Executive coach Stephen Shepherd of AltusQ has extensive experience working with co-operatives and mutuals.
In this conversation with rural journalist Michael Cavanagh, hear how the co-operative difference informs and strengthens the business strategy of the co-ops and mutuals Stephen Shepherd of AltusQ works with. When co-ops fully embrace their history and purpose, a clear and workable strategy emerges; by harnessing the power of co-operation, co-ops and mutuals create a win-win situation for their organisation and their communities.
Melina [00:00:01] Co-ops have come a long way from when a group of farmers and associated industries would get together to pool their resources and their products to ensure they increase their profitability. Hello, I’m Melina morrison, CEO of the Business Council of Cooperatives and Mutuals, or BCCM and this is the latest in our Meet the Co-op Farmers series of podcasts. In this episode, BCCM’s Michael Kavanagh takes a look not at co-ops, but how they need to cope with changed expectations.
Michael [00:00:32] Melina, you’re right, you and BCCM, when advising on how to set up a co-operative, not only have to look at the product itself, but also how the operation would function. And this is not only with emerging co-ops, but also in some cases ones that may have been operating for over a century. Stephen Shepherd is the Head of AltusQ and he spends time with the various co-ops well-established and also in their infancy, providing advice and direction.
Stephen [00:01:04] Over 20 years ago when we started out AltusQ, we saw the market of consultants being largely in two groups. You had people like the McKinsey’s of the world who come in and tell you are stupid and research the market and give you very smart things that you needed to do. And then they would write you very long reports and tell you this is what you need to do. On the other side, there was this burgeoning coaching piece that look at the humans and the people, and they would come in and they’d give you a cuddle and they work out who you are and why you exist and very useful again. But no one was really joining the two, so no one was saying, who are you as a person? What gets you up in the morning? Why do you do what you do and joining that with how do you remain viable? How do you remain vibrant and sustainable over the next 20 years in choosing what you do? And so we started our business with that thing. You need to get the strategy right and you need to get the people and the passion right and join those two. And so when coming to work with co-ops and mutuals, what we found was they are perfect for that philosophy because in a sense, you’ve got groups of people coming together who do similar things, who’ve got similar desires in life, who’ve got similar needs, who come together to achieve often initially quite specific things, but over time that can grow out. So what I’ve found over the last number of years is that by combining the strategy and the passion, you can get groups of people working cooperatively together for some very clear and agreed aims and have a better chance of achieving those aims and remaining in business together cooperatively over a long period of time.
Michael [00:03:03] Co-ops have a long history, not just in Australia, but even greater history, particularly in Europe, and they’re embedded very much in the day-to-day economy. Co-ops here in Australia are very much aligned with the primary production area of the economy. And you’ve got say five farmers originally got together in a dairy co-op in 1920 and then they grow really if they’ve grown and they’ve done well and they survived 100 years down the track, what then can an operation like yours bring to not just the co-ops, but you also mentioned mutuals and we’re seeing a growth in mutuals again as well, resurgence. What really then can you bring them?
Stephen [00:03:47] Well, it starts with when I start talking to the board or the CEO, I’m very interested in what you said, the story. So what brought them together back in the day, back in 2005, in the case of Casino food co-op or abattoirs up in Casino, I mean, they joined in 1933. And when I asked John the chairman, well, what was it that brought these people together, it was really interesting what the story was that they felt they were being ripped off by the Sydney markets and they needed to band together to make sure that they were getting the right price for their meat. And what was interesting about that was that it was very clear that they said, we want to share in the fruits of their labour. And so before starting the strategy session, I got very clear about why does this organisation exist. And I was curious to know as to why they started their organisation way back when was still true. And what was interesting was there was a couple of people in that room, in the exec and in the board, who didn’t know that story. And so we started with that story and went right back to if we were starting this co-op up again, what was important then and how has that transpired today? And is it still true today as some of those things are still true? Has it changed? And where we ended up to after is a really rich conversation and these conversations are about bringing people together. And it’s about getting people on the same page because they come from different walks of life. You’ve got growing members who are on the board and they are living and breathing this every day. You’ve got execs, some of whom live in the local towns, some of which have been flown in. You’ve got board members, many of them are grown members, as I said, but sometimes you’ll have external who come from