1. In 2000 Giam Swiegers migrated from Pretoria to Australia where he took up a position as head of the Brisbane (Queensland) branch office of Deloite Asia/Pacific. In 2002 he moved to the head office in Sydney and in 2003 he was elected Managing Partner, and re-elected in 2006. In an interview with Kate Burgess for the Business Review Weekly he says: 'That people tend to underestimate the differences in doing business between the two nations, but that landing in Brisbane first helped him to adapt. "There is almost nothing that is similar about doing business in South Africa," he says. "Australia is a lot more competitive than people realise—a lot of people think that the business environment is laid-back. I was fortunate when I went to Queensland. You have to pass the 'good bloke test'-relationships are very important."'

When he was elected Managing Partner in 2003 the business was losing money fast. In his first three year term he had the business restored to high profitability under difficult conditions. The key to his success was a fundamental change in corporate culture.

Quoting from the Kay Burgess article:

'To do this he had to enact sweeping cultural changes to the rigidly hierarchical norm: "We changed the way partners treated their staff. The theme we used was 'ours to inspire'."'

2. John Siddons owned a company making high quality hand tools, with a unique corporate culture in which the relationship between the owner and the workers was based on mutual responsibility and authority.

• He organised his workers in small teams, each team responsible for a specific task.

• These teams were given output goals to achieve and, with this, an annual budget for materials and equipment requirements. They had full authority to order whatever they saw as needed without having to go through a central purchasing system. They had complete autonomy with accountability for achieving the goals.

• The goals and budgets were set by the Board of Directors, chaired by John Siddons, but with a majority of the Board consisting of representatives of the workers. In an interview I had with him, Siddons said: "I don't know why I cannot convince my fellow industrialists that this is simply good business practice. In all the years I have been operating this business I have never lost a minute's time through strikes or stop work meetings of workers. They feel it is their company because I treat them as though it is."

Nowhere is this issue of corporate culture more crucial than in cooperatives. What makes co-operatives unique is the unique values and working principles that distinguishes their very corporate identity.

The Alternative Way of Doing Business

The two business enterprises we have looked at operate on the profit model, the goal of which is to provide goods or services to the public as a means of generating profit for the owners, usually shareholders.

Co-operatives operate on a fundamentally different business model. The International Co-operative Alliance definition of a co-operative is:

"...an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise."

The ICA definition of basic co-operative values is:

"...the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others."

No doubt many enterprises operating on the profit model would claim to have similar ethical values, though it is not hard to find examples of profit taking precedence over ethical considerations.

The story of Kenya Breweries and CocaCola

In 2008 Kenya Breweries (KB), a highly successful enterprising Kenyan owned business, launched a new non-alcoholic beverage in a bid to diversify into this market that has long been dominated by the multinational giant CocaCola. The result was a significant drop in sales of CocaCola brands.

In an attempt to protect its dominance, CocaCola asserted that the claim that the new beverage is non-alcoholic was deceptive-a claim given some appearance of credibility by the identity of its maker. The reality is that the CocaCola counterattack was dishonest trade practice.

The KB beverage has a pineapple juice base and any market beverage containing fruit juice will unavoidably have an negligible small amount of alcohol. For this reason the standard definition of an alcoholic beverage is one that has more than a stated percentage of alcohol. In these circumstances KB did not need to defend itself since the Kenyan government publicly confirmed the validity of KB's claim, though the dishonest tactic of CocaCola may have muddied the waters somewhat.

On the other hand, the whole package of values is basic to the goals of co-operatives. Co-operatives need to make profit in order to operate in the commercial world but profit is not the primary goal but subsidiary to these core values. They are the very heart of co-operatives. It is this that makes co-operatives distinctive: the alternative way of doing business.

Lessons from Co-operative History

Co-operatives are governed by seven basic principles that are guidelines for putting these values into practice. Following these guidelines is fundamental to the success of any co-operative.

Before looking more closely at these principles, let us take a quick look at two examples of spectacular co-operative failures caused by failure to follow these values and guidelines. In one case, the failure is followed by an equally spectacular rise from the ashes.

Kenya Creameries Co-operative (KCC) was founded in 1925 during the British occupation of Kenya, its members were then white dairy farmers. After independence Africans replaced the white dairy farmers, in the process comprising the membership of KCC.

Having been excluded—as were all other Africans—from commercial activities, they knew nothing of the operations and structure of a co-operative. The Board of Directors, now comprised also of Africans who should have known better, failed to implement one of the fundamental principles of co-operatives: education of members.

Consequently, the dairy farmer members thought it was like what was to them an entirely new political system in which people vote for a leadership who then have the authority to run things as they see fit without any input from those elected by them.

At first, all went well with major growth occurring during the period 1966-1988. By 1989 KCC was selling 1 million litres of milk a day, with purchases from farmers reaching a peak of an average of 1.4 litres per day.

During the 1990's facing stiff competition from new commercial operators and a Board of Directors that was both corrupt and incompetent, it was all downhill. With a serious loss of income because of the inability of KCC to pay for their milk, a recognition of the malpractice of the Board and, at the same time, a realisation of their rights as members, the farmer members took action.

In a move that received strong support from Kenyan President Moi, the members sacked the Board and appointed a new interim committee to try to find a way to rescue the operation. However, by then there was such a mountain of debt that the Kenya Commercial Bank, which held the debentures relating to the debt, put KCC into receivership, installing the accounting firm PriceWaterhouse Coopers as receiver/managers.

