Anytown, USA

How to Use the Framework for Action Planning

 

Here we tell the story of a fictitious Anytown where a variety of stakeholders use the Cooperative Growth Ecosystem framework to analyze their local community and begin to develop an ecosystem of support for worker cooperatives.

Anytown is a midsize city in the middle of the country. A group of visionaries have come together, inspired by the success of worker cooperatives in other cities where anchor institutions and city government have embraced their development. There are no worker co-ops in Anytown, but there are some credit unions, one food co-op, and a thriving social enterprise community.

 

In two years of infrequent conversations, these visionaries have brought together diverse stakeholders spanning labor, economic development, anchor institutions, and the local community foundation. The group decided to use the Cooperative Growth Ecosystem framework to assess their local ecosystem and strategize about where they can have the greatest impact in jump-starting a cooperative economy in Anytown.

Ecosystem Analysis

The group convened a half-day workshop for twenty participants representing the four most active organizations and some allies from the social enterprise community and the food co-op, and together they developed the scorecard displayed here. Once they’d filled in the scorecard, rating each element on a scale of 0-5 (five being most developed) they stepped back to reflect, asking themselves the following key questions:

 

– What are the strongest elements in our ecosystem?
– Where are there notable gaps?
– Which categories do our weak and strong elements fall in?
– What does this tell us about where we might want to start?

 

Their key observations were the following:

coop_ecosystem_essential

With no worker co-ops, no co-op development organizations, and no previous experience of investing in worker co-ops, Sample City scored low in the Essential Elements category. One local community development financial institution has already expressed interest in lending to cooperatives, and the local community foundation is a leader in this nascent group, and also a likely source of initial grant capital. There is one attorney connected to the business community who has moved from curious to passionate about worker cooperatives and is a key leader in the group.

coop_ecosystem_important

The group is optimistic about being able to develop the Important Elements of a Cooperative Growth Ecosystem. The main participants in the group have strong connections to the local Small Business Development Corporation (SBDC) and other business support entities within city government and local nonprofits. They also identified three key industries that are growing in Anytown and in which worker co-ops might have a good chance at success: small scale food manufacturing, home care, and medical records storage. The one anchor institution in the group is interested in being creative about how its procurement of goods and services might be able to support the growth of worker co-ops locally.

coop_ecosystem_environmental

Anytown’s moderately high score in Valuable Elements makes the group optimistic about the general receptiveness of the local community to cooperative businesses. They hope to be able to leverage the strength of the local social enterprise sector and the backing of local food co-op leaders to support implementation of their early strategies. The local university has a professor who teaches about cooperatives in her undergraduate business course, so cooperatives are not an entirely foreign idea.

Action planning

 

Based on these observations, the Anytown group considered three paths forward:

OPTION 1:

Community planning approach

Expand the circle of anchor institutions and government officials (especially in the city’s economic development department) who can get behind a cooperative development strategy and initiate a research and planning process to determine the best strategy.

 

 

Analysis:

With initial support from anchor institutions, some supportive city officials and a growing medical records storage industry, this option seems promising on the surface. The group looks into it and finds the following:

 

– Anchor purchasing comprises millions of dollars in the local economy, and much of it is bound up in multi-year contracts with multinational corporations. Recently, however, the local publicly-funded hospital came under mandate to increase community health outcomes to maintain its funding.

 

– The local community foundation is interested in this model, and in persuading other funders to explore it.

 

– With no cooperative developers on the ground yet, it will take years to build the capacity to create businesses that can effectively serve anchor institutions.

 

– Other anchor institution development projects have shown that there can be a mismatch between the limited capacity of sometimes volatile startup businesses and the expansive needs of stable anchor institutions.- There may be some possibility in helping existing businesses that serve anchor institutions to convert to worker-ownership, rather than starting new anchor-serving businesses.

OPTION 2:

Lean startup approach

Identify an organization that could develop a worker cooperative quickly and pool resources to create a small but successful demonstration project to showcase the cooperative model as part of the local economy.

 

Analysis: 

With a strong social enterprise community, this seems like the natural direction to pursue. Further investigation reveals the following opportunities and gaps:

 

– Local lenders and investors have little experience with worker cooperatives. However, due to strong cooperative ties, there may be an opportunity to source some community capital in the form of equity investment from the food coop and/or the credit union.

 

– There is a local community foundation that may be interested in investing, but would need to be convinced of the potential community wealth-building impact for low-wage workers.