other corporate backgrounds. And so how do you bind them together to ensure that they have a very similar idea of that basic question of why do we exist? And after a really rich conversation for that organisation, they came up with a phrase of everyone grows together. And what that means for them is. And the beauty of co-ops is this is not about making profits for today. Profits are important, don’t get me wrong. Profits guarantee sustainability. Profits allow you to invest back into the business. Profits allow you to do all the things that you want to do moving forward in that business. But they said everyone needs to grow together. By that means the growers need to have their businesses growing together. The employees, the staff members who live in that local town need to have their career growing and prospering. The town itself Casino, the Casino Food Co-op and Norco, who’s another one, another large co-op in that town or that region of Lismore and Casino. They’re the largest employers. So what does that mean? What’s the responsibility of those large organisations to the town to be putting back into the town, to be contributing to the fabric of the town? And so by ensuring those core stakeholders can grow together and share in the fruits of their labour that’s the basis on which then I can start to build a strategy that is going to resonate with those various stakeholders, but also have a greater chance of seeing the course through. So that’s where it starts. If I take another group down to the end of the country or south country in South Australia, they are, you know, it’s a very small business compared to the food co-op. They started in 1998 [correction: 2018] and it’s the limestone fishers. And so they are lobster fishermen. And it started and actually this was interesting because this was during COVID that I was introduced to them and had never met them. And so I’m talking to these fantastic, smart, grizzled salt of the earth, I apologise for the pun, but salt of the earth fishers, who banded together in 1998 [correction: 2018] because they were concerned that the corporates were coming in and enticing the local fishers to sell their produce to them. This is where China was buying at fairly high rate. But what they were concerned about was this money was going out of the communities. So these are very proud, multi-generational families that have grown up together and know each other really well and kids go to school. And what they were doing was they were seeing increasingly the profits of their labour going out to a corporate who had shareholders in Sydney and Melbourne in wherever that they got to benefit from it. But the community didn’t get to benefit as much so and they had no transparency over the prices. They didn’t know what the real market was. They didn’t really trust what was being told to them. So they banded together with that view of let’s have something where everything is put back in the mill. Everything we make we go into, we will produce together. We will sell together. And interestingly, they banded together with Geraldton Organisation Co-op, it had been around for a long time. Now this is another thing about co-ops. You’re not competing with each other, even though you could say that they are competing in the same markets for the same fish. You’ve got a more established business saying, hey, we’ll help you. And this is where BCCM were fantastic, because they facilitated that conversation and said, why don’t you guys talk to each other because these guys have done everything you’re wanting to do and maybe they can help you go a bit straight or bit of learning on the back of their shoulders from falling down. And so they formed a fantastic alliance within the two co-ops to get them A, out of the ground, but B, to actually help them market and sell their product to the same market. So here are some examples of co-ops working together. But why are they doing that? They’re doing that so that the towns will thrive. So they actually said, we want our, when I asked them the same question, they said, we want our towns to thrive. We just don’t want the growers to thrive. We want to make sure that the money that we get from our rare resource that we have a privilege to be able to harvest, we want to make sure that that’s sustainable for generations beyond us. We want to make sure that the towns that we know, the fishing villages along the Limestone Coast will benefit long-term from our involvement. And so that’s why they got together. And so I love those two stories because for me it brings together the why. And as someone who comes in and wanting to understand the struggle to build the strategy, if I start with the why, if I start with the passion, then I make sure that we’re building a strategy that makes sense.
Michael [00:11:33] Well, you mentioned two seafood co-ops, the very large organisation based at Geraldton in WA. Then you’ve got Limestone in South Australia. You’ve also got places like Norco on the far north coast of New South Wales, a massive dairy operation, Casino Foods. You’ve also got a growth in the smaller co-ops. Now you come along and we’re also seeing a growth in paddock to plate and often you go to markets and there are complementary operations. People say produce pork and then they work closely with someone that’s got some nuts and spices that would go well. Is there also the need in your area of expertise in the marketing and drawing them together but getting co-ops, not just lending each other like the IP of the two fish co-ops, but possibly bringing together what appears initially to be unrelated co-ops and yet they should be looking at that market.
