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The survey has been undertaken as part of the Society for Co-operative Studies research programme entitled ‘Reasserting the Co-operative Advantage’ in collaboration with the Co-operative Research Unit at the Open University and the Co-operative College, Loughborough. Our contribution to this research is this report based upon our questionnaire survey. The survey covers co-operative strategic management, membership, human resource management and operational, marketing and cultural issues covering seven trading areas: Food, Dairy, Non-food, Chemists, Motor, Funeral, and Travel. The survey was sent in July 1999 to the chief executives of retail co-operative societies in Great Britain. Each society received separate questionnaires:

• on strategic management, for completion by chief executives
• on each business area, for completion by operational heads
• completion by functional heads in human resources and member development.

Returns were received over a period up to and including November 1999. Each Questionnaire was composed of five sections, each with up to thirty questions, many with sub-sections and space for supplementary information. The size of the survey and the amount of work undertaken in providing the information thus required several weeks for completion. The authors wish to record their appreciation and thanks to the societies and to managers and staff for their help and co-operation.

The survey covers a wide variety of themes quite deliberately. This is partly in recognition of the complexity of co-operative business profiles and organisational cultures, and partly in a candid acceptance on the part of our research team at Leicester that the whole concept of a ‘Co-operative Advantage’ was not based on a preconceived set of criteria or variables. There is a large literature with a long history arguing the case for co-operative superiority as a means of doing business. Our aim underlying the questionnaire survey's approach was to find out in practice where the co-operative advantage lay in terms of co-operative activity rather than in terms of co-operative theory. This approach does not mean that we think co-operative theory, values and principles as stated by the ICA in its Statement of Co-operative Identity are irrelevant - far from it. In fact we take up a considerable part of our survey with questions raising the issue of the role and significance of co-operative values and principles for the operation of co-operatives.

The decline in British co-operative social and trading activity in the post-war period, linked to the failure of dividend policy to reflect changing shopping patterns and consumer values, has put the whole British co-operative project under a shadow. There are, however, strong signs of revival, most noticeably in the strong brand image achieved by a very deliberate values-led programme of marketing and product development by the Co-operative Bank. The near unanimous endorsement by the British Movement of the greatly enhanced statement of co-operative identity adopted by the ICA Congress in Manchester in 1995 is another sign of a revival of interest in co-operative values and their relevance to commerce and business. Clearly, the overwhelming majority of the ICA Congress delegates representing nearly 3/4 of a billion co-operators saw the values and principles and their operation as essential to co-operative enterprise.

We give below the sample size in terms of the number of societies participating and their significance in terms of the total population of societies in the UK, in terms of the total population of individual society's turnover, and as the breakdown of the seven trading sectors within that total population.¹

In terms of percentage of turnover for the consumer movement as a whole, the current returns represent over 70% of the movement's retail trade based on 1998 returns excluding farming, financial services and opticians. The sixteen societies include two that merged during the work on this survey’s data.

We believe these figures represent the most comprehensive and representative independent survey of the consumer co-operative movement to have been undertaken for at least a quarter of a century.

In this section3 we outline the co-operative societies' view of the threats and opportunities before them and what they see as the key changes they will be making to overcome the threats and to capitalise on their opportunities. We also present the barriers to change that the societies identify. We have listed all the replies in order of their significance as a percentage of responses. We have then attempted to group these responses across two sets of polarities namely: Internal (organisational- or movement-led) to External (business environment-led) on one axis, and Radical Break to Continuing Trend or Development on the other. This latter axis is a grouping of those responses that can be identified as within the range of expected responses given co-operative history, current strategy and market conditions, and those that look, at ‘face-value’ at least, to be something new. Such an attempt to classify the survey responses is bound to be subjective and open to interpretation. To help readers make up their own minds we have coded each set of dimensions across the two axes with the letters A, B, C, and D. Each tabulated response carries one of these letters so that the reader can see immediately how we have characterised each response.

The organisation's mission has been described as “This enduring set of fundamental principles guiding strategic decision making ….” Bob de Wit and Ron Meyer (1998, p812). The co-operative movement has for its set of guiding principles a clearly laid down identity statement. The statement identifies a set of fundamental values and principles, and was adopted by the whole movement at the International Co-operative Alliance Congress in Manchester in 1995. So fundamental to co-operative identity are these values and principles that we sought to search society mission statements for evidence of their influence.

