Creating Co-op Fever: The Hard Lessons Learned . Presented by: Bill Patrie, Executive Director, CEDC

1. Common Enterprise Development Corporation Presents Creating Co-op Fever:The Hard Lessons Learned.Presented by: Bill Patrie, Executive Director, CEDC This presentation is brought to you by: The Cooperative FoundationCHS Foundation The material in this presentation is the opinion of the presenter and not of the sponsors. Creating Co-op Fever: The Hard Lessons Learned

2. What is Co-op Fever? • Between Aug. 7, 1990, and July 1, 2006 • 104 development projects • $800 million in total investment • 30 enterprises created and still exist today . Resulting in… Hundreds of millions per year in new revenue Employment of several thousands of workers Creating Co-op Fever: The Hard Lessons Learned

3. The media took note… Creating Co-op Fever: The Hard Lessons Learned

4. Declining Development Creating Co-op Fever: The Hard Lessons Learned

5. Creating Co-op Fever: The Hard Lessons Learned

6. Creating Co-op Fever: The Hard Lessons Learned

7. “As it is we live experimentally, moodily, in the dark; each generation breaks its eggshell with the same haste and assurance as the last, pecks at the same indigestible pebbles, dreams the same dreams, or others just as absurd, and if it hears anything of what former men have learned by experience it corrects their maxims by its first impressions, and rushes down any untrodden path which it finds alluring, to die in its own way, or become wise too late and to no purpose.” -Santayana Creating Co-op Fever: The Hard Lessons Learned

8. Lesson 1 Es ist zweifelhaft, daß Ihr oder andere sehr viel von mir erlernen - Sie gerade haben nicht die Zeit. Creating Co-op Fever: The Hard Lessons Learned

9. Lesson 2Cooperative behavior is instinctive in humans Identify the leaders… “13% of people have the cooperator gene” -Robert Kurzban Find the joiners… 63% of people generally fit the category of intolerant reciprocators. (Kurzban research) Avoid the free riders… Design your cooperative with absolute transparency – give the free riders no place to hide Creating Co-op Fever: The Hard Lessons Learned

10. Lesson 3The mortal enemies of cooperatives are greed and deception • The twin pillars of evil are the love of money and deception—They are mortal enemies of cooperation. • Deception is so easy and seems so innocent but the consequences are evil and deadly. • Cooperation is a better model of exchange for goods and services than competition—it produces a better system of determining value Creating Co-op Fever: The Hard Lessons Learned

11. Lesson 4The myth of free markets as the best way to distribute goods and services is perpetrated by those who intend to monopolize those markets • The system of exchange of goods and services is a human, not a divine, convention. • Free market domination not competition. • The myth of the free market has been used to explain why health care must be run through the fragmented, disjointed, inefficient system we have in America. Creating Co-op Fever: The Hard Lessons Learned

12. Lesson 5Anger is the first signal that a system change is needed • Anger may be a catalyst in cooperative formation…but it only works as a call to action. • Appreciative Inquiry, or asking positive questions, is the required action. Appreciative Inquiry involves the art and practice of asking questions that strengthen a system’s capacity to apprehend, anticipate and heighten positive potential. Creating Co-op Fever: The Hard Lessons Learned

13. Lesson 6There is no easy “cookie cutter” approach to creating cooperatives • Don’t ever start a cooperative without trusty local leadership already in place. • As democratic organizations, cooperatives will elect their own leaders, not ones selected by experts. • There is no easy way—government mandated cooperatives are hardly voluntary associations. Creating Co-op Fever: The Hard Lessons Learned

14. Lesson 7Without a compelling vision, cooperatives are not sustainable • A vision is the answer to the question, “What do you want to create?” – Peter Senge, The Fifth Discipline • Make no small plans, for they have not the power to stir men’s souls.” – Howard Cowden, Farmland Industries Source: www.dakotagrowers.com Dakota Growers Pasta Company Carrington, ND, Plant Creating Co-op Fever: The Hard Lessons Learned

15. “I have a dream.” – Martin Luther King Jr. Source: www.newsday.com President Barack Obama’s Inauguration Creating Co-op Fever: The Hard Lessons Learned

16. “The people of Fargo and Moorhead think they are going to win – and I won’t bet against them.” – Sen. Byron Dorgan Source: www.eileenparker.com Source: www.ndsu.com Creating Co-op Fever: The Hard Lessons Learned

17. Lesson 8Cooperative formation is cultural and parallels the cultural values of social equity • Cooperatives thrive in areas of high social capital resources. Lower crime, better health, better education, higher incomes, higher levels of civic engagement. It is within this culture that cooperation thrives. • The touchstone of social capital is the principle of generalized reciprocity. • A single federal program with the same measurable outcomes will not be effective. The cultural resources that support cooperation are missing in some regions of the country and abundant in others. Creating Co-op Fever: The Hard Lessons Learned

18. Lesson 9There is no surrogate for local leadership • Cooperative educators and developers must find ways to work on the local level. • “Getting the right people on the bus is a CEO’s first job.” – Jim Collins, Good to Great • A cooperative developer doesn’t control the local leadership selection – only influences it. Creating Co-op Fever: The Hard Lessons Learned

19. Lesson 10There are no perfect leaders Source: www.flickr.com John Calhoun supposedly said that although Henry Clay was brilliant, he was also corrupt and “like a rotten mackerel in the moonlight he both shines and stinks.” Creating Co-op Fever: The Hard Lessons Learned

20. Lesson 11Courage, intelligence and honesty are more important leadership traits than charisma Cooperatives that last are lead by humble board chairs who focus on delivering a member benefit in a clear, straight-forward way. Creating Co-op Fever: The Hard Lessons Learned

21. Lesson 12Cooperatives can be highjackedunder the guise of demutualization What makes cooperatives vulnerable is the drifting of intent from adding value to a commodity to adding value to money. Creating Co-op Fever: The Hard Lessons Learned

22. Lesson 13Discipline • Madison Principles advise development but do not enforce regulations. • Cooperatives must have internal discipline. • Development needs to be a long-term view • Bank of North Dakota, 10 years from inception to funding • Power plants, 10 years from permit to site • “Discipline, gentlemen, discipline!” – Jim Rainey, CEO, Farmland Industries Creating Co-op Fever: The Hard Lessons Learned

23. Lesson 14Adopting a sustainable life philosophy If people do not share a metaphysical dream, they have no sense of place and are not a part of something larger than themselves… A group of egotists coming together to form a partnership does not form a community… • Kent Kedl, associate professor of philosophy, South Dakota State University Ideology and partisanship and egoism have imprisoned us but we can get out. We can rekindle the dreams of a better life and people will use that dream to change the world. Creating Co-op Fever: The Hard Lessons Learned

24. Questions? Bill Patrie Common Enterprise Development Corporation (701)-663-3886 bill@cedc.coop Creating Co-op Fever: The Hard Lessons Learned