1
Rating Conference Presentations?
By Co-op? By Member?
Closing Plants & Branches
Great!
Less
service?
Executing Growth Strategies
Great!
For Whose
Benefit?
Achieving Strong Brand Name
Great!
At Whose
Expense?
Keys to Success – a Synthesis
Great!
Whose
Success?
2
Distinguishing a Co-op From
Other Business Organizations
• Each Member / Patron Has at Least One Business
Interest in Common With Every Other Member / Patron
• Those Common Business Interests Form Business
Relationships that Each Member / Patron has in
Common With the Cooperative
• Unique Governance Speed Bump: Co-op Directors are
Simultaneously Co-op Patrons and Fiduciaries of the Coop, Which Creates Conflict of Interest for each Co-op
Director. No For Profit Business Organization has that
Organic Conflict in its Governance.
3
At the Margin . . .
Directors Must Favor the Cooperative
Favor Cooperative
Favor Members
Stronger Gross Margins
>
Weaker Gross Margins
Tougher credit
>
Generous credit
Fixed Asset Expenditures
>
Stock Retirements
Profitable Service
>
Unprofitable Service
Working Capital
>
Stock Retirements
More Earnings
>
Less Earnings
Tight Inventory Control
> Weak Inventory Control
4
Managing the Governance Speed
Bump
• Manage the Conflict. Recognize the conflict
between the needs of Co-op and its members &
patrons (“this conflict”) must be managed –
governance will not necessarily be comfortable
as this conflict is rationalized.
• Make Hard Choices. Recognize management
should not be expected to successfully
implement business strategies if the Board of
Directors will not make the hard choices that are
5
predicates for success.
Managing the Governance Speed
Bump
• Conflict is About Capital. Recognize this conflict
is related to Co-op’s capital needs;
– Communicate with members & patrons about Coop’s capital needs.
– Turn the investment of members & patrons in your
Co-op into a valuable asset on their own balance
sheet. Cash today or capital gain tomorrow?
• Defend the Co-op. Recognize that directors must
lead by defending the legitimate needs of the Coop. If directors defend the Co-op, the employees
6
will too.