Three Key Mistakes Co-Op Leaders Make

Since the 1930's, America's electric cooperatives have enjoyed long periods of growth and stability. As we note in our two-part video series, the age of disruption is upon us, and co-ops simply must be led well if they are to thrive into the future.

This blog post provides senior co-op leaders with insight into three key mistakes we have seen leaders make. These mistakes can destroy a co-op's culture, its ability to execute successfully, and its likelihood of survival.

Extremely Low or Extremely High Levels of Change

Cooperatives must innovate if they expect to survive. But the 'status quo' is all too often the mindset of management at all levels. It is only natural. The more successful we are at doing something, the more we do it. The old methods worked, so our decision-making heuristics becomes more simplified. But, those organizations that make the biggest difference in the world, and make their employees and owners happy in the process, are those that are not trapped by convention.

Change can be good. Technologies change. Member expectations change. The electric utility business is constantly changing. So must a successful co-op.

But, not too much. On one end of the spectrum are management teams that are averse to change. Perhaps worse are those managers who seek change without a good strategy around that change. We see it all the time in management fads. Reengineering. Mergers. Acquisitions. Divestitures. Rightsizing. Globalizing. Outsourcing. Insourcing. The array of possible changes management can make is dizzying.

For our clients, we recommend measured, deliberate, vision-driven change. Such change must be powered by both a top-down and bottom-up approach. Senior co-op leaders set the overall vision for the organization, and they drive strategic change. At the same time, individuals throughout the co-op must be brought into the conversation, and they must have ample opportunities to share their personal and valuable insights. One excellent tool for creating dialog and consensus on vision-driven change - the GreatCo-Ops Cooperative Disruption Model℠ - was covered in a previous blog post.

Short-term Focus

Cooperatives with the best odds of surviving the coming disruption have management teams demonstrating a sharp long-term focus and a solid strategic planning architecture. We've had the great fortune to visit with many CEOs in a wide variety of industries about their companies' long-term goals. It's shocking how few CEOs have a compelling and well-articulated vision for the future.

We ask several questions of nearly every CEO we meet. One of the questions is, "How much time do you spend on the company's daily operations versus planning for the company's future?" The CEOs we've visited with typically spend only about 5% of their time on developing a vision and strategy for the company. And almost every one of them winces when they admit it. This can be a disastrous proposition for an electric cooperative, because it creates organizations that are reactive and unfocused. It also reduces a co-op's ability to attract, engage, and retain the best talent to help it weather the coming storms.

Tolerance for Incompetence or Misconduct (or Both!)

It seems obvious, doesn't it? Electric cooperatives shouldn't tolerate incompetence or misconduct. But, some do so every day. Maybe it's a director's nephew. Maybe it's the operations manager's neighbor. Or, maybe it's just that person with the crusty attitude that supervisors are afraid to correct. There are people working in cooperatives all across America right this minute who aren't contributing to the organization's mission...or who are even detracting from it.

A great example comes from a client we worked with in 2017. This was a mid-sized cooperative headquartered in a small town. The co-op's general manager, who was new to the job and had just moved from another city, was having serious trouble with a foreman. The foreman had more than 35 years of experience with the co-op. He cut corners of safety, was belligerent to his men, and had a reputation for saying inappropriate things to the women in the office. Strong discipline was clearly required, yet the longtime previous general manager had overlooked these offenses for years. When we asked the new general manager why this person's behavior had been tolerated for so long, he replied, "Everyone in this town knows him and knows he works for us. His family has lived here for generations. Firing him would cause so much trouble in the community that it's just easier to let it go. Plus, he doesn't exactly take correction very well. He'll be retiring in a couple of years anyway."

It's one thing for a co-op to support a struggling employee and do everything it can to develop that individual. However, if leaders in your co-op turn a blind eye to incompetence and misconduct, and avoid those tough conversations, the organization's ability to adapt to future disruption is limited. As you consider your co-op's future, take time to reflect on the organization's culture in this respect. And, be sure to take a firm stand as a co-op leader when it comes to poor performance and misconduct among your people. Others in the organization will thank you for it.

Questions to consider

Consider the following questions as you evaluate your co-op's strengths:

  • Has top management spent the time necessary to develop a long-run strategy for the co-op? Does this plan fit the emerging realities in the industry?
  • How much of the CEO's/GM's time is spent being a visionary/strategist/leader vs. being a tactician?
  • Is the management team running a high-integrity organization? What behaviors are they encouraging in their people?
  • Is management quick to hire relatives, acquaintances, or friends who are under-qualified?
  • What happens when someone at your co-op is clearly incompetent, disengaged, or even belligerent? Is the situation dealt with or simply ignored?
  • Does management seem to change just for change's sake? Is the co-op constantly reorganizing and restructuring with no real vision?
  • Is there any positive change taking place? If yes, what can our co-op learn from that?
  • Is the culture one where employees feel safe to speak up? Are employees frequently asked to do things that run counter to their personal values?
  • Is the culture one of integrity that will be sustained in the long run, even after I'm gone?

Answering these questions will help you get a better idea of how likely your cooperative is to have the underlying foundation of strength to survive - and even thrive - in the coming age of disruption.