In 2003, a government initiative enabled the farmers concerned to register a new co-operative which they called "New Kenya Creameries Co-operative Ltd" (New KCC). A little later New KCC became operational when it made a successful bid for the KCC physical assets including the all important processing plants, when the receivers wound up the affairs of KCC with a public bid for these assets.

It has now regained and even surpassed its old position as the market leader. It is the largest business entity in the dairy industry in East Africa, with a wide range of products including fresh milk, cheese, long life milk, both flavoured and unflavoured, fermented milk both flavoured and unflavoured, yoghurt, ghee and powdered milk both whole and skimmed variants. And it is still developing more products in line with its aggressive marketing strategies.

As befits a co-operative, it is able to claim that its products are all of guaranteed quality and taste, perfected over time, and made to the highest international standards.

THUS A PHOENIX ROSE FROM THE ASHES SOARING TO NEW HEIGHTS

The Shepparton Preserving Company was established in 1918 as a co-operative cannery operated by a group of fruit farmers in the area around the regional town of Shepparton in the Australian state of Victoria.
The SPC brand soon became known throughout the nation as a symbol of quality canned fruit. Few would have known the full name of the co-operative, but the brand was a best selling brand on the shelves of every shop of any size.

In the last decade of the 20th century, facing strong competition from companies operating on the profit model it faced bankruptcy. The farmers, who were the members of the co-operative then decided to invite the cannery workers to join them as co-operative members.

They said: "Since it is the core of the Shepparton economy, if the cannery closes, not only you, but the whole town will suffer. If you join us in a bid to save the cannery, you will need to take a reduced pay in the short term just as we will have a reduced income, but in the longer term you will share in the profits".
The workers readily agreed and the result was that, in a short time, the cannery was back at the top of the market.
The fundamental cause of the failure was not the more competitive market, but the failure of follow two important principles of co-operatives:

1. As a cannery business the cannery workers should always have been members of the co-operative since it was a producers' co-operative and they were the ones producing the marketed products. The farmers only supplied the basic raw materials.

2. Borrowing money from commercial banks was contrary to the cooperative principle of self-funding, only accepting financial support on the co-operatives own terms. Banks only lend on their terms!

CO-OPERATIVE SUCCESS DEPENDS ON FOLLOWING CO-OPERATIVE PRINCIPLES

THE SEVEN CO-OPERATIVE PRINCIPLES

Time tested guidelines for a successful co-operative

1. Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2. Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organised in a democratic manner..

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4. Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5. Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public-particularly youth and opion leaders-about the nature and benefits of co-operation.

6. Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7. Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

Education and Training

This may well be both the most important and also the most challenging issue for South African co-operative development. No matter how highly qualified or experienced persons may be for operating businesses based on the profit model, they are not able to provide education or training for co-operative operations because of the fundamentally different way of doing business. They are more likely to hinder rather than help co-operative development.

Yet, if the potential of co-operatives is to be realised in South Africa, it is imperative that such training and education is provided, This is the challenge.

There are currently two major sources where this can be obtained; the long standing Co-operative College in the U.K. and the online version being developed in Australia. In themselves, these would not serve the present need of SA.

As a viable alternative for the initial phase, the Faculty of Management and Commerce at the Univeristy of Fort Hare (UFH) is planning the development of a printed "Training Manual" that draws on the materials of the existing international co-operative movement's training and education programmes; in particular, the long established Co-operative College in U.K. and the recent intiative to produce an online version being undertaken by two of Australia's biggest cooperatives, motor spare parts co-operative, Capricorn, and Murray-Goulburn Dairy Co-operative, the largest supplier of dairy products in Australia.

These materials would be provided to co-operatives at cost. UFH does not plan to provide training but to provide materials that South African co-operatives can use to do their own training. These materials will be in English, and where co-operatives are formed with no member with the required fluency in English, they will be encouraged to form an alliance with one or more other co-operatives with members who have this competence and can deliver the training in the language that their members understand best.

Operational Efficiency

Marketing Strategies

1. Willing to learn from others with relevant experience As a food and beverage store it stocks a large range of cheeses. His knowledge in this area was virtually nil. As a result his cheeses, which were of the highest quality, were going mouldy even though they were kept refrigerated. His cooked meats were keeping well, so he thought the problem was with his suppliers. As someone who knows cheese, I suggested the problem was that he had the temperature set incorrectly for cheese. He promptly acted on my advice with the result that he averted a disastrous plunge in customer confidence.

2. A range of quality products, many not available in the supermarkets This strategy fitted the customer profile of the area. It includes many who want to be able to buy these, but could not get them locally if his shop was not there. These people are attracted to his shop.

3. Efficient, personal service Every customer is treated as a person, not merely as a number passing through a supermarket checkout. His staff are well trained to treat customers in this manner, and he himself readily steps in to serve a customer if necessary.

4. Sensitivity to customer feedback If a regular customer asks for a product which he does not stock he readily responds by making every effort to source that product and add it to his stock. I have only known him to fail once, and that was because one of the supermarkets had an exclusive agreement with the only supplier.

5. The highest quality goods at competitive pricing He achieves this by keeping his profit margins low. Many small businesses make the mistake of thinking that they need to add a substantial profit margin because of their small customer base. Ximing implements the right strategy by cutting his profit margins to the bone and, as a result, building up a strong and loyal customer base.

In today's market, co-operatives need to be flexible, ready to improve their performance promptly in response to market changes that may threaten them.

Co-operation among Co-operatives