With the Platform Coops Now! course and accelerator about to start, it is timely to reflect on some great work done by Megan Larcom, Jenny Weissbourd and Jeremy Avins.
They undertook a study of the alt-labor movement – being those organisations and campaigns working outside of traditional bargaining structures. They looked at how alt-labor is evolving and where it is succeeding.
High touch versus high tech – the challenges of organising at scale
The table above captures the lens through which they viewed this landscape. Essentially they categorised organisations by the scale of their activities – to what extent they were high touch versus high tech.
To explain their approach:
Work shapers – are those organisations that facilitate or restructure labor’s role in the workplace, giving workers a direct role in governance, management or ownership. These co-determination strategies are high touch as they are very much about workers and their relationship with the management of specific companies. For example, Lobster 207 – a business very similar to our very own Geraldton Fisherman’s Coop.
Worker centres – are also extremely high touch organisations that are focussed on information and training of labor. Eg. The Laundry Workers Center
Coalition builders – organisations that are serving workers day-to-day but by working on systemic change, often drawing on traditional organising approaches. The Justice for Janitors campaign led by the SEIU is an example.
Platform connectors – organisations drawing on scale as their source of power, as they are set-up as platform-based intermediaries. Workers can share experiences and build campaigns at scale. For example, the WorkIt app that grew our of Our Walmart and has been adapted in Australia by the the United Workers Union for care workers.
Information equalisers – organisations that help workers overcome information asymmetry. They give the example of https://www.glassdoor.com.au/ – a jobs matching platform similar to Seek. Not sure that I agree that these companies are alt-labor organisations – unless they are platform coops (but more on that below).
A key challenge then is discovering how to blend the high touch and high tech.
The union-coop model – Lobster 207
Lobster 207 is a great example of the union-coop model, as it’s both a local lodge of the IAM union and a marketing coop that provides members with a way to influence industry and to capture more financial value from their labor.
It started in 2012 in response to a crisis, as coops so often do. Lobster prices were at a level that made being a lobsterman simply unsustainable. A serendipitous connection led to the introduction of the IAM who approved an ‘unusual organising campaign’. It was unusual because the lobstermen were self-employed.
The campaign first involved flying the lobstermen to attend training by the IAM in organising and political tactics with the aim of equipping them to form their own local and take power back from the industry. In Sep13, with legal help from the IAM, Local 207 was formed. At the same time the Marine Lobster Union, a statewide marketing cooperative, was incorporated. This enabled the lobstermen to be exempted from anti-trust provisions, and become price-setters rather than takers. From 100 members in 2014, they grew to 550 members, or 10% of the industry, by 2016.
Their success can be attributed to two key factors:
Political – the union was able to help them organise, for example, training members in group bargaining strategy, and enabling them to lobby for specific legislation and run candidates for industry bodies.
Economic – the cooperative business was able to command higher prices and with their group buying power to acquire their own wholesale business (funded by the Bank of Labor and IAM locals).
Lobster 207 is a shining example of the union-coop model where a cooperative becomes a powerful mechanism for worker voice. The alignment of interests across members as business owners means that they can have greater control over their work while leveraging solidarity to increase their bargaining power.
Where are the platform coops?
There is a very large platform coop shaped hole in the research. To be fair the paper was published in Jan18, and as platform coops are still very much an emerging sector their profile as alt-labor organisations at that time was easily obscured from view. So let’s see how they would fit into their nomenclature:
Platform coops as information equalisers – The idea that a privately-owned labour hire platform, that generates its revenue from employers, could be considered an alt-labor organisation is deeply flawed. However a worker-owned platform does offer a very clear mechanism for workers to address issues such as information asymmetry. Sadly, we have a current example of this in Australia where the $500m Working for Victoria Fund, that has been tasked with addressing the unemployment crisis, has chosen to exclusively partner with a privately owned labor-hire platform. Workers, and the organisations that represent them, are unable to access any of the information that is being aggregated by this platform. This is a striking example of the difference between a platform coop that is owned by its members and aligned to their interests, and a privately owned platform that will always aim to maximise returns to its shareholders.
Platform coops as platform connectors – If our social media were owned by its users, then they would be the perfect platform connectors. As they are not, there is a very real and significant role for trade unions to use their resources to create the platforms that can play this connecting role. The WorkIt app is a great example of this. A platform coop is the perfect operating structure for unions and other organisations to aggregate their resources and collaboratively create the technologies that we need to build the labor movement.
Platform coops as work shapers, worker centres and coalition builders – One of the most exciting things about platform coops is that they offer the promise of being able to blend the high tech with the high touch. As member-owned businesses, cooperatives are designed to promote individual agency while aggregating group power. This means that a platform coop for cleaners can both enable creation of a ‘quality assured’ brand at scale (and thereby scarcity) while also enabling cleaners to create localised nodes where they can work as local teams. The Up&Go model in Brooklyn is a great example of this.