Stephen [00:12:40] There’s certainly sense in that so the cliche here is reinventing the wheel. The cliche here is, well, you’re competing in a large market. How do you make sure that you provide that into the various markets and that requires some expertise that requires a story. So by banding together as part of a co-operative, it is far more cost effective for you to build a brand, to market your particular wares, as you know Riverina or as Limestone Coast. So by actually building a brand, building a story, but then more particularly having the grunt and you need if you’re going to, if you’re going to make it with a Coles or a Woollies or a reasonable distribution to get some, to get some consistency in the sale or if you are in the course of the lobsters going to the China market, when the China market shuts down, how do we get to Thailand and how do we reposition our fish for the Australian market. Having an organisation that can actually have the pooled resources, the pooled finance, to be able to employ either an agency and or in-house to come up with those strategies for building brand, building market positioning and distribution strategies and relationships, it’s very difficult to do that when you’re one, two, three, five farmers. And so if you can do that on a broader scale, make sense. If you are one, two, three, four, five, it’s a lower scale, but the principles still stand. How do we pool our resources? How do we pool our ideas to achieve a particular aim? So whether you are working at the scale of and mind Limestone in the market are still relatively small, but they’ve been able to make themselves larger through cooperating together, but also cooperating with an adjacent or in this case, the Japan adjacent, not necessarily geographically, but certainly market was. So having those pieces are really important. Another example of this and unfortunately it didn’t quite work, but the idea behind it was fantastic. A few years ago, you might recall this, there was a lot of blow up around live exports of cattle and there were calls for or in fact, we were banned for a period of time in key market and that that completely disrupted the business model of people in the middle of Queensland. And you know we’re talking about a million heads of cattle from Townsville through the Mount Eliza and all the way through there. And so Casino Food Co-op actually worked alongside them to actually help them come together to work out how do we change our business model over a period of time from a reliance on export of cattle through to potentially processing it and building a centre in the middle of where we actually are so that we can not put them on trucks for 3,000 kilometres or whatever, but actually process closer to time. Now unfortunately you might recall that they had a meeting, I facilitated the meeting. This was sponsored by a Casino food co-op, which was a terrific example of co-ops cooperating together. And they came up with some plans, still in its infancy. But you had the kernel of an idea there. Unfortunately, a couple of months later there was the flooding through there and very cold weather, which resulted in 400,000 or 500,000 cows hit, being and just devastated that area. So that unfortunately got shelved. When they rebuild that might come back up but it’s an example, again, of people coming together, who are working in their own farms with a collective issue that they want to resolve and improve. And that’s typically where whether you’re small scale or large scale that’s where co-operatives and mutuals really work. When you’ve got a common goal, a common problem or common opportunity that you can’t crack yourself.
Michael [00:17:15] This is Meet the Co-op Farmers podcast. I’m Michael Kavanagh. I’m talking to Stephen Shepherd, who’s the owner of AltusQ and looking at how expertise such as coaching and bringing together different co-ops, whether they be large or small, can market themselves just that bit more efficiently. Stephen, the issue of we’re seeing lately incredible disasters around the country, particularly on the East Coast with flooding and bushfires. Is the growth not just in the more traditional primary production co-ops, the mutuals, they seem to be going through a resurgence as well. What about because we are seeing this unfortunate expansion of disasters, you also work closely with regional councils and in particular in the area of insurance. Does that go down the path? How do you work with them?
Stephen [00:18:22] It’s interesting the specific risk nature so it was formed in the late 80s as a result of councils but back then it is actually not dissimilar to now there are a number of circumstances that meant that insurance is going through the roof, public liability in particular. And so it was becoming increasingly prohibitive for councils to insure themselves, get coverage, expertise, they didn’t have the expertise. It’s really difficult if you’re in the middle of New South Wales, in Wagga, to get someone who’s got real risk experience to negotiate. Also working one off with different brokers, etcetera. Do we trust them? Do they have our best interests at heart? Am I really getting the right rate, not understanding the market and feeling exposed from that? And so that led to Civic Risk Mutual being born back in 1998 and they’ve now grown since that time, we’ve now got 26 councils, mainly through New South Wales, managed assets that are 30 odd percent of councils. And you can imagine that’s a very large number and where this structured they have pooled their resources. They self-insure for some of these things, but more particularly they’ve now got enough clout in the market where they can get decent prices. They can get more interesting product mixes and certainly through the recent floods and fires, etcetera and a lot of their councils were right in the firing line of that floods in particular. What that meant was that those costs were being borne across a wider group and they have a mechanism that’s very transparent. And so one of the core principles of any successful co-op is transparency. You need to be very transparent about how you charge people, where the funds get used, how they get used. They’ll come back to that a bit later. But in this case, they managed through a lot of hard work, but also the work that have been done over many years to mitigate that risk. And yes, there were costs but they were not catastrophic for any particular. Now, there are some councils there that are really licking their wounds right now, but it would have been catastrophic if it weren’t for these pooled solutions. And so for me that’s a real example of them coming together. Now, the interesting thing about Civic Risk Mutual, I did their five-year strategy a couple of years, in fact I’m facilitating their members forum next week and sitting down with the board a couple of weeks ago we were looking at what have they achieved, etc. But the process to achieve that planning is probably instructional when it comes not only for mutuals but for co-ops in general. So we started with talking to members and people talk about member engagement, etc. and often it’s a team, but how do you properly engage with your members? How do you ensure that you have a proper two-way? This is what we’re doing for you, aren’t we good, pay your premiums next year. It’s how are we going? How are you going? What do you need from us? It’s a two-way conversation backed by proper, dedicated resourcing to manage that member relationship and to make sure that you’ve got a funnel for ideas, complaints, all of those things so that the relationship is real, the relationship with the members, they’re not customers, they are your shareholders. So it is a very different relationship from customers and so and they are your customers so you need to remember that as well. So we made sure that we had surveys, we had forums, they had forums every year where we have open conversation about what’s working? What do you need? What’s the next piece you’re looking for? And there is an in and out process that’s followed over several months to come up with any change in strategy, which is go to the members, get a sense of what their issues are, come back with some premises, go to the members. We’re thinking of doing this. And of course, the board is made up of the representatives of the various councils as well as are most co-operative boards made up of the grower members themselves. So you’ve got that representation board level but you’ve also got a real two-way conversation happening with the members. And so another company Almondco do that very well. They had [00:22:16]grower [0.0s] relations person who’s that’s their job and I’ll come back to Almondco a little bit later. But so with Civic Risk, we were at pains to get that intel. I then sat down with the exec team because they do understand the business. What’s happening I sat down with the board got this story and so we got there, why did they first become a mutual? We wrote that story up as the plan. So the plan, it starts with why do we exist? Who are we? What are our principles? And they came up with wonderful principles of open book. This is how we are. We are transparent that builds trust. They think value mutuality, what you put in, you get out. So how do they ensure that the members aren’t there sitting back, that they’re active participants. So there’s a lot of work that goes into making sure that each member plays an active part in sharing their skills and knowledge and is an active member of the mutual. And that for me, is part of the success of mutuals or co-operatives. When you do have that back and forth amongst the members. So that’s an example of then we took the draft plan back to the membership. We gave them a copy of it, and then we ran a forum of 50 people in the room. What do you think? What’s missing? Here are the priorities that the board’s come up with, do you agree that these are the priorities? Real conversation and off the back of that conversation that was captured, we then make sure that that is then added into the document. So that back and forth in any process to ensure that the intent of the purpose leads into what the members want and what they are feeling and needing now into the strategy is a key part of any process.
