Monday, February 22, 2010

The Seven Cooperative Principles: How Committed Are We?

I’m quickly learning that any calls for credit unions to pause and rediscover their roots might prove to be a futile exercise if we credit union folks don’t also stop to consider how much we are truly willing to embrace and actualize the real essence of being a cooperative. I’m referring to the Seven Rochdale Principles associated with the cooperative business model (

How committed are we to the principles, or do we find ourselves picking and choosing what fits best to meet our own particular needs?

I’m willing to bet that many draw a sharp distinction when it comes to credit unions versus cooperatives. It would be cool to hear arguments supporting the thesis, but quite honestly, is there really a distinction? In my mind’s eye—no.
Yet, there have been numerous occasions when I’ve heard tenured credit union officials shutter from sharing their thoughts and beliefs about co-ops and our defining principles and values, acting as if such discussion was reserved for the hippy communes and flower children of the ‘60s.

Why is that so? A wealth of factual evidence supports the cooperative business model and everything it stands for—its principles and values—as being a solid and successful manner of conducting business.

Such success accounts for the move by the United Nations to recognize the valuable attributes and contributions flowing from the cooperative business model, and the value we bring to both the marketplace and lifestyle of millions. The UN’s proclamation that 2012 be The Year of Cooperatives sets the stage for all the eyes of the world to look at us—yes, credit unions as well. What will folks see?

In the Nov/Dec 2009 issue of the Cooperative Business Journal (, Dan Mica, President/CEO of the Credit Union National Association, talks about the relationship between credit unions and cooperatives in a full-page article. One bright spot he points to is the Cooperative Alliances Committee, formed to foster mutually beneficial business- and advocacy-related partnerships between credit unions and other cooperatives.

Just imagine how much we all could benefit and grow from such partnerships? For instance, imagine the power of one unified cooperative voice in all cooperative-related advocacy initiatives.

So what’s stopping us?

Mr. Mica summed it up quite directly, saying, “The Cooperative Alliances Committee has discussed that more of these partnerships can form if we overcome a persistent hurdle: the lack of a shared identity between credit unions and other cooperatives. I am convinced that if credit unions and other co-ops had a greater recognition of our shared principles and history, we would see greater interaction between these cooperative sectors.”

And, “greater interaction” for me spells out greater prosperity for us all.

Mica strikes an important chord. So, how committed are we to the Seven Rochdale Principles? Are we willing to accept everything that they stand for?

The question reminds me of a story I heard quite some time ago. It helped me to better understand the price of commitment and how much further I had to go attain the price.

Remember a high-wire acrobat from back in the 70s named Karl Wallenda? He was the founder of The Flying Wallendas, an internationally known daredevil circus act famous for performing death-defying stunts without a safety net.

Well, on one of Karl’s famous walks across a high wire strung between two towering structures, a young fan named Peter was on the ground standing among the crowd, viewing Karl’s carefully calculated steps across the sky. In watching, he became so mesmerized and excited by Karl’s skill that he sought him out after the walk, proudly professing his deep esteem for Wallenda and the unique abilities he embodied.

“Peter,” Wallenda said, “If you really believe I’m as good as you say, come back tomorrow when I plan to perform the walk again. This time I’ll be pushing a wheel barrel and I’d like you to be in it.”

Now ask yourself, “How committed am I to the Seven Rochdale Principles?

I know I still have work to do!

Monday, February 8, 2010

The Time Is Right To Re-Discover Our Roots

When future generations of credit union folks look back to the Great Recession of 2009and the havoc it created for credit unions everywhere, what do you think will be their ultimate assessment?

Now lest we forget, credit unions are financial co-ops based on a business model predicated by seven cooperative principles. Membership is voluntary and without discrimination. Co-ops are democratically controlled—-one member, one vote—-formed to be an aggregator where the benefits of membership come in the form of lower fees and better rates, not soaring profits. Co-ops are autonomous, self-help organizations that educate their members, cooperate with other cooperatives, all the while focusing on member needs and demonstrating a concern for the community.

But what was the reality of U.S. financial cooperatives during the first decade of the new millennium?

OK, let’s not kid ourselves. Can we be honest? Although credit unions still demonstrated a strong presence with the underserved, I am of the opinion that the push was on to see where the best yield could be achieved on many credit union investment portfolios. One investor was shopped against the other to see which could deliver the higher yield. All along, we failed to realize the consequences induced by the competition this practise created, affectionately dismissing it as co-opetition.

All the while, credit unions focused their attention on the bankers who were constantly trying to undermine credit union business, pushing for limits on the range of products and services that we might offer, in addition to advancing calls for taxation.

Bankers, increasing regulations, decreasing margins, and now the need to compete for members with the credit union up the block all mounted a formidable pressure on everyone, prying our focus from where it rightfully belonged——on the cooperative values and principles that are at the heart of credit unions. Why should we care about a national branding strategy we asked ourselves when our first obligation is locally to our members and the success of our own credit union?

In retrospect, it’s ironic to think that the more our business flourished, the more our behavior became like the bankers we so firmly abhor. To me, it appears we as an industry drifted from our real intrinsic nature as defined by those seven cooperative principles.

So, I only can wonder if future generations will be of similar opinion. Today, somehow, some way, I believe we have to find our way back to those principles and values that truly distinguish us within America’s financial services marketplace. I believe our survival depends on it. Wouldn't you agree?