In Tables 2.1. and 2.2. we give the survey finding and in the commentary below we explore the content of the mission statements of the respondents. All referred to being a co-operative in their mission statements, although with varying degrees of emphasis. Some societies included specific commitments to the continued provision of certain benefits and services, but the majority kept to the more general statement of overall objectives and principles governing the conduct of their business, values and governance. The mission statements were strong in their commitments to members, to quality, and to their customers. The importance of the ethical and community dimensions all came through strongly. The environment was less prominent, as were references to the future, and the wider co-operative movement. Only two societies saw IT as an important content for their mission statements. Two societies saw independence as being part of their mission, and it was the same two respondents that mentioned competitive pricing in their mission statements. Most of the references to trading practice mentioned fairness, quality and commitment to development. Most of the references to members included references to democratic accountability, training and development. Staffing was mentioned rather fewer times, but when it was, commitment to good employment conditions and training and development were generally included, and, in one case, there was a reference to recognition of trades unions.

The references to co-operative identity may be a little misleading as Table 2.2. does not refer to the identity statement, just to the fact that being a co-operative was acknowledged as part of the mission of the society. We need to worry that such a significant percentage of our sample did not have a mission statement. Large as well as small societies can be found in both groups with the ‘NO’ group accounting for approximately 47% of our sample’s total turnover at the time of the survey. Clearly the key areas for evolving principles underpinning co-operative strategy according to the analysis of our sample’s mission statements are: co-operation (100%), customer service (100%), community (81%), quality (81%), membership (73%), ethics, profitability and staff (56%).

1 Mission statements need to be communicated in the operational activities of societies. Do co-operative customers, members and staff - not to mention suppliers and carriers - really appreciate the ‘Co-operative Mission’ and ‘Co-operative Difference’?

2 Should we be thinking of mission statements based on national business perspectives in addition to regional and local society-based missions? Could such statements help to evolve a relevant national strategy for consumer co-operatives?

The idea of identifying threats is to enable us to turn them into opportunities by identifying innovative responses to counter the threats and by establishing appropriate resources to counter them. The message from our data is that there are significant external threats representing a radical break with past practice which are not being matched by the opportunities being identified, nor by the changes being proposed. The solutions being proposed by societies do not appear to match their needs. We do not claim that numerical representation of qualitative material is a safe basis for analysis. Yet even allowing for subjective elements distorting the picture presented it is clear that the threats out weigh the opportunities in the responses. More significantly than the numbers however is the fact that we see so many challenges emerging in the business environment and yet so few of the changes sought are in response to these challenges. Another feature of this part of the survey is that there are relatively low levels of agreement between the respondents as to the specific threats, opportunities, and actions that need to be taken by societies. If there is agreement about anything, it is the general need to improve performance; in IT, customer relations, in marketing, in staff development, and in general.

* Another way to break these answers down is to group them according to their implied references to problems deriving from scale of operations

The two most consistently identified threats in Table 2.1. Societies’ expectations of significant threats, not unexpectedly, came from the societies' business environment in the shape of new and powerful competitors and the changing shopping habits of consumers. These pressures show up across the board for all the co-operative societies' range of businesses, but of course they are manifested in quite different ways depending on the different businesses. For example, backward integration by the manufacturer threatens co-operative motor sales; the entry by acquisition of powerful multinational discount hypermarkets challenges the continuation of co-operative food hypermarket operations. This latter appears to be driving co-operatives into the convenience store niche - except that here too, competitive pressures are mounting. In funerals the American-style multinational SCI has established a dramatic slice of the market through acquisition, though co-operative funeral businesses are still well placed to defend market share and even grow further market share. Discounting and the alliances between retailers, carriers and hoteliers are threatening the economic basis for independent travel agency operations and threaten the continuing viability of some regional (and currently highly successful) co-operative travel business. We consider the separate co-operative businesses later in the report (Section 5). What we want to draw attention to at this stage, is that all co-operative business, even its most significant and successful sectors and strongest respective regional societies, face intense competition which threatens their continuing commercial viability.

Two other significant points emerge from Table 2.3.: Societies' perception of main threats. Firstly, it is clear that the problem in responding to the external threats is internal and structural. Regional societies lack the resources to compete with multinationals. If you group the answers that suggest threats arising from structural weakness in co-operative organisation (8) you have 19.5% of the responses. Even national buying groups like CRTG lack the buying power of the main players in food retailing. The problems of past under-investment, duplicated overhead costs, lack of national strategies due to local rivalries, and lack of national brands all inhibit positive co-operative counter measures to respond to the challenging business environment in terms of price, product consistency, or cost reduction across all co-operative businesses.