Michael [00:25:18] I’m Michael Kavanagh, I’m speaking today to Stephen Shepherd, who’s the owner of AltusQ. It’s part of the Business Councils of Co-ops and Mutuals’ Meet the Co-op Farmers Podcast. Stephen, you recently took part in a roundtable on agriculture with co-ops pushed along by BCCM and you’ve been talking about mutuals, insurance, and obviously there were co-ops. They’ve also got to look at their costs. What came through from that roundtable was there is affirmation that really regardless we’ll always go with a mutual or a co-op orientated business or the bottom line still is we’re being offered a better financial deal by a non-mutual non-co-op insurance operation?
Stephen [00:26:15] It’s an interesting conversation that is often had with membership and one of the great things about co-operatives, especially agricultural co-operatives. By definition, agricultural cycles go over a long period of time. So it is boom and bust, rain, drought and a market opening, closing. And so over a period of time, over a five, ten-year period of time, there is going to be, it’s not all the same. So being able to actually ride through that to ensure that over arching that long cycle, the aims and needs of the membership are achieved through appropriate reinvestment, maybe taking a little bit off the table in the good years and putting it in, reinvesting it back and then paying that out to people in the smaller year. So that’s key to ensure that that long-term view can be held. The conversation at the roundtable was interesting. Some of the themes that came through was how do we tell our story better to government and to the market as a whole. So from an Australian perspective, there is so much value in having co-ops because the jobs are local, the regional piece, the investment is local. You don’t have funds going off offshore or offering to the cities. They stay within their local communities largely. You do have people who take a long-term view and reinvestment view. They employ to take the Norco Casino Food Co-op group. They employ a huge number of Australians and rural Australians. So having that paid around the stool by governments and by the public at large was one of the themes that came up. And obviously, you know, not obviously but BCCM, one of their core aims is to help messaging to Canberra and to Macquarie Street and into the various to ensure that those messages are not lost and the policy is over time built to support mutuals. And so that was one of the core things. Another core piece came out with what I was talking about before, the power of collective co-ops. So co-ops working collaboratively with co-ops and the North Beef piece, the Geraldton Limestone Coast piece, they’re examples of co-operatives working together. A number of co-ops in the Lismore Northern Rivers area getting together around brand. So they’re examples of different co-ops coming together to actually support a common opportunity or issue that they may have. Their members have a common problem with development or a common desire to get something built infrastructure wise. They can come together to actually work together for those same aims or maybe they need to come up together with a renewable energy opportunity that they couldn’t afford by themselves but by together in a region, maybe they could. So the sorts of creative ideas and the beauty of co-operatives are at their heart is just that co-operative, working in cooperation with each other rather than in competition with each other. And I think that’s a real benefit of that model and that mindset that allows people to be more creative, less guarded about things. But, hey, how do we grow things to mutual benefit rather than being worried about, well, you’re selling your stuff at the markets that I’m selling it at and so forth, that certainly came through was as part of those open forums. And I think that there was a lot nodding in the room when people were listening to some of the stories of that came through from that forum.
Michael [00:30:39] Stephen, the regional areas have been experiencing growth largely due to COVID and people also probably caught up in housing prices in the larger cities and therefore they’re moving into these areas. Is there a need you’ve talked about the marketing of the product in and banding together when you’ve been dealing with co-ops in particular, and a co-op would have been in effect in a farming area since 1920, 1930? They’ve been there a long time. Is there though, the need. You go into town and you’ll see an IGA not realising, in fact, that’s owned by a co-op. Or the petrol station in that town is owned by the co-op. From that marketing point of view, is there also the need for the next generation coming in to be aware of mutuals and co-ops because the co-ops themselves are enjoying a resurgence?
