These Companies With No Ceo Are Thriving
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Unraveling the Mystery of Co-ops: A Deep Dive into the World of Cooperatives
Imagine a grocery store in Brooklyn, New York, where sales per square foot are four times higher than any other grocery store in the area. This store employs 10,000 people, yet it doesn’t have a CEO. This unique business model is none other than the Park Slope Food Co-op, one of the 3 million cooperatives, or co-ops, worldwide. Co-ops are a significant part of the global economy, employing 280 million people, which is 10% of the world’s workforce, and handling over $2 trillion annually.
Understanding the Co-op Model
So, how does a business with 10,000 workers operate without a CEO? To answer this, we need to understand what a co-op is and why they were founded. The concept of co-ops dates back to 1844 when 28 weavers in Rochdale, England, came together to create and co-own a store. They bought in bulk directly from suppliers, which allowed them to negotiate prices and buy items they couldn’t otherwise afford. They ran the store collectively and democratically, a remarkable feat at the time. This Rochdale Society of Equitable Pioneers wasn’t the world’s first co-op, but it was the first to publicize its principles, which guide co-ops to this day.
The Different Types of Co-ops
Today, there are various types of co-ops. REI in the US and S-Group in Finland are large consumer co-ops. Credit unions and mutual insurance companies are financial sector co-ops. When farmers or other producers come together, that’s a producer co-op. Worker co-ops, like Mondragon in Spain or The Cheeseboard in Berkeley, California, were founded to provide jobs to people in the community. Some consumer co-ops, like Park Slope, require their members to work shifts in the store. In exchange for their work, members pay 15 to 50% less for groceries and influence what products are sold there.
Key Features of Co-ops
There are three crucial things to know about co-ops. First, all co-ops are jointly owned by their members, whether those members are consumers, producers, workers, or whoever. Unlike traditional companies, which can have outside shareholders, all owners of a co-op are also members. Second, co-ops are not founded to maximize profit. Many do turn a significant profit, but that’s not their core mission. Evaluating a co-op purely by traditional business metrics ignores its most important reason for existence: how well does it serve its members? Third, co-ops are controlled democratically by their members.
Decision Making in Co-ops
But how do decisions get made in co-ops? It varies. At a small worker co-op like The Cheeseboard, day-to-day operational decisions are just made by the workers. As co-ops get larger, they do institute some form of leadership or management. Park Slope has a general manager who leads the 80 or so employees. The largest network of worker and consumer co-ops in the world, Mondragon, has a president and managers who lead the roughly 30,000 worker-owners and 50,000 contract workers. However, leadership roles in a co-op are very different than in a traditional company. The leadership implements policies that its members or worker-owners have agreed upon, by vote. And at Mondragon workers, can vote to fire the president.
Co-ops vs. Traditional Companies
At a co-op, there’s no single person with overarching, top-down power over everyone else, as a CEO would have in a traditional company. Meanwhile, in both co-ops and traditional companies, major company-wide decisions are made by voting. But who votes and how is wildly different. In a traditional company, voting rights usually come with shares of stock. The more shares you own, the more votes you have. In a co-op, every member has the right to vote, and in most co-ops, every member gets one vote. That difference results in radically different policies than you’d find at traditional companies.
The Success of Co-ops
Studies in the UK show that co-op start-ups are almost half as likely to close within five years as traditional businesses. And in one study, researchers polled 600 workers at two in-home healthcare businesses: one was a worker co-op and the other was a traditional company. The workers did similar work with similar salaries. The biggest difference? Co-op workers were about 40% happier with their jobs.
Co-ops are a unique and successful business model that provides a democratic and equitable alternative to traditional companies. They are a testament to the power of collective ownership and decision-making, proving that businesses can thrive without a top-down hierarchy.
Discussion Questions
- What are the key principles that guide co-ops, and how do these principles contribute to their success?
- How does the co-op model differ from traditional companies in terms of decision-making and leadership?
- In what ways do co-ops prioritize the well-being and satisfaction of their members or employees over maximizing profit?
- What advantages do co-ops offer to their members or employees compared to traditional businesses?
- How does the democratic nature of co-ops contribute to a more equitable and inclusive working environment?
- Can you think of any potential challenges or drawbacks that co-ops may face, despite their success?
- What role do you think co-ops can play in promoting economic sustainability and social responsibility?
- Have you ever been part of or interacted with a co-op? If so, what was your experience like and how did it differ from traditional business models?
Lesson Vocabulary
Co-ops – Cooperatives, or co-ops, are autonomous associations of people who voluntarily come together to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise. – Many farmers in the area have formed co-ops to collectively purchase supplies and sell their products.
Business model – A business model is a plan implemented by a company to generate revenue and make a profit from its operations. – The subscription-based business model has proven to be successful for many online companies.
Global economy – The global economy refers to the interconnectedness and interdependence of economic activity across countries and regions of the world. – The COVID-19 pandemic had a significant impact on the global economy, leading to a recession in many countries.
Workforce – A workforce consists of all the people engaged in or available for work, either in a specific company or in the overall labor market. – The company is planning to expand its workforce by hiring additional employees.
Types of co-ops – Co-ops can be categorized into different types based on their purpose and membership, such as consumer co-ops, financial sector co-ops, producer co-ops, and worker co-ops. – The city has several consumer co-ops where residents can buy organic and locally-produced goods.
Consumer co-ops – Consumer co-ops are cooperative businesses owned and operated by the consumers who use their products or services. – The consumer co-op offers its members discounts on groceries and household items.
Financial sector co-ops – Financial sector co-ops are cooperatives that provide financial services, such as banking and insurance, to their members. – The credit union is a financial sector co-op that offers competitive interest rates on loans.
Producer co-ops – Producer co-ops are cooperatives formed by producers or suppliers of goods or services to collectively market and distribute their products. – The farmer’s co-op allows local farmers to pool their resources and sell their crops directly to consumers.
Worker co-ops – Worker co-ops are cooperatives where the employees are also the owners and have a say in the decision-making process. – The worker co-op operates on a democratic basis, with all employees participating in the management and decision-making.
Key features of co-ops – Key features of co-ops include voluntary membership, democratic control, economic participation, autonomy and independence, education and training, cooperation among cooperatives, and concern for the community. – The co-op’s key features ensure that all members have an equal say in the decision-making process and share in the benefits of the cooperative.
Decision-making in co-ops – In co-ops, decision-making is typically done through a democratic process, where each member has an equal vote and decisions are made collectively. – The co-op held a meeting to discuss and vote on important decisions regarding the future direction of the business.
Co-ops vs. traditional companies – Co-ops differ from traditional companies in that they are owned and controlled by their members, who share in the profits and have a say in the decision-making process. – Unlike traditional companies, co-ops prioritize the well-being of their members and the community over maximizing profits.
Success of co-ops – The success of co-ops can be measured in various ways, including financial stability, member satisfaction, community impact, and long-term sustainability. – The co-op’s success can be attributed to its strong community support and the dedication of its members.
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- Categories: Economics, Grade 7, Grade 8, Grade 9, Sociology, TED Ed, Video Lessons
- Keywords: business model, co-ops, co-ops vs. traditional companies, consumer co-ops, decision making in co-ops, financial sector co-ops, global economy, key features of co-ops, producer co-ops, success of co-ops, types of co-ops, worker co-ops, workforce