Table 2.3. could usefully be read with Table 2.6.: Societies' perceptions of barriers to change. Here, lack of finance is identified as the single biggest barrier. We can only speculate at this stage as to the size of revenues that might be released for co-operative development if the regional based overheads and the national overheads their presence generates were eliminated. However more fundamental than money are the attitudes and culture displayed within an organisation. We have not aggregated the responses in Table 2.6. variously entitled Resistance to change, Over caution, Lack of vision, Lack of understanding, and Lack of staff awareness all identified as barriers to change in the Societies. If they are aggregated, however, under Attitudes Resistant to Change they become the single most significant barrier to change identified in the questionnaire. We should not overlook the items, Lack of Management Time and Lack of IT Resources either, as these two combine to suggest a need for more resources of professional expertise to respond to, and deal effectively with the extent and pace of the changes needed (see Figure 3.2.a. and 3.2.b. where our returns indicate a 20% drop in the number of managers available to societies between 1994 and 1998). If we group those threats and barriers implying a Human Resource Management (HRM) issue we can see that co-operatives must be concerned about appropriate Human Resources to face the changing environment. An under-manned management that faces internal inertia at a time of mounting and critical challenges, some of which call for radical solutions, is unlikely to be able to deliver an appropriate response.

How should we interpret the strong mission statements indicated in Tables 2.1. and 2.2. in the context of the high levels of lack of vision, resistance to change etc in Table 2.6.?

(a) Is there a credibility gap? If so, what is causing it?
(b) Are the mission statements inappropriate?
(c) Are we communicating our mission sufficiently to staff and  in appropriate ways?

The findings in Table 2.4. below suggest some societies do recognise in their co-operative difference commercial opportunities, but it is not a general perception. In fact, lack of consensus is the main feature of opportunities as observed by chief executives.

The caution and resistance to change by board and staff create a context where ‘solutions’, changes and opportunities identified can often bear little relationship to the problems being confronted. This can be seen in the nature of the opportunities and changes identified by the survey at Table 2.4. In Table 2.4. overall, in different guises, commercial or market driven opportunities figured in twelve out of the thirty-four answers found in the survey forms. Only four suggested opportunities for bringing costs down. As for the rest, we find references to ‘local ownership’, ‘customer loyalty’, and ‘trusted image’ collectively representing fourteen responses. Promoting the ‘co-operative difference’ comes up once and there is no reference to the ‘ethical consumer’ at all as an opportunity for co-operatives. In fact, only a single consumer trend of any description is identified as presenting an opportunity for the co-operative societies who participated in the survey. Given the nature of the business environment today, to find “Local Ownership” as the single most frequently cited “opportunity” for co-operatives strongly suggests that the organisation that once dominated, indeed created, modern retailing appears to have given up the struggle for mainstream consumer markets.

Only six per cent mentioned as important opportunities ‘national branding’ and ‘improved economies of scale’. Given the enormous step that all the respondent societies with food businesses have taken in joining CRTG, one might have expected greater emphasis on this area. The general ‘thinness’ of the opportunities identified overall, and the emphasis on ‘traditional’ co-operative ideas of ‘trusted image’ and ‘local ownership’ supported by the third single biggest area of opportunity identified as relating to business development of existing businesses are noteworthy. This conservative list of opportunities was, however, closely followed by acquisition and the application of information technology. These two items do suggest that either increased operational efficiency or the introduction of new products and services are contemplated by some of our sample.

The changes identified as important are listed in Table 2.5: Societies' Perception of the need for Change. They are perhaps notable for the emphasis given to new technology as a means to bring costs down and improve performance. None of the responses to the question “What changes need to be introduced …" were quantified and many were not quantifiable. It is puzzling that rationalisation or cost reduction were only mentioned in three responses given the context of other answers identifying the raising of finance as such a clear threat to development in Table 2.6. Equally surprising is the single reference to new business opportunities in the changes being sought - and only five references to commercial developments out of the thirty-seven changes cited. The changes seem, on the face of it, to be more about maintenance rather than development. This is despite the extensive recognition found in the survey in Table 2.3 of a range of threats requiring urgent organisational, commercial and operational development.

1 To what extent might the lack of response to external threats in terms of identification of external opportunities be explained by the regionally-based structure of the co-operative core business?

2 Could a restructuring of co-operative business release core management talent and energy to innovate within the national markets which at present are ‘bottled up’ by regional constraint.

It is hard to identify in these returns a clear impression of a consistent and strategic view of the co-operative difference and what role it is playing or could play in societies’ responses to the threats and opportunities they identify.

How can co-operative identity help co-operatives to think globally and act locally in practical ways to meet the challenges they face?

