I am always interested in how stakeholder engagement or analysis changes so much depending on your position and therefore your literal perspective. Much of stakeholder analysis and engagement literature is written for the large corporate audience. For instance, a great piece by Neil Jeffery called "Stakeholder Engagement: A Roadmap to Meaningful Engagement," is very helpful, yet pointedly aimed at the large corporate audience. Jeffery says, "It is particularly important in the context of running an organisation responsibly and is integral to the concept of Corporate Responsibility. An organisation cannot be serious about Corporate Responsibility unless it is serious about stakeholder engagement – and vice versa." I agree wholeheartedly with this statement, yet it is not something you would need to say to an enterprise that is embedded in its local context already. This statement would be like a resident of Cleveland that the city has the second lowest median income ( $18,500) among American Cities; the resident would know this fact well as it is part of their daily reality.
I was thinking about how we got to the place where businesses need to be taught how to successfully engage with stakeholders, versus it being the starting place in their business plan development and execution. It largely has to do with the scale of economic entities in our current system, in that many corporations are larger than many national governments and have revenues sizing in multiples of third world country's GDPs.
For an alternative example, lets look at Green City Growers (GCG) in Cleveland Ohio. They are one of 3 new worker-owned cooperatives which are part of the Evergreen Cooperatives, a community wealth building strategy to create jobs, build wealth, and stabilize neighborhoods. For starters, here are Evergreen's community engagement goals:
• Create a shared sense of ownership and responsibility based on the concept of partnership and co-investment between grassroots and institutional stakeholders.
• Build cross-neighborhood connections to promote a unified identity among stakeholders in the neighborhoods.
• Identify, develop, and support local leadership within local residents, groups and community organizations.
• Deconstruct historical barriers between stakeholders, enabling residents to the access the social capital opportunities provided by local anchor institutions, and helping the institutions to be more responsive to the community needs, interests, and priorities.
The Evergreen Cooperative Corporation (ECC) started with a robust stakeholder and community engagement strategy before they were even an operational network of worker-owned cooperative businesses. So, for Evergreen and Green City Growers, stakeholder engagement is the strategy for both launching and sustaining viable enterprises. As you can most likely tell from the goals above, this strategy is also place based or rooted in a particular context. I will now lay out some of my GCG stakeholder analysis, which will also help tell their story.
ECC is the central organization in this strategy, in its operational phase. To start at the beginning though, The Cleveland Foundation is central. In 2005, the Cleveland Foundation was seeking to develop a "Greater University Circle Initiative" which would revitalize the Greater University Circle (GUC) part of Cleveland. This is a grouping of very poor and diverse neighborhoods surrounding what they termed the "Anchor Institutions" of the City. Those being large institutions, with significant economic impact, that are unlikely to offshore their operations. Among these Anchor Institutions were the Cleveland Clinic, University Hospital and Case Western Reserve University. These three institutions represented $3 billion in annual procurement of goods and services. The majority of this $3 billion was sourced from outside the Cleveland City limits, let alone the GUC.
So, the GUC Initiative was launched to address the issue of poverty and take advantage of the $3 billion anchor institution procurement stream opportunity. They quickly partnered with The Democracy Collaborative (TDC) who had expertise in community wealth building strategies. TDC lead a series of community roundtables and events to learn more about the GUC issues from the residents themselves and to gather community leaders to talk about solutions. The key conversations were of course with the anchor institutions. TDC then partnered with Towards Employment, a non-profit which connects low-income folks in Cleveland with jobs and training, thus acquiring a workforce from the GUC. They also partnered with the Ohio Employee Ownership Center (OEOC) for their expertise in creating business plans for worker-owned cooperatives along with specialized training in democratic ownership for worker owners.
The Evergreen Cooperative Corporation was created as the 501c3 that would oversee and hold together all of the pieces and parts of this strategy. The Cleveland Foundation, along with the anchor institutions, invested a hefty sum with Enterprise Cleveland, a community development financial institution (CDFI), to create the Evergreen Cooperative Development Fund. The fund would act as some low cost start-up capital for enterprises such as GCG. Also, as the cooperative enterprises under the umbrella of ECC become profitable, they will return 10% of their annual profit to the fund. This will allow the network of cooperatives to self-replicate by creating their own pool of capital to loan from.