The future of the union-coop model
The opportunity for the labor movement to grow around the union-coop model is profound. As the paper concludes, the union-coop model shows:
unions can support self-employed workers through a coop
a sustainable economic approach where union dues are paid out of business profits
the value of union political organising experience, tactics and training
They conclude that “A new labor movement requires collaboration not competition” between the old and the new… and I would add between our trade unions themselves.
I’d recommend investing 15 mins to watch their video – here and if you’re keen their research can be found – here.
For our first interview in the Ethical Fields co-design of funding for communities, we were very lucky to have Anna Guenther, Chief Bubble-Blower for leading equity crowd funding platform, PledgeMe join us.
ABOUT OUR GUEST
For those of you that don’t know Anna, she is the co-founder of PledgeMe, New Zealand’s first crowdfunding platform. Since launching, over 1,400 creative, community and entrepreneurial campaigns have raised almost $50 million through PledgeMe. Campaigns have ranged from Ethique who raised half a million dollars in ninety minutes from going to the public, through to craft beer company Parrotdog raising $2million in two days to move into their new brewery. Anna has also worked for the New Zealand Government, MIT and Harvard, and completed her Masters in Entrepreneurship with a focus on crowdfunding.
This TED talk “The Anti-CEO Playbook” – where the founder of Chobani, Hamdi Ulukaya, tells the story of buying a yogurt factory that was being closed down by Kraft and how it led to the revitalization of a community and creation of a global powerhouse.
Community is the keystone – The success of PledgeMe, and really any crowd-funding campaign, is the buy-in from its community. The role of those leading a campaign is to activate their tribe that believes passionately in its objectives.
Government is the enabler – The role of government is to encourage and nurture community-led actions through education and targetted financial support. Too often their actions hinder rather than promote community-led campaigns.
Land as a stakeholder – New Zealand now legally recognises land and rivers as natural persons. What if land had seat at the board table? How would the conversation change?
BARRIERS TO OVERCOME
Unhelpful regulation – Although intended to unlock regulatory hurdles, the requirements for equity crowd-funding in Australia are formidable. The PledgeMe checklist for enabling new issues is 10 times longer in Australia than in New Zealand. It significantly drives up costs in terms of time and dollars, and undermines the effectiveness of equity crowd funding.
Misplaced grants – Government has a key role to play in supporting the public good aspects of some community projects. But too often government defaults to grant programs that are administered by a bureaucracy trying to interpret government policy that in turn tends to lag public demand. Better to leverage the wisdom of the crowd and co-invest with communities that are investing with their feet (and wallets) in the things they passionately believe in.
Understanding impact – PledgeMe struggled to understand how to accommodate financial and non-financial goals in their decision-making with respect to approving projects for their platform. They settled on a target of 50% of projects must include non-financial impacts in their objectives (currently over 70% have them). Then there is the question of how to measure impact – there isn’t a dominant standard, and how do you manage ‘data fatigue’ and our very human need for a narrative.
SEEDS OF HOPE
Shared superpowers – communities tend to grow around a successful business or model – this could be an anchor institution or shared productive activity. So Superpowers will come from building on what already exists and what the community can rally behind.
From the Founder, Jenny Doran…
“We’ve also created what many call the “Disneyland of Quilting” right here in Hamilton. Our darling little town now attracts visitors from across the globe. Heck, we just had a bus full of quilters from Australia pull into town who were absolutely delightful! With 12 quilt shops right on main street—each featuring a different fabric theme—you’re guaranteed to find quilt fabric you’ll fall in love with! We even have a spacious Sewing Center for quilting retreats, great restaurants, the world’s biggest spool of thread, and a place called “Man’s Land” full of comfy reclining chairs and TVs, where weary folks can stop in and take a break from shopping (and even play a round of pool!) Hamilton, Missouri, (aka Quilt Town, USA) is a must-see destination for any quilter and I can’t believe I live in such an incredible place!”
Community-powered infrastructure – There is plenty of opportunity to use equity-crowd funding in the infrastructure space, but it has not been widely adopted yet. This is partly a function of structure – only public companies can raise capital under the equity crowd funding rules. In funding infrastructure, there is always the question as to where the line is between government versus privately-held ownership. Somewhat depends on the absolute breadth of the public good – is there a community that has a common cause or is the driver based more on place or location. Hamburg water utilities…
Raised just over $2m to acquire the Food Connect Shed, a warehouse that would become a local community hub for food. Its vision is to create a world where everyone has access to healthy, fresh, ecologically-grown food that is fair to growers, eaters, and the planet. And according to Rob Pekin (Co-Founder) – “In order to fix our broken food system, the infrastructure needs to be owned by the public.” In keeping with this vision, it’s equity owners are called ‘careholders’.(Check out the PledgeMe case study – here)
Network of trust – Equity crowd-funding works best when there is a tribe of believers that are able to rally around a campaign. The average single investment in a campaign is $2,000, while contributions are often limited to a maximum of $10,000. This means campaigns tend to build on wide community support. This creates it own advantages as the raising is based on a network of trust. The leaders of a campaign will be known to the community from whom they seek support. That community will in turn spread the word to their friends and family. These trust based relationships serve to de-risk the projects.