In Table 2.6. Societies' perceptions of barriers to change and the changes from Table 2.5. Societies’ perceptions of required changes we see a matching in the emphasis of the respondents (compare Figures 2.3. and 2.4.). However we suggest this matching may be more cosmetic than real, as the need for thorough-going structural and cultural change clearly indicated from the threats and barriers is not to be found in the content of the changes being put forward in this survey as identified in Table 2.5.

In terms of the barriers to change, only 3 out of 27 responses were external to the societies. There were 14 responses focused on lack of resources, either in terms of finance, location, technology, management and economies of scale. The third biggest grouping were problems relating to negative attitudes, which received 10 out of 27 responses. Such a significant grouping of responses around attitudinal issues does suggest that we were right to focus so much of our survey exploring issues of co-operative organisational culture.

1. Can the resource question be managed without radical restructuring and delayering of co-operative business?
2. Can the necessary change be wrought without a clear commitment by co-operative people based on a shared vision as to the goal being striven for?
3. Do the changes being proposed by Societies in Table 2.5. meet the threats and opportunities identified in Tables 2.3 and 2.4?

Of the sixteen societies surveyed, ten identified one or more areas of their businesses' activities as having produced exceptionally good results. The remaining six societies reported no exceptional results. With the exception of Non-food, all the main areas of co-operative business were mentioned at least once. Four societies (25% of our sample) reported exceptionally good results in either their food and/or funeral business. Dairy and pharmacy were reported by two societies (12.5% of our sample) property, motor, and travel were identified by one society as reporting exceptional results (farms, financial services and opticians were not included in this survey). Some of the societies’ criteria for measuring success were to match or be measured against the market leader of that particular business. Others looked at growth in sales, profits, and return on capital. One or two mentioned service levels as an important criterion. In one case however the exceptional result was to have ‘arrested decline in market share’; we assume the criteria being used were driven by past experience rather than an external standard and it is not clear from the responses whether this is not the case in some of the criteria based on sales, profits and return on capital.

In Table 2.7.: Exceptional business results and Table 2.8.: Criteria for measuring results we present the data arising from the survey. Before we can fully evaluate this material, we will need to visit the societies in question to conduct a case study analysis of their reported success. Some of this work has been taken up by our colleagues at the Open University. We need first to see whether the exceptional result is exceptional not only in terms of the society but also against the performance of the movement as a whole. Secondly, we will need to identify those elements in the local societies’ success that can be reproduced across the movement for everybody’s benefit. Although perhaps not quite within the brief to identify the co-operative advantage it would also seem relevant to us to explore why it is that Non-food was the one business in which no individual society seems to be able to achieve an exceptional success (however measured). Exceptions are just that and without a single exceptional result, a society could still be turning in strong overall results. What does seem self-evident, however, is that co-operatives are expected to co-operate and if there are exceptional results this may be due to management actions on the ground that could be learned and duplicated in other societies leading to increased revenues, reduced costs, higher profits, and improved benefits to members and their communities.

Might we not expect to see more reference to key areas of the society mission statement as criteria for success? (See Table 2.2.)

The importance of organisational culture

(15 Societies responded).

Other: 1: Investors in People (8%)
           2: Executive management recruited from outside the movement (8%)

If we aggregate to suggest a strong impact, we get a roughly 30-70 split in favour of co-operative values as having a strong impact on organisational culture. These figures need to be considered in comparison with those for the impact of trade and professional values on organisational culture in co-operatives that splits roughly in the proportion of 20-80 in favour of a strong impact on co-operative organisational culture. The figures suggest an equality of significance between the two sets of factors in the minds of the majority of chief executives. What is perhaps surprising is the fact that between 20-30% of chief executives don’t think either of these variables have a strong impact on their organisational culture. If, however, we aggregate the two societies who identified under ‘other’ a ‘4’ for ‘investors in people’ (we think this indicates broadly a professional value-base) and a ‘4’ for ‘external executive recruitment’ (we think this is definitely a managerial value-base) we find the emphasis in the responses moving slightly more towards what may be viewed as a broadly professionally-driven organisational culture.

Finally, we note a 46-54% split of respondent chief executives on the weak or strong impact of geographical region on co-operative organisational culture. What do these responses suggest? Perhaps that there is less certainty about the significance of regional identity than there might once have been within the British co-operative movement; that the trade and professional cultures predominate (79%); with co-operative values coming in strong second in importance (at 67%) or over-predominant in terms of being seen as very important by the single biggest group of respondents. The majority of our respondents clearly felt institutional and governa