Stephen [00:31:41] There are two parts to that story. I’m going to diverge and then I’ll come back, if that’s all right. Firstly, over, I mean no industry through COVID, etc., has been has every industry I work in across sectors are resourcing. If you talk about what the number one issue is, is finding and keeping people, talented people, people who can do the job and certainly in small towns, being able to attract and retain families in those towns that can grow and be part of that have their family members come through. So a large part of co-operative strategy is to make sure that the environment that you’re creating is such that the sons, the daughters, the nieces, nephews want to come through and work for the same organisation. If you take a Norco, if you take a Casino Food Group, if you take certainly the fishing communities, a large part of it is how do you get that as being, my mother works for the co-op and have that as a really great thing and then that goes through the schools. So there are a couple of parts to this. One is how do you ensure that especially as a co-op or mutual is growing, how do you ensure that the people within that organisation grow with it so back to the everyone grows together. So during the recent down short turn for the abattoirs, the exec and board made a very brave decision. They said we are going to hold on to a large part of our workforce, even though we don’t have meat from the process with the drought, with the drought breaking and everyone keep holding onto their females in particular. But we know it’s going to come back and we need to hold on to these people and these people need to hold onto their jobs. So how do we do that and how do we make the most out of this? So I had a conversation, a very mature conversation, with people saying, listen, over the last number of years, you’ve had a lot of overtime, etc. and I’m hoping that you’ve put that into your houses, etc.. But over the next few years it’s going to be less, but we’re going to invest in you and so we built a programme for 110 people, for their leading hands through to the board to build their leadership capability, to build their management capability, to build them as people. And that was a significant investment, a significant amount of time, but also to build the culture of the place so that when we did, when the market opened up again that those people would be in place that they would also be better placed to coach and mentor the people then being recruited into the business. So that’s the first piece, how do you invest properly in your people to make sure they grow as humans within the job. The second piece is how do you ensure in those local communities that the word is out? How do you get your brand out? So Casino, I keep coming back to that but they’re very active in their local community. They sponsor the local helicopter who does the CareFlights. They sponsor a number of organisations, a number of events over the year. They’re heavily involved in talking to the schools about what they do and the breadth of opportunities that they are. So moving away from the, are you working at the meat works? Well the meat works now is just so much more than that. So how do you get that message through and how do you change a culture from an old school do what I say through to and meat works were famous for this. In fact, the brief that I was given by Simon Stahl, the CEO, was Stephen, I want to create. It’s never been done before. I’ve started the job, but I want some help with it. I want to create a heart painted culture built on compassion and a meat works. Never been done, don’t know that it can be done, but I want to give it a red-hot go. We’ve been doing this now for the last two years and recently they were audited. They get audited all the time for a bunch of things. The order that came through and he’s been doing it for a while and he does it periodically. And he came through and he’s given, he says, I’m going to interview Joe, Mary, Fred, and he says who he wants to interview. It’s across the board, it’s union, non-union, etc.. And Simon and also the chair Dilma brought. So, listen, I’d like to have a meeting with you, what’s up? What’s going on here? He said, I want to have a meeting with both of you. What have we done now? We were summoned to the schoolmaster’s office. And he has said, I’ve spoken to 40 people across your organisation. I’ve done the same process for a number of years now. What’s going on? What do you mean what’s going on? Despite most of them only working three days a week, they are talking in glowing terms about the care that the co-op has for them and their families, the care that the supervisors and the managers are showing for them about what’s going on in their family or what’s happening with their mental health, big mental health issues through rural Australia and the investment that this organisation has made in providing the services. And so the conversation had shifted to such a great extent. But it started with the intent of everyone grows together and understanding that will, what are we doing for our staff and then putting a strategy in place to actually make that purpose come alive for that stakeholder group that have been left behind. And so what I love about co-ops is the ability or the ability to go back to purpose and have a really good look at, well, what does it mean for the town to grow and prosper? What does it mean for the families? What does it mean for the members? And how do you make sure that we grow together? And so it’s not seen as one against the other. You’re going to have to ask the question again, because I’ve gone on a tangent here. But for me, coming back to rural Australia and getting the message out there, it is a multi-faceted, multi-year approach to ensure that people want to join co-ops, to start their own co-ops and stories such as these that hopefully encourage people. It’s a great work that Melina and her team at BCCM are doing to really get out there and get the word across to you need to go and talk to someone. Large part of what they do is, are you thinking of this? Why don’t you go and talk to Fred? Why don’t you go and talk to Melissa? Because they did this a few years ago, and you could probably learn a few things from them. But how they did it, and then here’s a whole bunch of resources to help you get out of the ground. And here’s a guy called Steve Shepherd, who, when you’re ready, can help you get your strategy set. So it’s surrounding people with an ecosystem to actually make what might seem really difficult, manageable, and breaking it down step by step. This is how you start. You do this first, you get these groups of people together, You get that charter together, you get this piece of documentation together. Then you come together and have this conversation. Then you put so there are a number of steps and there are a number of very successful co-ops who have been down this path over many years, who have paved the way for people as they come in and go, oh, God, I’ve got this problem I’m trying to solve or I’ve got this opportunity. I don’t know how to do it. I think what I’ve seen certainly over the last five years is that collective wisdom has been brought together, documented systemised in a way that is readily accessible now for up and coming co-operatives up and coming, people who want to build co-operatives.
