A cooperative, commonly known as a “co-op,” is a well-known organisational structure. While we’ve seen the concept evolve and adapt across many different industries, the reason for creating a co-op often remains the same: to meet common economic and social needs.
There has always been a strong sense of community and shared values among co-ops – whether a grocery shop co-op or a platform co-op. While the founding principles of what makes a co-op remain the same, how they operate is changing. With more digital tools available, co-ops have the opportunity to digitise their operations to find more effective ways of working.
This article explores the evolution of co-ops, explaining where the concept comes from and highlighting a few traditional types of co-ops, along with the rise of digital co-ops. It also dives into the different digital tools – from finance to project management, governance to collaboration – available to co-ops to create an understanding of how technology can equip them for success in the modern business environment.
The history of co-ops and why they came about
Today, there are roughly 3 million cooperatives globally, with at least 12% of the global population contributing to a co-op. But the concept dates way back.
One of the earliest records of a co-op dates back to England in 1844 when a group of artisans in the cotton mills decided to collaborate in the search for better living conditions.
As the artisans struggled to afford food with their low wages, they decided to pool their scarce resources and work together to access basic goods, including flour, oatmeal, sugar and butter, at a lower price. And so, the Rochdale Equitable Pioneers Society, also known as the Rochdale Pioneers, was born. Every customer in the shop became a member and had a say in the business and a share in the profits.
Most co-ops still loosely work in a similar way. Members generally contribute to the co-op in some form and, because of their contributions, are allowed access to the products or services provided by the co-op. They’ll also have a say in managing the co-op and receive a share of the profits.
Co-ops are generally formed by groups of people who are willing to work together towards a common goal. Commonly-shared values that create solid grounds for a co-op include democracy, self-help, self-responsibility, equity, equality and solidarity. For many co-ops, there’s a greater focus on people over profit, so building a more inclusive business model.
The most common types of co-ops include work co-ops, agricultural co-ops, producer co-ops, consumer co-ops, housing co-ops and financial co-ops. The most popular sectors that we see co-ops emerge in include insurance, agriculture and food, wholesale and retail and financial services.
For more on purpose-driven organisations, check out: A hierarchy of purpose, not people: What does it mean for your organisation?
Co-ops in the digital age
Co-ops have come a long way from the group of 28 artisans selling goods in search of better living conditions.
These days, we’re seeing an increase in “platform co-ops,” or “digital co-ops.” Similar to traditional co-ops, they take the co-op ethos – and many of the practices – online. A platform co-op includes a digital platform, either a website or mobile app, designed to provide a service or sell a product. It is collectively owned and governed by the people who depend on and participate in it. Additionally, they’re often committed to open-source development so others can use their code and spread the co-op ideal.
- Palante provides technology consulting services to nonprofit progressive, social justice and community organisations. They stand for the seven cooperative principles and work to support and collaborate with other technology cooperatives.
- CoLab is a transnational tech worker cooperative network focused on building innovative digital platforms. They currently have invested member-owners on three continents and a larger collaborator member network in seven U.S. states and eight countries.
Platform co-ops naturally incorporate digital tooling into their processes, but digital tools and platforms can also help existing non-platform-based co-ops organise themselves better and involve members more actively. In the modern digital world, co-ops can be much more effective in their processes by adopting the proper digital tooling (which we get into below).
Many organisations also embrace co-op qualities when choosing to self-organise, In self-organisation, members also share a common purpose and decision-making is distributed throughout the organisation.
For more insights on conventional organisations adapting to self-organisation, check out our article on becoming decentralised.
The different areas of tooling for co-ops
Like in many organisations, the pandemic accelerated the use of digital tools in all major business areas for co-ops – from administration to online sales of goods and services and member relationship management. It especially accelerated the adoption of digital tools around participation in decision-making and member interaction.
According to the World Cooperative Monitor’s 2022 report, the business areas in which digital tools play a crucial role for co-ops are IT systems and their security, business management software, and selling goods and services online. But, there’s still ample room for more co-ops to digitalise, with research finding that about one in ten co-ops consider themselves to be poorly digitalised.
As a modern co-op, how many of the below areas have you incorporated tooling into?
- IT system security
- Cloud computing
- Collaboration tools
- eCommerce platforms
- Automation and AI
While not all areas may be relevant to every co-op, most would benefit from using some form of management, communication and collaboration tools as a basic starting point.
Here’s more detail on the types of tools available in each area and the benefits they bring:
IT system security
According to the World Cooperative Monitor 2022 report, IT system security is one of the most crucial areas for co-ops to incorporate tooling. Like all organisations, cybersecurity should be taken seriously to protect against security threats like hackers, malware and viruses.