When Mondelez announced it was closing the Cadbury Factory in Dunedin, New Zealand, a group of local citizens decided something must be done to keep chocolate making skills and jobs alive in the city. With the help of PledgeMe and Firebrand set up the “Own the Factory” web landing page to gauge public interest in investment to retain confectionary and chocolate manufacturing in Dunedin. During the two week campaign considerable national and international media coverage resulted in $5.7 million pledged. Subsequently, the Own the Factory campaign teamed up with a the Otago Chocolate Company to create OCHO – raising $2m via PledgeMe from the local Dundedin community.(Check out the campaign here)
On June 1st, the Platform Coops Now! program starts. It’s a global initiative to disrupt the extractive economy model, by sparking the creation of digital platforms that can be owned by the people that use them.
Conceived by Mondragon University and The New School, the course and accompanying accelerator program to be run by Incubator.coop, are designed to first educate participants about platform coops, and then via an accelerator program to develop and build platform coops in Australia.
How it works
The course starts on 1 June, when Trebor Schulz from the New School will lead a global cohort through four weekly sessions that walk through the emerging opportunity around platform coops.
Then at the completion of the short course, participants can go on to form teams to design a platform coop – and apply to undertake the accelerator program.
The program will accept up to 8 teams with at least 3 people in each team. The aim will be first design and document an executable business plan for the proposed platform coop over a 4 week intensive that is being coordinated by Mondragon University. Then over the next 12 weeks to start to build and grow the platform in the market.
It’s likely that the initial concepts will be draw inspiration from current business models – adapting existing platform coops to Australian environment or adapting existing platforms to the co-operative model.
For example, there is already interest around creating a platform coop for delivery drivers. There is a current operating platform called CoopCycle that has been developed in France that enables delivery of meals from restaurants. This could be converted to a medical & health store supplies model where the drivers own the platform and offer their services to pharmacies and retail stores.
Why Platform Coops are a better alternative
Platforms rely on scaling a their digital services. The value is created by each additional person that joins the platform, and the typical business model relies on the fact that the relatively fixed operating costs can create very large profit margins once a large enough scale is reached. In a very real sense they are a form of infrastructure, the digital equivalent of the roads that connect us. Given the technology is not a huge barrier, it is the network where the value resides.
Member-owned businesses have a natural affinity with networks. Not only does the recycling of profits back to members create a clarity of purpose that underpins their long-term stability, networks are native to their model. Members gather around a common purpose and for this reason, they are an ideal structure for scaling a platform coop.
Join the Platform Coops Now! program
So we’re looking for teams that are interested in creating platform coops that can be owned by cleaners, carers, agricultural workers, delivery workers, graphic designers and tech workers, fitness instructors. Platforms that can be owned by their members and where they can offer their services to the customers without a middle-man taking a slice. If you’re interested, please click through to register.
There is a connection between your hands, heart and mind, when you begin to work the soft, wet material. As you push your thumbs in, and as it squishes between your fingers, the raw earth transforms your attention. You are drawn into it.
Then forms begin to emerge. The process of moulding, caressing and cajoling the clay to follow your mind’s eye takes you out of clock-time and into a longer moment. It is a way of creating space to breathe and reflect but through an active doing. It’s yoga for the mind.
Make a Bell Person workshop
I helped my partner, Erin, with a clay workshop recently that was part of a team-building day for 40 people that work in a domestic violence support service. They have incredibly challenging work and it was an absolute pleasure to share this time with them.
We hadn’t run a workshop for quite so many people before, so were a little nervous about whether it would work at this scale. Erin introduced the workshop and why it is important. It is more than an exercise with play-dough. It is intended to make a space through which each of them can create an expression of self. A celebration of their life-changing work. And that by connecting with raw materials, and re-connecting with their senses, they can create a deeper relationship with themselves and perhaps with others.
Working with clay is a great process for those of us who find it hard to let go. After we had them make something so as to understand the basic techniques, they got to squish their creation back into a ball. (Now that is the most rewarding form of creative destruction!) Perfectionists soon learn that there is no right or wrong. It’s a trek through an uncharted wilderness with no real knowing what we will find at the other end.
Over the next two hours, everyone giggled and cursed their clay creations to life. Their objective was to create Bell People. These are the little folk that Erin creates as part of her practice. They tend to express the inner murmurings of our emotional landscape. And as physical objects, they provide a means of expression that is richer than can ever be expressed in words. It’s an emergent experience both for the creator – and the Bell Person.
And by the workshop’s end a troupe had emerged. A parade of Bell People, each one adding a new and unique chime to the sounds of Footscray…
You can meet the Bell People for yourself in the following very short animation. And a very big Thank You to everyone at Women’s Health West!