Michael [00:39:51] Stephen Shepherd is the owner of AltusQ. He’s my guest as part of the Business Councils of Co-ops and Mutuals’ Meet the Co-op Farmers and I’m Michael Kavanagh. Stephen, you mentioned earlier Almondco in South Australia and then you also just pointed to the up and coming co-ops and operations. Now you’re strongly in support of places like Norco, Casino Food Co-op, and in the West Coast, the seafood co-ops there. We’re also, something like Almondco, for example, seeing growth in horticulture, very much so. You also mentioned economic cycles. Now people like Casino people may change what they purchase in a cut of meat, but they’ll still buy meat. Norco, they’ll keep buying their dairy product. They may change exactly what they buy because of inflation and what have you. How do you make sure that those up and coming co-ops in a bit more a niche market, continue to thrive? Do you go and advise them to keep doing what they’re doing or look into places like Casino Food Co-op or the seafood co-ops on the West.
Stephen [00:41:12] There’s no one size fits all answer to that. So if I take an Almondco and you talk about cycles, it’s really interesting. The Almondco, often the producing market is separate from the end market. So if I take if meat prices have never been higher, but the throughput of meat has never been lower. So for an abattoir right now, because everyone’s holding off from rebuilding their stock after a number of years of drought, their business has actually shrunk significantly. So the growers are actually making terrific money, but they’re not putting it through the abattoir, they are selling it off or building their own herd. Now eventually that will turn and it will come through. Almondco a number of years ago prices went up and a whole bunch of people got into the market so they were established in 1944. And today they’ve got about 85% of the growers and about 30% of the market so a couple of big corporates that look after that so their philosophy very much and they work, you know, working in competition in a way, but not really against the corporates. But their focus is how do we build the capacity, the production capacity and lift that whilst the volumes are coming down from our existing members, they put trees in the ground three, four or five years ago and all of those crops are coming online. We know they’re coming online because you can tell, you know, you can model it, but it takes several years to put a bit of extra capacity in and it takes a lot of finance to be able to do that. So their problem actually is being able to hold back new members, etc.. So in those industries, it’s really difficult, the members that are there back to that long-term thing. They’ve got the stability of having their fruit being able to be taken. New entrants into the market are finding it more difficult because the processing is not there. So back to your question of what do you suggest? I always break it down of what are you trying to achieve? So are you trying to move away from something? So you try to move away from a lack of transparency or trying to move away from volatility, or are you trying to move towards something. You’ve seen prices in a particular market, go through the roof or new markets, India, for instance, opening up and you see a new opportunity there that if you could market into a new market or what have you, China coming back potentially for some market. So it’s in a strategic sense, it’s always sitting down and going, is there a problem you’re trying to solve here? Is there an opportunity you’re trying to get at? And let’s get really clear about what that is and let’s make sure the people around the table actually are agreeing on what the real priority or what the real focus is that you’re trying to achieve. Once you’ve got that clarity, then you can actually go, okay, what are the alternatives here starting with status quo through to starting our own co-op or enticing others to grow up to join ours or to join a larger co-op or whatever, or to cooperatively working with now another co-op and there are always those various paths to achieve what you’re trying to achieve. So I don’t have, as I said, I don’t have a one size fits all approach to it, but I do spend a lot of time coming back to purpose and coming back to what’s the actual problem or opportunity you try to solve. And it’s amazing what I’ve seen in the past how much strategy is built based on a fuzzy purpose or fuzzy overarching strategic aim. And quite often it sits in platitudes, in lots of words and I’ll say, I’m sorry, I’m a bit confused. I see a 30-page business plan here, but I don’t know how you’re going to do it all. What are you doing first, second and third? So breaking it down and then getting them to actually say, well, what do we need to do first? And what is going lead us to these opportunities. So what do we need to research first to actually build? What conversations and relationships do we need to build to give this opportunity? So great thing about co-operatives and mutuals is you can play the longer game. And so my view with these things is hasten slowly, have something especially in agriculture have something to though the cycle or several cycles. And be aware, you know, read Kipling, imposter is you know fantastic success or abject failure as a primary producer; you’re going to feel both of those over time. So how do you build a strategy that can sort of take you through and make sure you’re reinvesting the profits from a great year and propping up and keeping people in business while it’s really come back to, how do we employ, how do we keep employing our workforce when we don’t have work to do? How do we that?