The City of Cleveland was also important in this strategy. They are committed to improving the quality of life in the City of Cleveland by strengthening our neighborhoods, delivering superior services, embracing the diversity of our citizens, and making Cleveland a desirable, safe city in which to live, work, raise a family, shop, study, play and grow old. The City was able to help leverage New Markets Tax Credits as well as HUD Section 108 loans and grants to capitalize GCG.
GCG is a 3.25 acre hydroponic greenhouse operation in the heart of Cleveland. They will produce 3 million heads of organic lettuce and 300,000 pounds of herbs annually. Their key customers are the anchor institutions, which agreed to purchase the majority of their products. Another key stakeholder of GCG, are the worker-owners themselves. This enterprise has no employees as such, because everyone who works at GCG quickly becomes vested as a full owner.
To wrap this all up, stakeholder analysis and engagement can be used not only to achieve buy-in or legitimacy with certain groups, but as the key strategy for successful business incubation and operation as well.
There has been more and more attention focussed on this idea of the New Economy lately, and rightly so. Things in our economic system are not going so well for the majority of folks who rely on it for their livelihoods. We love to think that we are all lone rangers of the west here in the US, but the truth is that we are all necessarily linked to the economic system both in our country and now globally with the effective foothold of globalization, or the New Imperialism, firmly established. The interesting thing, however, is that things have not been going really well for the majority of folks since the begginning of our time here on this continent. There have been times of better and worse, but not good, healthy and equitable times. So, this idea that perhaps we should finally get radical (to the roots) about creating a New Economy is very refreshing!
So what is the idea of the New Economy all about and how do we get there concretely? First I will talk about the idea, then the possible set of tools or strategies to get there. A recent article in Yes! magazine by David Korten called, "What would a down-to-earth economy look like?," sums it up nicely. Korten is basically arguing that we should (perhaps now we must) organize our economy more like nature organizes ecosystems. He states, "An economy is nothing more than a system for allocating resources to productive activity—presumably in support of life. In fact, nature is an economy, with material and information exchange, saving, investment, production, and consumption—all functions we associate with economic activity." And...nature organizes itself in a way that sustains all life and in many circumstances allows it to flourish. Our economic system is supposed to be about sustaining life, but instead has the majority enslaved to the minority as wealth generating machines, all the while poisoning those it is supposed to support and destroying the very ecosystem we all rely on to function at all.
Korten lays out a matrix to help differentiate the charicteristics of nature vs. the Wall Street economy which I find very helpful:
Wall Street vs. Nature:
Defining value: Money vs. Life
Primary performance indicators: Growth, financial returns, flows, and assets vs. Life's abundance, health, resilience, and creative potential
Primary dynamic: Competition to maximize self-interest vs. Cooperation to optimize self- and community interest
Decision-making power: Global, top-down, centralized, and concentrated vs. Local, bottom-up, and distributed
Time frame: Immediate return vs. Sustained yield
Local character: Uniform vs. Diverse
Resource control: Monopolized vs. Shared
Resource flows: Global, linear, one-time use from mine to dump vs. Local, circular, perpetual use, zero waste
Deficits of concern: Financial vs. Social and environmental
Measure of efficiency: Returns to financial capital vs. Returns to social and natural capital
Growth: Infinite growth of money and material consumption vs. A stage in life's endless regenerative cycles of birth, growth, death, and rebirth
We talk alot about using bio-mimicry in manufacturing and process design for more sustainable business, but we do not talk much about bio-mimicry in terms of how to structure the very economic system within which all business operates.
Now, how do we go about doing any of this? I am going to highlight several strategies of the New Economy which are being called Community Wealth Building strategies. The Evergreen Toolkit provides some great literature about both community wealth building and the model of the Evergreen Cooperatives in Cleveland Ohio. The toolkit was authored by the Democracy Collaborative, also in Cleveland Ohio. I want to highlight four of the key community wealth building strategies and then talk to the strength not of any one strategy, but of all four of them when taken together. I would argue that re-developing the economy in each locality, by each locality, along the lines of the following community wealth building strategies, is a powerful and effective way to move towards the New Economy and the "down-to-earth economy Korten layed out.