Examples of IT system security tools to incorporate:
- Antivirus software
- Public Key Infrastructure (to safely exchange sensitive information)
- Managed Detection and Response Service (to be more aware of risks and be able to quickly detect and respond to threats)
It’s also essential for all co-op members to be well-trained in security measures – particularly in co-ops dealing with sensitive information.
Cloud computing is essentially any tool that is hosted over the internet. There are three types of cloud computing: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). Within those three types of cloud computing, you’ll find a wide (and continually growing) array of tooling.
There are also many niche cloud-based tools available for co-ops. For example, Agromovil is a mobile, cloud-based platform connecting small farmers, transporters and markets – ideal for co-ops in the agricultural and food industries.
Co-ops can investigate the different cloud-based tools available within their industry and niche and incorporate them where beneficial.
Solid financial management is essential for a co-op’s success, which is why finance tools are so necessary. There are many useful financial tools, from financial planning and budgeting to managing cash flow, payroll and bookkeeping.
Beyond daily finance planning and management, there are also tools that co-ops can use for crowdfunding and other financing options.
Examples of finance tools to incorporate:
- Cash flow management
- Expense tracking and management
- Inventory management
- Tax preparation
- Financial reporting
The most optimal financial management and accounting tools will likely be cloud-based and designed to integrate with other supporting platforms.
Communication tools are a given in any organisation, even ones that don’t work remotely. For co-ops in the digital age, there are a multitude of communication tools at your disposal, and you’re likely already using many of them.
It’s worth auditing your communication channels to ensure they’re being used as effectively as possible.
Examples of communication tools to incorporate:
If building your brand is a key objective of your co-op, then you need to create a marketing strategy. And that comes with incorporating relevant marketing tooling to ensure success.
Examples of marketing tools to incorporate:
- Social media platforms and scheduling tools
- Email marketing
- SEO optimisation
- Video editing software
- Graphic design software
- Blog and website hosting and posting software
- Paid advertising
- Analytic software to track your marketing efforts
Co-ops are all about working together, meaning collaboration is essential for their success. Digital and, even more so, traditional co-ops with distributed teams can benefit from collaboration tools to ensure they work as effectively as possible. Nestr, for example, helps teams collaborate around a common cause by creating a shared space to share work, have discussions and provide feedback to each other.
Examples of other collaboration tools to incorporate:
Digital tools are an important part of co-op governance by giving members more opportunities to engage and interact with the business and other members. Tools like Nestr allow co-ops to create a centralised place for all shared agreements. It’s important to be able to capture and track your co-op structure, accountabilities, roles, policies and domains – and for it to be easily accessible by all members.
Co-ops can also adopt digital tools to allow members to vote online and facilitate discussion and decision-making.
Examples of governance tools to incorporate:
- Shared agreements
- Data governance
- Role and accountability management
If your co-op is based around selling goods, then incorporating an eCommerce platform can help extend your reach to more customers. Co-ops can choose between creating their own eCommerce platform or selling on popular marketplaces like Amazon.
Examples of types of eCommerce platforms for co-ops include Shopify, BigCommerce, Wix, WooCommerce, Magento and others.
Another way for smaller co-ops to incorporate a level of eCommerce is to sell via social media platforms – for example, Facebook Marketplace or Instagram.
Automation and AI
Automation is all about efficiency and reducing the need for human input. For co-ops, this can mean automating various processes to streamline their workflow. AI takes it a step further and helps to optimise certain processes by learning from how things have been done in the past. Like the other tools, there are multiple ways for co-ops to integrate both automation and AI into their business model.
For example, Southern Co-op, a co-op in the south of England, has incorporated AI technology in the form of facial recognition software to scan all shoppers entering their shops in an effort to reduce shoplifting and abuse of staff.
Examples of automation and AI tools to incorporate:
- Administration automation
- Content management automation
- Document management automation
- Marketing automation
- Workflow automation
- Machine learning for decision making
- AI process mapping
A new era for co-ops
When using the right tooling combined with their community and value-based ethos, platform co-ops can become a mainstream alternative to more traditional organisations. Digitalisation can radically reshape how co-ops manage their day-to-day operations and how they relate to their members.
However, as many traditional co-ops thrive on in-person engagement, a blend of embracing virtual elements while continuing to focus on in-person collaboration is a formula for success. Tooling like Nestr can help co-op members align around a central value-based system while creating a solid collaboration and governance structure.
For more on digital tooling, check out: Moving the needle: How collaboration tools improve effectiveness