If you are interested in finding out more about Erin’s workshops – you can head over to her website erinswindow.com or via instagram @erinswindow.
Co-operatives tend to mirror their cultural context. Their democratic nature allows them to escape the homogenising demands of capital and to focus on the different ways value can be delivered to their members and communities. So it was not so surprising that the annual Platform Co-operativism conference in Hong Kong was notable for the many faceted ways that platform co-operatives are developing across the globe. They may have a common gene pool but the way it is expressed is very much a reflection of the community that they serve.
Defining the space
A common definition of platform co-operatives is still emerging.
Trebor Schultz (the New School) as the primal protagonist of the Platform Co-operativism movement spoke to the very tangible ways that work is being done to build momentum. This includes projects around the Platform Coop Development Kit that are at the vanguard of change to create open-source software by industry sector and by common function. It’s a very utilitarian definition of platform co-operatives.
In line with these developments, Danny Spitzberg (CoLab) suggested that perhaps it makes more sense to talk about ‘co-operative platforms’– that they are not a new type of co-operative but a specific way to organise a technology platform. They represent the opportunity for the value of a platform’s network, whatever its size, to be retained by its users rather than passed over to profit-motivated shareholders. This makes intuitive sense, as unicorns can only exist if they are able to capture the lion’s share of the network value they catalyse.
The nature of the network was also pivotal to Michel Bauwen’s (P2P Foundation) thinking around the trends he sees emerging in the co-operative sector. In a wide-ranging talk, he mapped co-operatives against two axes – with distribution of value contrasted against their reach:
This approach takes a narrow definition to ‘platform’ – limiting platform co-operatives to the ‘for-profit and centralized’ quadrant – which then enables Michel to distinguish between other network enabling technologies:
Platform coops – are primarily digital marketplaces
Ledger coops – are technologies that enable distributed capitalism
Protocol coops – are open design repositories for common infrastructure development
Cosmo-local coops – are urban commons projects that can use shared technology
For the purposes of this note, we’ll adopt a simple definition that co-operative platforms (aka platform co-operatives) include all those co-operatively owned technologies that enable communities to create online networks.
There is a willingness for co-operatives to share platform technologies across borders.
One of the benefits of being a global conference is that could draw on the latest thinking and developments from a wide variety of industry participants. And as co-operatives are pretty good at sharing, it offers a way for the sector to foster development across borders.
But while platform technologies are generally portable by nature, the way they can be shared will depend on the economics and structure of the networks that they enable. So there were examples at the conference of open-source codebases, hosted software-as-a-service options; peer-to-peer licensing for sharing of code between members; and, proprietary closed software platforms that were owned by cooperatives.
Similarly, the reach of the communities that use a technology can define how platforms can achieve scale and therefore the way they might be shared – from platforms that are defined by an industry or function and that can be adapted to meet local needs, to placed-based co-operatives that seek to take advantage of common infrastructure platforms.
We can see these factors being played out in the different co-operatives that presented at the conference.
This approach is exemplified by the work that the New School is doing with SEWA to create a platform to assist beauty workers in India. Similarly, CoopCycle has created open-source software that enables worker coops to create their own local bike sharing schemes. By solving for a specific problem and making the solution open-source, it is hoped that these platforms can be picked up and developed to meet similar needs in other parts of the world.
Open source software has it limitations, particularly as it still requires that each instance is customised and maintained to meet local needs. For this reason, another way of targeting scale efficiencies is by creating hosted solutions that offer more plug’n’play type functionality. For example, Sharetribe – which enables communities to create their own labour or product hire markets – is a co-operatively owned platform that offers hosted, customizable services.
Special purpose platforms
And then there are the platforms that offer services that meet the specific needs of communities of interest. Their technology platforms tend to be highly customised to the circumstances and target scale at the nation-state level. For example, a worker co-operative like SMart offers very sophisticated back-end support for skilled freelancers. It needs to be specifically customised to the regulatory framework of the region it operates in. Similarly, NeedsMap – which connects donors with communities in need – maximizes its effectiveness when it can match needs on a country-wide scale.
Finally, there are the platforms that are developing capabilities that can support co-operatives regardless of their purpose or structure. These are platforms that are aiming to create common infrastructure. So for example, Coop Exchange is aiming to make it easier for co-operatives to raise funding. Similarly, Geddup is being developed to support distributed organising and governance in co-operatives. Interestingly, Geddup takes a blended approach to sharing the technology as it is being created as an enterprise coop where its members are large organisations that require their own instances, and it also makes a hosted ‘community’ version available to smaller organisations.
The sharing of value across different stakeholders remains a challenge for the sector.
One of the underlying themes of the conference was the question of how value is shared between founders and investors of a platform on the one hand, and its users on the other. It’s a foundational issue. Notwithstanding their democratic approach to the distribution of value, platform co-operatives still need to find ways of attracting the resources required to foster development.