 

– A leading social enterprise organization has developed multiple social enterprises in home care, one of the key growing local industries. One of these enterprises is mature enough to become a permanent stand-alone business—as a worker cooperative.- A local community organizing group is partnering with a workers center to start a campaign targeting the health care agencies and hospitals, to demand a living wage for non-union health care and home care workers.

OPTION 3:

Conversions approach

Undertake an awareness-raising campaign targeted at local small-business owners in the food manufacturing sector, which is strong in Anytown.

– Several small factory owners are nearing retirement age, and the small business support community is tight-knit and could be leveraged to grow awareness among its retiring members of the option for selling to workers.

 

– The supportive local attorney is willing to learn the details of structuring and financing ownership transitions, and to mentor other attorneys.

 

– After some inquiry the group learns that the local CDFI community is potentially interested in financing business transitions, but needs to be persuaded by at least one successful transition deal.

Next steps

After looking at the data, the group agreed to explore Options 2 and 3, and to put Option 1 on hold as a next-stage initiative.

1

The community foundation provided a grant that would be split between the social enterprise organization that would “incubate” the home care co-op and an experienced co-op developer from another state that could provide cooperative expertise. Their goal is to create a stable and growing worker cooperative within a year, formally linked to the social enterprise organization through a back-office service contract. They may coordinate with the local workers’ center on hiring, and they may co-brand a campaign to drive business to the new worker cooperative home care entity.

2

The local attorney agreed to increase her skills and knowledge around business transition over the next year by connecting to other transition attorneys around the country. The group approached a local public relations firm to propose an awareness campaign for business transitions in food manufacturing, paid for by a combination of pro bono time from the PR firm, matched by a seed grant from a national foundation focused on supporting strong local economies.

3

A small group, staffed by the social enterprise organization, will undertake research on local industries to understand their growth trends, capital needs, and potential to create quality jobs. At the end of the year, they will present this research to the group, to inform future development plans. They will write a grant proposal to the local foundation to pay for the staff and external support to do this research.

The local partners agree to meet quarterly over the next year to support and learn from the success of this initial effort. Their longer-term plans are to spin off new co-ops from the first cooperative or develop along its value chain, and to undertake at least one business transition in year 2. They will create a new cooperative development organization within a year, and develop a five year growth plan that connects philanthropic investment with equity investment.  They will revisit anchor strategies at the end of the first year of work, to assess the feasibility of this approach.

Fifteen years from now, after several high-profile successes and at least a couple cooperative business closures, Anytown has built a Cooperative Growth Ecosystem supporting effective worker co-op development and benefitting hundreds of low- to moderate-income families around the city. The ecosystem builds on the relationships and strategies developed in the earliest stages of planning. In this mature Sample City ecosystem:


– Most of the city’s dozen or so worker-owned cooperatives are concentrated in key industries (some of these were startups and others converted from another form of ownership), but some have arisen spontaneously in other sectors of the economy. The co-ops are all visible in the community and active in local business associations.

– Two co-op developers led the launch of six of these cooperatives and now have strong track records and steady funding through public and private grants, as well as earned income. One of these developers is a stand-alone nonprofit and the other is a large social enterprise organization with a co-op development division, staffed in part by former members of the first cooperatives it developed.

– The majority of the worker co-ops have more than twenty worker-owners, and three-quarters of the cooperatives employ formerly low-wage workers. They have created internal training and external partnerships with entrepreneurship organizations, other co-ops, and community colleges to help them develop management skills and strategies for sustained business growth.

– The two largest worker co-ops partner with the university on a key procurement contract and with the community college for workforce training.

– Several local lawyers and CPAs have expertise in co-op law and accounting, and the local law school provides free advice to startups through its community economic development legal clinic. The co-op community is also well connected to the business school and a variety of business support programs.

– Diverse stakeholders, including city government and local Small Business Development Centers, are active in promoting worker co-op development as a community economic development strategy and educating entrepreneurs about cooperative business models.

– The co-op community is connected to organizing and advocacy groups and in a position to coordinate on campaigns that will result in better conditions for workers, as well as greater demand for worker cooperatives.

– Co-ops are regularly featured in the media and at the annual social enterprise conference, as well as in several courses at the university and community college.


Anytown started small, assessed what they had and what they needed, and moved quickly to a small-scale concrete learning project, from which they launched larger and larger initiatives. They took stock first of their location, demographics, industries, technical assistance capacity, financing access, and philanthropic support, making small asks, demonstrating proof of concept, and building on success.