As a U.S. private foundation, Winds of Peace has been providing development assistance in Nicaragua for more than 30 years. Most of that time and effort has been rendered on the “inside,” hand-in-hand with the members of the cooperatives and associations and networks with who we have partnered.
It has been very personal work. We can describe the organizations. We can remember where they are and the circumstances in which their people live. We can name names. That accompaniment is a condition of our work, being “on the ground” where there is little access, few outsider visits and sparse resources. It’s being with partners on the inside, helping to find a small opening where opportunity might be waiting on the other side. It’s still our model, still the way that we will continue to work in Nicaragua. But we also have added a component to such work, this time from the “outside.”
The Nobel Peace Prize Forum is an event which Winds of Peace has sponsored for many years. The Forum exists as the only sanctioned event under the Nobel Peace Prize name outside of the award selection itself. Annually, it has brought together past peace laureates, activists, scholars and those working in their own ways and in their own niches for peace and justice, “on the inside,” where life is actually lived. This year’s Forum will be held in Minneapolis, Minnesota during September 13-16. It will feature many stories of peace-building and human development. And it will include work underwritten by Winds of Peace.
In what is billed as a “high-level dialogue” session, major research and “inside” work on cooperatives will be presented by Foundation colleague Rene Mendoza. Rene is recognized as a development innovator and engages in “participatory action research” to facilitate actions by cooperative members themselves. Specifically, Rene will highlight the efforts and conclusions from cooperatives in various countries. And he’ll emphasize the importance and stabilizing impact of cooperatives in societies emerging from periods of conflict, and how their financial impacts serve as an essential ingredient for both economic and social well-being. He has also assembled a panel of six cooperative members from Central and South America to join in the conversation and share their experiences of cooperative life and meaning. Yet, that’s not the full extent of the session.
The rest of the invited audience will be comprised of individuals from cooperative-supporting organizations, entities which have in some way positioned themselves as partners with the small cooperatives, whether in the roles of funders, marketers, associations, Fair Trade and Organic certifiers, buyers, roasters or retailers. They are (hopefully) big names. The presentations are designed to invite dialogue with this invited audience about where the entire process chain is working well, where it isn’t, and how collectively all actors might make it more valuable to the essential focus: the producer and his/her family.
As a result of the discourse, the participants will be encouraged to arrive at an objective or change that might be affected during the ensuing 12 months, a plan of action which will be shared with the at-large Forum attendees. In 2018, some of those discourse participants will then return to the Forum for a report-out on success, and whether the conclusions and actions identified in 2017 really made an impact. It’s a very action and accountability effort, unlike many conference end results, and one that Forum organizers (and sponsors, like WPF) hope can bring real impact to cooperatives as major peace components. It’s “outside work,” changing the focus temporarily to the ambient world surrounding places like rural Nicaragua. Consider this blog entry as an invitation to experience at least this part of the Forum in the Fall.
Why? Because sometimes circumstances don’t allow us to achieve our needs fully by ourselves. There is not one among us who has reached full potential and well-being on our own. Sometimes, we require the intervention of “outside work….”
LEAN: a method for improving businesses and cooperatives
René Mendoza V., Steve Sheppard and Mark Lester*
We are not ants that come in and only take a grain of sand, carry it, pile it up and dig a hole. We come in, we take the grain of sand, we carry it, we pile it up and we have the capacity to ask, “How can I do it better?” And we build an excavator. (P. Akers, 2 Second Lean, 2012: 132)
The Lean model (The Toyota Way) helped Japan recover after the Second World War and become part of the club of countries called developed countries. Since this “automobile revolution”, the Lean model has been successfully applied to different sectors of the economy, types of businesses and organizations around the world. If “Open Books Management” (see: http://www.peacewinds.org/open-book-innovation-in-business/ ) provides a perspective for making businesses transparent and having a circular organizational structure, Lean provides a framework and tools for innovating. Here we summarize them, provide possible applciations from the agrarian sector, and we conclude on the importance of reading it from the culture itself for expanding human capacities.