Michael [00:46:30] You mentioned risk protection and there’s the issue of mutuals versus the more traditional co-ops. Mutuals, they’re in the finance sector, so there are a lot of guidelines, scrutiny. They’re probably more aware of risk protection. When it comes to the co-ops and particularly ones that have been going 100 plus years, do you have to come in and explain that risk protection? Is there kind of not that part of their business plan? Because I think, oh, look, we’ve been going along, we’ve got the community backing. Then there’s great food product or farm supplies, we don’t need to think along those lines.
Stephen [00:47:09] Yes, it’s a great question and certainly as part of any strategic planning process I do. Once we’ve got the plan worked out, we’ve got the priorities worked out and it’s linked to the brand, it’s linked to their culture, it’s linked to all those things. The final part of the puzzle is go, okay, now what could possibly go wrong? And I have the what could possibly go wrong conversation. And I had this for actually for one of my customers recently, one of the ones we mentioned. And over the years, what I worked out is that they had commissioned various reports on this. And they were all at various levels of really theoretical to lots of pages to this. And then one report was done five years ago. Another report was done three years ago, because every now and again the board goes, oh, we haven’t felt that risks. And so I conducted what I call an empty draw. Bring out your data exercise. And I do this with all my clients up front. So you’ve got all these strategies and all of these conversations, all these board meetings throw it all to me and I will sift through to work out what’s the narrative of the conversation, because there will be kernels of really good ideas that you’ve had three, five, ten years ago that you’ve forgotten. So these risks are not you. You’ve dealt with them before. You’ve had a conversation with about before. But what is new is the fact that you’ve forgotten it or the new board member hasn’t been inducted on it. And there’s no central three or four page document that actually brings together in a very practical way. What are the risks of this business from the natural floods, fire, the like, through to the market’s up some ups and down through to price cuts, through to competitive issues, through to labour force and COVID. We’ve just been through that through two bees. You know, there was a mite on the New South Wales bees which then shut down any bees going across the border into South Australia, etc.. We had beehives that were supposedly going to be looking after this. Well they couldn’t get across the river. So these are the things that okay and very basic but a very good conversation was is how high is the likelihood of this happening and how devastating is it to your business and actually getting a conversation about this, I’m going to say 15, 10, 15, no more than 20 core risks that can really bring you undone. And having the directors separate meeting, maybe you might have a group that off to the one side will do it. But certainly all the directors involved at the end of that is a document, which is 3 to 4 pages long. And the first is piece, this was created here. And once a year minimum, we will come together and we will re-evaluate the ratings and we will update this document. And then it doesn’t sit in various drawers. It sits as an appendix to the board meetings. It is an appendix to the strategy meeting and is part of the strategy. And so we’re not reinventing the wheel as risks come and go that document morphs over time. But that way, the learnings of board members or people who’ve been the industry for 20, 30, 50 years, the collective wisdom is encapsulated in firstly the story at the upfront of the strategy, why do we exist? What’s our history? What do we do? What do we don’t do? Why do people buy us? Why do members choose to come? All of that documented, reviewed once a year, once every two years, once a year, every five years, three to five years, it’s properly refreshed. But we get to have a conversation about these things and we keep coming back to the base assumptions of the market and the base assumptions of what we agree on, still true, great. So why are we going off and doing this now? Well, okay, if we’re going off and doing that, at what expense is that? What are we missing out on as a result of going and wanting to buy this organisation or had one the other day where they wanted to help someone out that’s beautiful. So nice that you want to go and help this other organisation out. The last board meeting you were talking about, you didn’t have the capacity in the headspace, given the major projects that you had on here to get them through. So you’re going to spend a whole bunch of time and energy helping those people. Are your members going to thank you in two years time when these projects haven’t been delivered? Probably not, okay, so let’s go back, once we’ve sorted that we can help them. They’re getting people to remember it’s the members, it’s their members versus second and third.
Michael [00:52:23] Because you’re working a tightrope here in the fact that it’s increasingly competitive, it’s the growth in the co-ops and the mutuals. On that board the shareholders, they may have been a very successful dairy farmer for 30 years. The co-op itself has been going for a hundred years. And then there’s corporate governance, all those sort of things, you’re walking that tightrope. They’re walking a tightrope. And then they’ve got the community. And no doubt the community they’re always in their directors’ ears where they just bump into them at a sale-yard. That tightrope must get quite difficult.