To resolve this challenge, some platforms have sought to align interests by promising to share surplus with founders and investors subject to pre-defined constraints. For example, Fairmondo’s model is to allocate slices of equity to founders and investors, but to also place limits around individual shareholdings, salaries and dividends paid. Notably, Coop Exchange is seeking to free up investment in the sector by promoting a standardised methodology for sharing value based on the Fair Shares model that rewards investors, founders and users.
These concerns are not just limited to multi-stakeholder co-operatives. The sharing of value between members based on patronage or other metrics can give rise to wide dispersion of returns. The debate around these issues suggests that this remains a key focus for platform co-operatives to address both at their founding and as they grow.
There is plenty of scope for the cooperative sector to work with data.
The conference showcased some cracking examples of how data sharing and analytics can change communities:
PetaJakarta showed how using open source software (Cognicity), they had been able to change the way Indonesia could respond to flood events
Shanzhai City is developing tools to measure impact of social investing that can be embedded in the funding structures themselves via smart contracts
Datavest illustrates a data cooperative approach to helping members realize the value of their data
Notwithstanding these examples, there remains an underlying concern about how data is managed by co-operatives and the potential role of emerging technologies in augmenting this. In particular, there was some deep suspicion around blockchain approaches to solving problems.
My view is that co-operatives, with their focus on individual agency within a collective structure, are ideally placed to help with the transition to a data-driven economy. The big technology companies are already well advanced in developing algorithmic ways of interacting with the disempowered consumer. Co-operatives that can understand and develop event-driven solutions, while still enabling members to retain control over their data, offer a very healthy alternative approach.
The conference was a brilliant hotpot of fresh ideas. In our own corner of the world, it’s already lead to the introduction of a few of these international efforts into the Australian market. We look forward to seeing where the movement has taken us next year.
Over the last couple of months I’ve been getting to know the team at Monash BikeShare. I’ve followed their intrepid lead, huffing and puffing my way around the Monash University campus. They’ve shared their stories of rebuff and conquest from their epic start-up trek. And their youthful enthusiasm leaves them with plenty of runway ahead to pursue some grand plans. All-in-all they’ve got a great springboard from which to pursue their bikeshare dreams…
Australia’s most successful bikeshare
So how did the team take an a unloved scheme and turn it into Australia’s most successful bike share? Like all well executed plans, it looks simple in hindsight.
Their first step was to implement the Donkey Kong model of user engagement – they identified the biggest barriers to user take-up and sought to remove them:
Cost – the scheme was introduced with a membership fee structure that had proved an immediate disincentive to potential users. The team convinced Monash University that it would be better to have people using the bikes for free than to have those same bikes rusting in a shed.
Awareness – Notwithstanding the relative visibility of the bikes around campus, there remained the problem of people’s awareness of how and when to use them. To solve this, the team sought to draw in separate groups within the campus to show how the bikes could directly benefit them. By ratcheting up their use by specific users, the team were able to increase the visibility of the bikes actually being used – and thereby tripping the tipping point for network effects.
Know your customer
There’s no doubt getting a critical mass of people to use the bikes was a great achievement for the team. Perhaps the more intriguing thing is their understanding of the way the business works. On the face of it, you’d think that the customers of the bikeshare are the folk who ride the bikes. Not so, say the team, they see their primary customer as Monash University. This starts to make sense when you break down the benefits.
When it is easier for people to get around the campus, Monash University can:
Help IT and support staff get to where they are needed;
Understand how people are moving across the campus;
Infer which facilities and areas are being used – both in and out of term; and,
Encourage better and more timely attendance by students.
We can start to see that the potential benefits of sharing schemes in a digitally connected world are not simply the immediate and most obvious ones around the consumer getting to use the bike. For a relatively small investment, Monash can start to generate some pretty interesting returns…
Bikeshare as a data coop
Which leads us to potentially the most interesting part of the conversation. If the customer of the bikeshare is Monash University, as it pays to derive the aforementioned benefits, what are users?
You could argue that they are the beneficiaries of a fabulous free service.
But we think there’s more to it than that. This is the same situation that has been played out in the models employed by Facebook, Twitter and anyone else that seeks to monetise the consumer. We get to use their platform, and they get to sell our attention and data. The costs of getting the platform up are minor compared to the payoff of locking in the network.
That’s why we believe that there is a different model. That this is the perfect opportunity for a new type of consumer coop – where the members benefit from using the bikes, and where the customers are those organisations that derive second order benefits. The members own the bikes, the data and the platform. The coop negotiates the terms with the customers.
Controlling our data
See this is about more than sharing bikes. As the mesh – as Lisa Gansky calls it – sends its tentacles ever deeper, the real world gets mapped in greater and greater virtual detail. So that while the sharing of assets and infrastructure get more efficient, so too does the information about those that are using them. Our customers want to know more about us.
