According to a widely held modern myth, difficult challenges can only be solved by businesses. Without pressure from investors and priority-clarifying financial metrics the conventional wisdom goes, organizations can only aspire to mediocre outcomes and bureaucratic structures. Setting aside the fact that many businesses are deeply mediocre and bureaucratic, cooperative and mutual organizations have proven capable of achieving audacious goals and building industry-defining effective structures.
REI, Mondragon, and Navy Federal Credit Union are just a few of the mutual-style organizations that have gone toe-to-toe with investor-owned, net income-maximizing counterparts and consistently done well. What types of human goal can be reached by excellent member-owned organizations?
Almost any goal. Cooperatives, mutual companies, and other membership organizations have taken on nearly every sort of challenge. From medieval guilds providing a death benefit to the families of master craftsmen to electric utility cooperatives with tens of thousands of member-consumers, if there is a goal that requires some level of organizational infrastructure to achieve it is probably solvable by cooperatives.
With so much hype surrounding starting companies from scratch, why isn’t there a commensurately sexy culture of starting member organizations, including Shark Tank-like reality television shows?
In short, the founders of cooperatives do not stand to become fabulously wealthy. Startup founders have large equity stakes in their venture capitalist-accelerated organizations that are convertible to windfalls when the company is acquired or when shares are sold to public investors. Member organization leaders can be paid solid salaries and receive performance-based compensation. However, as these leaders do not personally control the transfer of units of the organization, windfall profits are less intuitively harvest-able.
How might the building and running of member-owned organizations become a more popular path for talented leaders and experts?
In part, parents, educators, and society’s leaders must help change the narrative around wealth accumulation. When many of society’s heroes are billionaires, driven and creative people will seek similar paths. Founders or leaders of member-owned organizations can also create exceptional, biography-worthy career narratives while creating a far more distributed ripple effect on society.
Additionally, member organizations, educators, and governments need to improve the initiation, funding, and operating of cooperatives and mutual companies. An academic, regulatory, and operating ecosystem of organizations seeking to achieve goals that benefit all their members must be reinforced as it becomes a career and organizational standard; civilization and its individual members will be far better off as a result.