Stephen [00:52:39] So actually, it’s a really interesting point. One of the key things is you do have a number of dynamics that come into any strategic planning process in any board. So most co-op boards are made up predominantly of grower members. Now, some of those may have worked on a number of boards before, but a number haven’t. And so if I was to use the example of the fishermen’s board of Limestone Coast, other than their own family businesses, they hadn’t really, none of them, very few of them had been on boards before and some were a little bit intimidated by, oh, we’re doing a strategy session, what’s that? What have I possibly got to contribute? And so the goal there is to create a process around that, that their views can be put on to the table in this case. So I interviewed all of them ahead of the strategic planning. And so I talked to them. And it’s really important for me to find people where they are, so no judgment. They know their business. And so my job is to give them the comfort that they actually know their business and they know a lot more. And if I take the big jargon of strategy and brand and all of those things that get battered around and strip all that out and have a conversation about what do you think we need to do? What do you think’s working around here? What do you think needs to be different? Where should we spend the next hundred grand or 2 million or whatever it is and break it down in those sorts of conversations ahead of the board session. Then you bring a discussion paper. You’re bringing Fred, Mary Matilda’s voice into that meeting. So they’re not feeling that they can, you know, not have a say that’s really important because invariably, if Fred hasn’t been heard of that meeting, he will come back in the side door conversations later on, which then get in the way. So I’d much prefer to understand what I’m looking for, what’s not being said also. What’s the elephant in the room to start the phrase, what’s not being said? What are the taboos here? And have it all come out in a very non-judgmental way? Every business that I go into, every co-op, there are things they do well, things that they’re not doing particularly well, let’s get a full conversation happening and let’s get everyone’s voice heard around the table. So that’s a really important piece. The second piece that is important is you’re going to have often you’ll have people who’ve come from a for profit environment, maybe as a non-exec board member or as a CEO potentially. In that case, how do I help make sure that is they are aware of how this organisation works as against a for profit, the fact that it can take a longer-term, the fact that you’ve got more stakeholders that you’re really looking for, it’s not just about the shareholder or the member, it’s about the community, it’s about the employees. It’s taking a longer-term view across sectors, etc.. So the tightrope, as you say, is just acknowledging that we all come from different perspectives, different backgrounds, and giving a voice to all of those different perspectives. The guy who knows nothing about co-ops will have a wealth of information to give about other areas that they’ve come from, but we need to make sure it’s covered. Similarly, sometimes there’ll be someone who doesn’t know they are a bit conflicted, but they’re coming from a particular their own view or how that’s going to affect my farm or my produce. And so being able to get them to see that maybe there’s a little bit conflict here and make sure that we’re having a conversation that benefits all rather them mucking up about what impact in the short-term that might have on their family or market strategy. So just making sure that through the conversations and developing the strategy that’s acknowledged because it’s real, it’s when it’s not acknowledge it, when it’s brushed under the carpet is when you get it coming up somewhere, anything that you push down will come up eventually. So through a process of talking to members, through a process of making sure that everyone around the table is heard, having a process of going back to members, make sure that all of those potential objections have been heard and are seen to be heard even if we don’t end up where they want to. So they’re the ingredients in any process that I find is really important and to take some time to do it, not to rush it through because we’ve got a AGM or whatever. It’s making sure that they’ve due time and process to have the, you know, the in and out through the membership, through the exec, through the board. At the end of the day, everyone being on the same page, understanding why what’s been chosen is being chosen and understanding what their part in it to execute that.
Michael [00:57:21] Stephen Shepherd, who is the owner of AltusQ, has been my guest today on the Business Council of Co-ops and Mutuals’ Meet the Co-op Farmers series of podcasts. Stephen, you’ve brought a totally different perspective to how we normally look at co-ops and mutuals, not so much from the farming side, but increasingly an important side, the marketing and making sure that they’re in touch with the latest trends and where they’re going for that community as well. Thanks very much for your time.
Stephen [00:57:52] My absolute pleasure, thank you, Michael.
Melina [00:57:59] Stephen Shepherd, the head of AtlusQ, which works on aspects such as advising boards, succession planning and what a CEO may provide in this case with co-operatives. And Michael, in the next Meet the Co-op Farmers podcast, you’re looking at the area of financing?
Michael [00:58:15] That’s right, Melina, while co-ops still look at the primary source of funding through membership and shares, when it comes to major projects, they have to look further. And that is just one subject I’ll be examining in the next Business Council of Co-operatives and Mutuals’ Meet the Co-op Farmer podcast.
Melina [00:58:34] I hope you enjoyed this latest episode of Meet the Co-op Farmers. If you’d like to know anything about setting up or running a successful agricultural cooperative, you can find out everything you need to know at the co-op farming website that’s www.coopfarming.coop, that’s right c o o p for co-operative. Please share this with your mates if you enjoyed this story, we really do want to get the great stories of farming cooperation out there. And remember in a troubled world with all of the challenges but also the opportunities we have, we really are better together. I’m Melina Morrison and I look forward to seeing you on the next episode of Meet the Co-op Farmers.
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