You want to hop in that self-driving car? Sure just wave your chip, and we’ll map you into the grid. Think about the types of data that the self-driving car company will want on you. They’ll want to check that you wear deodorant and haven’t trashed any self-driving cars lately. Our reputation will be built by the things we do and the data exhaust that comes with it.
Regular readers will know that I believe data coops offer a way through to the next place. That our personal data is best managed in ways that enables the individual to maximise control while still allowing the collective to optimise value in aggregate. Having had a good look at the Monash BikeShare, it looks like a great place for the personal data revolution to start….
Just signed up to WorkSmart – the UK Trade Union Council’s freshly hatched plan to help organise 21-30 year old’s. Now okay, I’m a little outside the target demographic (perhaps a lot), but I’m interested in understanding how they’re positioning it.
What is WorkSmart?
WorkSmart is a set of tools and content to help younger workers take control of their career.
Currently, there isn’t much to see. I was sent a link to a short survey that tested my perspectives on work – how fulfilling it is, do I feel like I am in control, and my level of motivation. It promises to tailor the experience for me when the app is released. I signed up to know more about ‘how to progress my work’ and ‘how to build better relationships’ – when those bits are released.
Designed for two-thumbed typists
The TUC have invested many hours in seeking to design an experience that will appeal to the younger demographic. Emails are liberally smattered with emoticons. Text is very brief in the best post-modernist tradition. And the interactions are quick.
The point is to get younger workers engaging with an offer that helps them build their confidence, motivation and understanding – and helps break down the barriers to organising collectively. Over the course of younger workers’ engagement with the offer, we will introduce rights info, and get younger workers thinking about problems at work and how to work with their colleagues to overcome them.
Rebirthing trade unions
They’ve also downplayed the role of trade unions. As Antonia Bance (@antoniabance) notes ‘these younger workers thought unions were for other people – older people, public sector workers, people fixed in their career. And you could hear the impact of atomisation in their feedback to us – young workers didn’t feel able to trust their colleagues.” The aim is to introduce a paid offer – WorkSmart Extra – that incorporates union membership once they understand its value.
Finally, and the bit that particularly resonates with me:
the plan then is to start to spot emerging leaders, common issues, and clusters of members with the same employer.
Our experience has demonstrated that organising remains a face-to-face activity. Where technology can help is accelerating distriibuted organising. Ensuring that those folk that are willing to gather others and lead their local initiatives are well supported. It’s good to see that this is front and centre of the TUC’s thinking…
Good Work in the Machine Age
The need for this kind of thinking was starkly demonstrated in some research that the RSA has just released:
Question: How prepared are the following institutions to protect workers from the effect of new technologies?
It was delightful to have the opportunity to attend a couple of events last week where Lieza Dessein (current Board member and Project & Community Manager) introduced the SMart cooperative to various audiences. The reception was very promising with some of Australia’s more progressive thinking trade unions like the AMWU and NUW leading the way in considering how this model could be introduced into Australia. Following are my notes…
How SMart works
The aim of SMart is to assist skilled freelancers in managing their business administration. It does this by helping with contracting, invoicing and associated functions like insurance, accounting and tax. These functions are primarily managed through the SMart IT platform.
Additionally, every member is allocated a personal advisor to provide career and legal support. It’s intentionally a high touch approach. As there are ~50 advisers for ~20,000 active members, every advisor has 400 potential clients to work with. As a former adviser, Lieza confirmed that this is a number that works in practice.
The interesting thing about SMart is that it brings the power of a cooperative to freelancers – blending independence and flexibility with the strengths of a collective organisation. So for example, as a cooperative it can:
Spread the risks relating to payment and debt collection across its members through a mutual guarantee fund. This means that members can be paid for their work within 7 days of a contract being completed and SMart will then manage the debt collection process; and,
Aggregate purchasing power to enable better access to services such as creative hubs, equipment hire etc, and to business support such as insurance and training.
SMart has helped 90,000 people in Belguim since its inception in 1998 – artists, architects, journalists, IT developers, graphic designers, dog-walkers etc. It is expanding into 9 European countries currently, and Canada has a project underway to explore how the model could be applied within its borders.
SMart’s business model – a worker cooperative
The core idea behind SMart is that members create a pooled capability that can be shared without fear or favour – it’s a new type of worker cooperative. The resources and services of the cooperative are financed by collecting revenue based on the volume of business undertaken on the platform. As freelancers typically have irregular income, each member is participating according to their billing capabilities. It’s a system based on solidarity. This pooling system enables 100% of the members to benefit from SMart’s services when, based on billing capacities only, SMart services are covered by 20% of its active members.
To get a sense of SMart’s operating model, following are its financials from 2015 and 2016. (Note that they are translated from French and there is little by the way of notes to the accounts, so any analysis is necessarily superficial.)
First up, a snapshot of SMart’s revenue. When a freelancer becomes a member, they can use the platform to contract with their clients. In doing so, they actually become an employee of SMart during the term of a contract – which means that SMart reports the gross revenue of all their members.