Origin and concepts
Ideas from the business side seeking productivity and quality, and ideas from the social side with research and participatory action contributed to what later would become the Lean model. W. Shewhart in 1924 proposed the use of the “statistical control of processes” to statistically observe the yield of the entire production process and not just the result. K. Lewin in 1946 proposed participatory research action where the people involved would analyze their reality and transform it; in organizations, the people affected by qualified changes have the primary responsibility in deciding on the improvements that have to be made in the business. Based on these contributions, in the 1950s and 1960s E. Deming proposed the circle plan-do-verify-act: improving the quality process from the beginning, recognizing leaders with their differentiated skills, cultivating confidence in order to gain efficiency and effectiveness, erasing barriers between departments, educating in the work for self improvement, and organizing to transform the organization.
On this basis the Lean model developed four concepts, each of which readily lends itself to an agricultural setting (see: Liker, J. K., 2004, The Toyota Way. 14 Management Principles from the World’s Greatest Manufacturer). The first is that the decisions be based on a long term philosophy, at the expense of what might happen with the short term financial objectives. The perspective is about improving the lives of the clients and making their own members grow, and through that emphasis growing a healthy business that would be profitable. The second is the process of creating continuous flow in the entire production chain so that problems might come to the surface and thus be identified and addressed (e.g. overproduction, excess handling and inventory, dead time where someone is not working or clients are waiting, underuse of the talent of the staff). Lean creates a culture of stopping to solve problems instead of waiting until the end of the process, and of standardizing improvements. The third is continuous evolution of the people, of leaders creating a long term culture, one of continuous improvement, utilizing errors in order to learn and teach, and of respect for the extended network of members and providers (“extended enterprise”), challenging them and helping them to improve. The fourth concept is teaching the tools of problem solving (organizational learning), giving importance to the data as indicators of what is happening, but making decisions going to the events themselves and understanding the context in which they happen and the nature of the problem.
The Vice President of Lexus, Japan summarized this different way of working like this: “The most important thing for Toyota are the people. We get involved in teaching and training, and we build a culture of continuous improvement. We are not concerned about the next hybrid, the next engineering marvel, not even the next sales strategy. Our number one concern is forming our people and building a culture of continuous improvement.” And that importance transcends factories and fields and offices everywhere.
Shaking the agrarian tree
Lean emerged in the automobile industry and has been applied more in factories, including plants processing cheese, chocolate and vegetables. But it has been demonstrated to have the same high impact in any other work settings, because the concept is based on the fact that all work- of whatever sort- is a series of processes. How can Lean be adapted to small farming production in Central America? The first thing is building a long term culture based on an aspiration of interconnected farms, with a perspective of productive chains and diversified and sustainable systems whose center are the families themselves. Then, in this perspective, identifying and fighting waste: planning the production supply not according to the moon, but to the demand (e.g. harvesting beans every month of the year in accordance with climatic-soil variations, investment in irrigation and organization of the actors in the bean chain; likewise in products like corn, plaintains, honey, milk, passion fruit, meat or eggs); making intelligent investments (e.g. instead of each company and each cooperative having a dry mill that costs more than a half million dollars, cultivating relationships of trust with the owners of the already existing mills, and establishing relations based on standards for the control of coffee weight and quality). Then, that this process be undergoing continuous improvement in its very details, for example, instead of increasing productive yields based on applying chemical inputs, calculating yield in the entire chain and developing relationships with the coffee harvesters so that not even one bean is lost in the soil, regulating the huller so that coffee beans are not broken, having adequate drying screens without holes to prevent coffee beans from falling through while drying them on the farm, making organic fertilizer from the pulp, keeping coffee beans from being left on the patios of the dry mills, roasting-grinding and packaging coffee specifically for niche markets. Finally, doing everything just in time to achieve product quality, and in each part maintaining records to analyze them jointly with the actors and improving them. Make the chain a space for organizational learning.
From the culture itself
The Lean model is not a magical recipe, but a reference point for any organization – business, cooperative, NGO and any type of institution – and for any family. All of us want to continuously improve the activity that we are involved in, which is why identifying the waste and doing away with activities that do not create value give us more life. Nevertheless, not all of us want to grow in the way that is “in style”: growing in areas of land at the cost of dispossessing peasant and indigenous families of their land; increasing the yield of the crops at the cost of producing more greenhouse gases (carbon dioxide, methane and nitrous oxide) that speed up climate change. Instead of “bigger is better”, the notion of decreasing is growing: focusing on the people and on their repossession processes, developing a culture of learning to innovate continuously in each detail. Correspondingly, subtracting is more than adding; if each day we save two seconds in the activity in which we are involved, we are making each process simpler, in just two seconds! How much time would we save in a year?
