Robb on Cooperation
Cooperation or coop-etition?
I’ve just been reading of a most disturbing development between credit unions in Denver, Colorado. It is called “Bellco has balls! Forget the cooperative spirit, the gloves are off.”
The New Horizons Community Credit Union has recently been acquired by a Texas-based credit union. Nothing wrong with that, you might say. And I would agree.
Mergers and acquisitions can be a part of business evolution. But they should always lead to more viable combinations.
When mutual organisations combine they should strengthen mutuality.
Mergers inevitably provoke some reaction from the remaining organisations who may fear for their future when faced with a stronger competitor.
And that is what has happened in Denver. One mutual competitor has reacted aggressively.
The Bellco Credit Union has mounted an aggressive new promotion to steal New Horizon’s members. This includes offering cash incentives of US$100 to those members of New Horizons who open a cheque account or $US25 if they open a savings account with Bellco.
A commentator who reported this development says: “Sounds pretty good to me. In the past, there was an unwritten understanding that credit unions were all in this together and the banks were the enemy.
“The new reality, especially in multiple credit union markets, is a full-on, no-holds-barred fighting to the death (or merger).”
That concerns me greatly because it strikes at the fundamental values of cooperation and mutuality.
It emphasises short term benefits over longer term considerations. This is financial folly.
Those who are lured in by the cash incentive are unlikely to show loyalty to the organisation.
It benefits some members at the expense of others.
This is inequitable. It implicitly rejects the advantages of mutuality by focussing only on short-term financial considerations.
Traditional cooperative values are multidimensional.
The commentator also said: “This campaign begs the question: Is it a good thing for the credit union movement?
“Or does the ethos of the cooperative spirit and collective credit movement really matter any more with everyone on a quest for more members and billions in assets?”
I believe the ethos of the cooperative spirit does matter.
I also believe it is false to say that everyone is on a quest for more members and billions of dollars in assets.
More members and a growth in assets are the likely outcome of successful business operations. They are the result, not the objective.
History, both recent and ancient, shows very clearly that businesses who have focussed on growth of customers, assets or investors have a greater risk of failure than businesses which focus on providing quality products or services.
Think of Enron, or WorldCom.
History also shows that businesses focussing only on financial returns have a greater risk of failure than those who also recognise their social responsibilities.
Cooperatives and credit unions must be run in a business-like manner if they are to survive. That does not involve a rejection of cooperative values.
In my view the board at Bellco has done just that.
The ethos of the cooperative spirit does matter in today’s world. The real battle should be with the investor-owned firms, not with other cooperatives.
– from the October/November 2007 Cooperatives News
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