For the same reason, SMart’s expenses include the wages, commissions and other fees that are paid to members as their employer.
Fees, Purchases & Charges
Participation of members in shared costs (6.5% of sales)
Budget not consumed
To get a clearer picture of the operating performance of SMart, they also provide a ‘clean’ income statement where the activities of members are excluded from the analysis. I have included the complete income statement at the end of this article.
If we assume that capitalized platform development is largely offset against depreciation and amortisation, then there are really only two drivers of income:
Participation of members in shared costs – Members share in the costs of running SMart by effectively paying a fee of 6.5% of the value of the contracts that they enter into on the platform. You can see this number flow through from the gross revenue number reported (ie. 6.5% of €136m is ~€8.9m).
Benefits from pooling – This revenue item contributes as much again as the 6.5% fee – and it is not clear exactly what it relates to from the accounts. The reference to ‘rebates and reduced commercial charges’ implies that SMart is receiving a margin on products and services that it provides to its members. In essence, the volume of administrative, tax, commercial transactions gives rise to scale benefits that the SMart cooperative collects on behalf of its members.
Given that there are approximately 20,000 currently active members, the average annual cost of the entire platform is €850 per member. If the principle that 20% of the members effectively bear 100% of the costs holds true, then the average cost per year for these folk would be €4250. Either way, these costs seem pretty reasonable given the services provided!
Permanent staff – SMart has intentionally pursued a high-touch service model. It believes that by marrying the technology platform with expert advice, its members are best able to learn and develop their businesses. For this reason the largest component of its permanent staff are personal advisors and legal specialists. Additionally it has a large IT team to support this infrastructure that must be tailored to each legal jurisdiction. It also requires a core team for debt collection and contract management.
Bankruptcy losses – Based on these two years, SMart has a reasonably high bad debts experience. As Lieza explained, the losses from bankruptcy arise principally from bankruptcies by major employers (SMart will pay out the employees even if the employer is unable to). While the bad debts experience may be material, the social benefit of providing this safety net to members is significant.
Opportunities for the model in Australia
This model, whether in whole in or in part, has direct application in the Australian context. Following are some reflections on the opportunity and how it could work.
Growth in the gig economy
With at least 8% of the workforce now considered to be working in the gig economy, which may well understate the true extent of the casualization of work, the need to provide services that can effectively help these workers is already substantial and growing. This could include the SMart suite acclimated to Australia:
Career advice, legal support & training
Standardised contracts and cashflow management
Insurance & superannuation
Regulatory and tax management
Shared resources such as co-working spaces
The platform used by SMart is highly customised to the European context. Even if the tech stack can be installed on an Australian domiciled server, it will require customization and integrations with the likes of the ATO, WorkCover, ASIC as well as an API for industry super funds and local accounting packages to draw upon. There is also the question of ongoing development and maintenance of the ‘core’ and the customised components. How will a federated SMart infrastructure be governed and developed across an international user base? This raises questions whether importing the SMart model is really about protocols and processes – and what technology could be efficiently shared.
Industry agnostic versus industry specific
The approach taken by SMart is very much industry agnostic. They can be used by any skilled freelancer regardless of the type of work they do. In their experience, freelancers are often career polymaths moving from industry to industry, even over the course of a year. To effectively spread the risks and costs of the business, they need to adopt this approach.
In Australia, there may be advantages to breaking at least parts of the model into industry segments. For example, it may assist to have specialization around member communication, career advice, micro-financing, training and standardization of contracts. This specialization could occur within a single entity or through the creation of industry specific organisations.
The challenge then is how to aggregate those functions that are common. For example, the mutual guarantee fund and the ‘core’ technology components could be best shared across industries.
SMart has intentionally eschewed setting up marketplaces for its members. Their view is that this is a business that could conflict with their single-minded representation of skilled freelancers. As online markets are generally industry or skill specific, this may support the notion that implementations of the model are industry specific. For example, the creation of a ‘pacemaker coop’ in the graphic design sector could have material benefits in bringing up standards for all workers (following the Stocksy model).
Freelancers as employees
In the Australian landscape, freelancers are typically required to register for their own ABN. They can have all the same problems in managing their back-office, payments, training, and super – but they do so from the perspective of a registered sole proprietor. This may create barriers, whether cultural, legal or mechanical, for the ‘freelancer as employee’ model.
SMart have taken a very constrained approach to data, for example, avoiding any temptation to undertake deep analytics of their member base. This approach meant that navigating the recent introduction of GPDR was relatively straight-forward for them. My view is that coops offer a very attractive way for enabling individuals to better manage their data for both their own benefit and collectively. This is exactly where the work with the farming sector has taken us. Given this, there is a substantial opportunity for the SMart model to lead to better data management tools and capabilities for its members.
Where to start with an Australian model?
