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McKinsey & Company has just released the results of its research exploring the growth of cooperatives and best practices that support this growth. McKinsey presented its findings at the 2012 International Summit of Cooperatives today.
McKinsey & Company surveyed 666 leaders of 9 cooperatives, representing 4 major sectors – insurance, banking, retail and agriculture – and compared the results with an existing database of more than 500 companies. McKinsey concluded that coops showed significant strengths in gaining alignment behind a strategy or goal but that coops face challenges in execution of their strategies and in organizational renewal. Mckinsey categorized these as three major agility challenges:
1. Agility in decision making;
2. Agility in pursuing adjacencies; and
3. Agility in sourcing and developing the best talent.
McKinsey extensively researched 64 cooperatives in developed and emerging markets working in insurance, finance, retail, and food and agriculture to identify best practices for coop management to overcome these agility challenges.
– Agility Challenge 1: Agility in decision making – best practices include a clear distinction of roles between executive and elected officials; using new technologies to consult members; and creating transparency on performance. By increasing their agility in decision making, coops can ensure that decisions are made in a timely, effective and actionable way, without compromising their democratic principles.
– Agility Challenge 2: Agility in pursuing adjacencies – best practices include injecting external perspectives; fostering collaboration; and protecting capital that can be used solely for growth. Pursuing adjacent markets and sectors that offer benefits to members is a key growth method for coops.
– Agility Challenge 3: Agility in developing and sourcing talent – best practices include developing training programs for rising managers; and attracting the best new talent into the organization. Given the close proximity of coops to their members and customers, their people are a particularly important resource. With changing work styles and developmental needs across the workforce, coops should be particularly cognisant of this factor in ensuring their continued success.
The report includes an executive rountable on the future of co-operatives and has specific chapters on challenges and opportunities for retail, banking and agricultural co-operatives. In two separate chapters (a) Harvard Business School Professor Rosabeth Moss Kanter sees parallels between great public companies and co-operatives and (b) the Global Managing Director of McKinsey & Company argues that companies should make changes that share similarities with the ways co-operatives operate.
McKinsey on Cooperatives
McKinsey & Company
Research was partially underwritten by Desjardins Group, Credit Agricole and CIBP. The research, however, was conducted solely by McKinsey & Company.