The first strategy is called Anchor Institutions. It is a term for key institutions in a community. Anchor institutions not only include universities and hospitals, but a broader range of place-based institutions, including cultural and arts centers such as museums, libraries, community foundations and other locally-focused philanthropies, faith-based institutions (such as churches, mosques, and synagogues) and community colleges. In many places, these anchor institutions have surpassed traditional manufacturing corporations to become their region's leading employers, and leading spenders in terms of procurement. This community wealth building strategy is really about building new businesses and infrastructure around the needs of the core anchor institutions in your community. This is important both because the anchor institutions are large, unlikely to pick up and leave, and generally already have a social mission. These institutions currently procure and do business with the business as usual mega corporations which generally do not reside in the same community, do not pay living wages, do not have a social mission, and do not truly build community wealth, but instead extract wealth from local communities and efficiently funnel it up to the few.
The second strategy is about Social Enterprises. Social enterprise refers to non-profits that operate businesses both to raise revenue and to further the social missions of their organizations. These businesses build locally controlled wealth, which helps stabilize community economies, and represents a shift in non-profit operation toward a model of collaborating with ‘client’ populations in community-building efforts. As of 2005, social enterprise businesses in the Social Enterprise Alliance trade association generated $525 million in business-revenue, helping support $1.6 billion worth of mission-related work. These enterprises are on the cutting edge of social entrepreneurship and the creation of new and hybrid structures which will make up the New Economy.
The third strategy is about Worker-Owned cooperatives. A cooperative is any business that is governed on the principle of one member, one vote. The first modern cooperative was a retail co-op founded by 28 people in Rochdale, England in 1844. Originally selling butter, sugar, flour, oatmeal, and tallow candles, business expanded rapidly in scope and scale as the co-op succeeded in elevating food standards — rejecting then- common tactics such as watering down milk. Co-ops today exist in many sectors of the American economy, including banking (credit unions), agriculture, electricity, housing, and grocery stores. All told, over 130 million Americans are members of at least one cooperative or credit union. Credit unions alone have assets exceeding $600 billion. Non-financial cooperatives are also growing. Retail food cooperatives, if grouped together, would constitute the fourth largest chain in the natural- foods industry. Worker-Owned cooperatives are businesses like those above, but they further differ in that they have no employees. Every person that labors to create value for the business, is also an owner of the surplus created by that labor and has substantial powers of governance. The Evergreen Cooperatives are a great example of this type of business.
The fourth strategy is about Community Development Financial Institutions or CDFI's. First formed to combat red-lining in the 1970s (a practice whereby banks would refuse to make loans to minority neighborhoods and would literally draw a red line circling the proscribed area on a map), CDFI's have grown to include a variety of community-focused banks, credit unions, micro-enterprise funds, loan funds, and venture capital funds that have assets of $20 billion, which they use to provide loans and technical assistance to meet the credit and finance needs of low-income individuals, community development corporations, and other community entities. CDFI's are banks run as social enterprises, and have been playing an important role in financing the New Economy.
So, how does this all fit together into an effective and exciting New Economy strategy to build community wealth and mimic natural systems? Korten says, "We would favor local, cooperative ownership and control. Organizing from the bottom up in support of bioregional self-reliance, our economic institutions would support local decision-making in response to local needs and opportunities. Cultural and biological diversity and sharing within and between local communities would support local and global resilience and facilitate life-serving system innovation." By harnessing the green and entreprenurial benefits of social enterprises, organized structurally as Worker-Owned Cooperatives to democratize decision making and the creation of wealth, the functional units of the economy, businesses, take on a more local, resilient and equitable nature. Then, as with Evergreen, if you center new worker-owned cooperatives around a CDFI like financial institution, the enterprises can be creatively and more democratically funded, and you can "entrap capital" produced and stored by these businesses for future use in funding new cooperatives. This capital becomes community capital controlled by the very enterprises that created it and store it (by storing I simply mean when you have capital in a short or long term account in a bank) for the community to use in democratic and sustainable development. The Anchor Institution peice comes in at the very heart and begginning of this strategy as initial worker-owned cooperatives can be created to better provide the materials, supplies and services which the anchor institutions are currently sourcing from extractive corporations outside of their community.
This was a whirlwind tour of what the New Economy can look like both theoretically and on the ground. More to follow in due time.