Any member-owned organisation must grow from the ground up. One of the challenges with introducing the SMart cooperative model is how to gather freelancers when, almost by definition, they are a disaggregated lot. In a sense, this supports that notion that the starting point is in single industries where the gig economy is dominant (eg. graphic designers). This would allow industry representative bodies to focus on the benefits to the workers in that sector (for example, the AMWU represents graphic designers). Ideally, these organisations have the existing organising capabilities and resources to bring freelancers, government, and industry stakeholders to the table to effectively execute a coherent strategy.
SMart’s ‘clean’ income statement
Participation of members in shared costs (6.5% of sales)
Hard data on co-operatives and mutuals in Australia is a little scarce. Perhaps it’s because they cover so much territory – from the very large to the very local. So some quick cuts from the CME database.
Not surprisingly the location breakdown of CME’s pretty much echos population density…
And the type is interesting insofar that if we mapped the same by assets or revenue rather than sheer number of entities, then it would be the exact opposite – superannuation funds would be the largest by a fair margin, then health funds… and coops.
What perhaps is more interesting is seeing how the breakdown by industry maps to emerging trends in the sector:
Emerging trends – consumer coops
Community owned assets – The Housing and the Sports & Recreation sector are the most numerous by far – with groups as diverse as model railway operators to the Hells Angels using coops. They often use coops as a mechanism to gather management and ownership of shared infrastructure. We’re seeing emerging interest in the coop housing sector for this purpose from specific demographics such as aged care or respite.
Shared financial services – still going strong when it comes to aggregating consumers money with financial services (aka credit unions, building societies, mutual banks etc), health insurance, superannuation funds. Merger activity and rebranding is often leading these entities to become increasingly remote from the constituencies that created them.
Education, Training & Childcare – numbers are swelled by public schools using favourable legislative treatment to create coops for building projects. Having said that, the childcare sector is another where workers and community can come together the use the coop structure to deliver better outcomes.
Information & Media – the community radio sector in Australia is huge with some 22,000 volunteers contributing over $300m in value to the community. Notably, the local and community nature of these operations has provided natural protection against the disruption that has been rippling through this sector.
Retailing – community ownership of retailers is a growing category of coops. So while most retailing coops are community owned stores there is also an emerging recognition that promoting consumer-ownership is the best defence against online disruption. If we follow in the footsteps of the UK, then we can expect more retailers to be acquired via coops – such as pubs, service stations, your local bakery.
Utilities – current energy retailers are pricing their offers to promote the emergence of community owned energy providers. We’re seeing wide interest across Australia in renewable energy projects that are likely to leverage the coop model.
Emerging trends – producer coops
Agribusiness and Fishing – Some of Australia’s more prominent agricultural coops were demutualised recently (Murray Goulburn and Namoi Cotton). Whether their members were better served by the coop structure is a moot point. Conversely, the federally funded Farming Together Program has sparked another crop of coops into existence. They are yet to appear in the data. Perhaps the biggest emerging trend is this sector is the wave of new technology that is being propelled at farmers. The potential impact on farmers has encouraged many to consider the role of coops in helping them manage their data both individually and in aggregate.
Arts & Culture – with 8% of the Australian workforce now part of the gig economy, we are expecting to see the arrival of platform coops that can help these workers to aggregate their needs and better protect their interests. As the Arts & Culture sector has a long history in using coops to manage resources, they could be well placed to emulate the SMartEU and Stocksy models in Australia.
Wholesalers, Professional Services, Purchasing Services & Shared Services – the industry aggregator coop remains alive and well despite the best efforts of Amazon.
Some days the new world order just plumps itself down in front of you like an overweight chook… So today while scraping Tim Mazzarol’s fabulous cooperative and mutual database (here), I got to thinking about what was going on here.
The website gives access to the most complete list of co-operatives and mutuals in the country. It is all publicly available. And yet, the developers didn’t make it easy to download the database.
Why create the artificial barrier? Perhaps there is some residual sense of ownership of the data. Perhaps it’s an attempt to make the site a destination for accessing the data. It’s a little hard to know.
The thing is that this approach is all back-to-front. It’s the kind of thinking that gave us CRM’s that pretend that customer data is something you own. It is not the way the emerging data-driven culture works.
Data co-operatives are the solution
We are moving to a world where we choose to share data. It becomes an asset that we control – we need to be motivated to share it (even if it means agreeing to your capricious terms of service Mr Zuckerberg).
There is an opportunity in this. At incubator.coop, we have been working on developing a co-operative operating system. A software-as-a-service model that will enable coops of whatever size to access an integrated website, member engagement app, and share registry. It’s intended to be a co-operatively owned solution for the co-operative sector.
Now here’s the thing. Very much like painting the Sydney Harbour Bridge, the CEMI database is out-of-date by the time it is finished. It relies on the collection of static data. At its simplest however the coop mgt system offers a way for coops to share their data. They can choose what data they share to create a dynamically updating database that is truly open for anyone to use. And open, accessible data – that is shared by those that control it – is the way value can be created in the new world order.