other job I’ve ever had, it has fundamentally changed my quality of life to go to a place where I’m expected to feel fairly good most days. In previous jobs the expectation was that work sucks but that’s why they pay you for it: a trade-off that me and most of my friends were not happy with but we just sort of conceded that’s just what work’s like. But to be in a place where you’re deeply engaged with the work and deeply engaged with each other and doing it due to intrinsic motivation, not extrinsic motivation, doing it because you believe in the outcome and you’re surrounded by people that you trust, actively working for your goals, that is really an incredible work environment. It’s quite remarkable and I attribute much of that to the decision that we’re going to organise without force.

I think ― and this is a hypothesis ― but I think that in the long run it’s also a more resilient and a more innovative way to work. When you include the widest perspectives in your decision making, you tend to develop decisions that are better than the decisions any individual could develop their own. That’s the core hypothesis that we at Loomio are testing. Right now I can report that it feels really good! In the long run, we’ll see whether it actually delivers results. It seems like it delivers results just in terms of the amount of the impact that we’ve had compared to the resources that we’ve put into it. Because people are so engaged, they really give an awful lot more than the meagre wages would account for, because they’re engaged with each other and engage with a mission that they actually believe in.

It gives us a kind of resilience as well that’s been quite remarkable. This kind of work of starting a cooperative it’s stressful and difficult like starting any business is stressful. We’ve had times where say one of our key people had said, “Look I need a little rest; this is too much.” Because we’ve got quite a high degree of overlap between the different kinds of work people are doing, we can handle it when someone says, “I need a rest.” We can rearrange and cover it. Sure there is some specialisation and there are some people that would be harder to replace than others, but no one is completely irreplaceable because we’ve got an emphasis on distributing power and influence around which means we’re distributing context around and distributing relationships around. Not endlessly, but there’s always a couple of people that know more or less what needs doing in any job. That gives us a kind of long-term resilience that I hope will pay off. It’s early days for us but I think it will pay off in the long haul.

As for the challenges then … man! It’s incredibly challenging because for one thing we’re inventing everything from scratch. I mean, we do our research and try and not reinvent the wheel, but the process of bringing, well now it’s 13 people along for the ride of: “Okay what would a good investment structure be or what’s our conflict resolution process going to be?” All that sort of stuff. We have systems to delegate work out to different small working groups, so we don’t have to get full consensus every step of the way. We’re quite fluid and dynamic in that regard. But still it’s a lot of work. You spend a lot of time in communicating and then synthesizing diverse inputs and hopefully in the process coming out with stronger outputs but still the work of synthesizing is complex. It requires emotional intelligence and I’d say probably political nous.

In any organisation, regardless of the structure, you’ve got those kinds of challenges: How do we structure ourselves? What policy makes sense? What strategic decision? That’s always difficult. But it’s definitely made more difficult because our structure is less common. Consider the ludicrous start-ups in the United States that get funding at the drop of a hat. If you’re willing to structure yourself along traditional corporate lines and fund yourself with traditional venture capital funding, there are doors that open a lot more rapidly than if you choose to do things like: “Well we’re not a charity but we’re not a traditional profit-maximising company either. And, ah yea, by the way, the thing that we’re building: that lives in the commons, and oh yes, we live in New Zealand… Yes, we’ve got a pretty much iron-clad commitment to ethics over everything else.” It really does make it harder than if we were willing to play it by the traditional set of rules.

But it’s not really a choice for us. If it weren’t for these ethics, we wouldn’t be doing it. It’s just a reflection of who we are. So it’s a huge challenge but it’s also so rewarding. The sense of solidarity is it’s unparalleled. I’ve had a little bit, not a lot, but a little bit of experience with different activist groups and the solidarity there is pretty amazing. When I was participating in the Occupy movement, that was my first taste of solidarity, where I was part of this collective identity called Occupy, and then I saw these people on the other side of the world that shared that identity, and then their struggles were my struggles. When I saw them getting beaten by the cops that affected me in my guts. It was like, “OK, this is what solidarity feels like.”

It was a tremendous experience, but it expired. That collective identity expired. With other activists projects that I’ve been involved with, the community so often expires because it’s up against such a huge foe and it’s always coming out of people’s volunteer time and surplus energy and what they can manage to squirrel away from the boss or whoever. So people are forever burning out because you’re relying on people volunteering. So to have an enterprise that is on track to sustainability means that we get that sense of solidarity in participating in activist project that is mission driven. We keep getting to do that day after day after day. That sense of solidarity is deepening to an extraordinary degree, that I know that these people deeply care for me and can turn that care into really practical support when I need it.

Tim:       Excellent Rich, that was really inspiring answer and we’ve spoken for about 20 minutes. If it’s okay I’d rather keep the interview relatively short and on those points that you raised. But I wanted to also ask, before we end, if you have anything else you wanted to add or if there was a question that I should have asked that I didn’t ask, that you wanted to answer.

Rich:      The question that’s on my mind at the moment, is about scales: so Loomio was one co-op that is a member of a collective of companies called Enspiral. There’s about a dozen different companies that are siblings and we are mostly based in New Zealand and we’re now exploring how to scale out across the rest of the world. One of the tracks we’re exploring that seems most promising is not for us to expand our collective identity globally but actually to just make good friends with the others, to find others and connect with them.

I guess really a simple question is: I’m really interested to hear what’s happening in your hemisphere that you’re finding it exciting or that’s got some promise or is worth connecting with. I’m on a mission at the moment of connecting with all the interesting people that are trying to invent this new economy and supporting each other to do so.

Tim:       Maybe it’s a question for readers of this blog, is that fair?

Rich:      Yes. My sense is that we’re trying to do something very challenging, to invent an economy that’s based on ethics. One of the ways that we can increase the likelihood of success is by supporting each other’s work. We’re all so busy doing our thing that it’s hard to get our heads up sometimes and pay attention to what else is happening. So I’ve just in the last couple of months sort of opened my ears a little bit to hear what else is going on. So yes, a question for people reading the blog is a great idea.

Tim:       Excellent. Rich, thank you so much for taking this time to talk to me.

Rich:      It’s a real pleasure.

For more information on Loomio, see:

Loomio.org

Wired: Out in the Open: Occupy Wall Street Reincarnated as Open Source Software

How a Worker-Owned Tech Startup Found Investors—and Kept Its Values

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