The human goal is changing the world for the better. Money is a means and will be multiplied if we do not lose our long term perspective, in that our concern “is forming our people and building a culture of continuous improvement” to the point of asking ourselves: how can we do it better? How can we reduce or eliminate barriers and thus improve the return on our work? More than “excavators” we are committed to building a culture of a better life.
* René Mendoza (email@example.com) has a PhD in development studies, a collaborator of the Winds of Peace Foundation (WPF) (http://peacewinds.org/research/), associate researcher of IOB-University of Antwerp (Belguim) and of the Nitlapan-UCA Research and Development Institute (Nicaragua). Steve Sheppard, current director of WPF, was the manager of the Foldcraft corporation owned by its 350 employees. Mark Lester is the director of WPF in Nicaragua and of the Center for Global Education and Experience of Augsburg College.
Two sailors were at sea. A storm blew up. The boat was rocking. One of the sailors hurried to tie things down, while the other just watched and moved with the storm. The first said, “if we don´t save the boat we will die.” The second replied, “it is not my boat.” Will they save themselves?
In the article “open book innovation in business” we summarized its central points and we considered that companies in Latin America can adapt it creatively. In this article we think that the cooperatives could even more easily adapt this innovation. Because they are organizations composed of members, and the cases where they have personnel (workers and/or employees), there is openess to their joining, their identity is being associative and being an enterprise, and they have a democratic organizational structure based on cooperative principles. But, even though the cooperatives emerged, like the corporations in the US, for the good of society, like the corporations that have moved away from the original idea of their founding, a good part of the cooperatives were also co-opted by elites. Our thesis is that the cooperatives have rules and a democratic organizational basis for the “associative” part of their identity, and not for their “business” part, which has made them controllable and eroded their associative side. Consequently, we argue that the innovation of “open books” could be the key piece for that “business” side of the cooperatives, and that energizing the associative side, would put the cooperatives back on the path to contributing to the transformation of our socieites. That is what this article deals with.
Cooperativism, founded 250 years ago, has general principles and rules that are found in the Cooperative Law in each country, and in the statutes of each cooperative. This is mostly for its “associative side”, where each member is one vote. While its “business side” is another game and requires specific rules that start from the economic contributions (amount of money) of each member, where “you earn in accordance with your contributions”. This combination of the associative and the business provides each member the path for organizing, learning by scaling up through the different bodies of the cooperative and through getting actively involved in the work of the business in which their organization participates.
A member contributes to the success of the cooperative (improving quality, lowering costs and developing products and services that no one else has) only to the extent that that member knows their organization: each member must understand how the cooperative makes (or loses) money through each of its processes. First, with the participation of all the members they define their objectives, goals and collective incentives for each year, the deals to include, the amount to produce and sell, amount of savings and loans, and incentives for meeting and/or surpassing the goals. Secondly, they also define their processes and standards in each area, for example, if the cooperative is a coffee or cacao coop, the members in the production area define their steps of production, set their standard of productivity to reach (qq/mz), the harvest collection area sets the % of the total production of its members to collect, the area of processing sets the % of yield (of wet coffee to sun dried, of cacao pulp to dry cocoa), the credit area sets the % of recovery and percentage in arrears, the administrative area sets the % costs/member, and the commercialization area sets the % of product placed in niche markets; and each area constructs their standardized costs. Third, members of each area report on their profits and losses, and in doing so see the effect of their work on the balance statement of the organization; each piece of data is evaluated in terms of the objectives, goals and standards set for the year. This review allows transparency of where problems may be occurring. Fourth, this process is systematic, reported monthly, so when there are losses or lack of fulfillment in certain areas, it gets resolved among all, without waiting for the end of the year when corrections may be too late. This is possible because everyone knows that the more they learn about each step of their business, the more they can see, the better they can perform, the more their cooperative earns, the more return there is on their economic contributions, and the more their communities improve.
This seems necessary and possible, if the mentality and current institutionality of the cooperatives changes. Myths that currently govern the lives of the cooperatives are seemingly “written in stone”: “an illiterate person does not understand the numbers”, “the fieldhand does not speak in the presence of the patron”, “not even the mother of the manager should know the information about exports”. This mentality of centralizing information in an elite, complemented by members with a “fieldhand” mentality, like that of the second “sailor” in the story at the beginning of the article, has led to systematic administrative crises and to the death of the cooperatives. Nevertheless, “what is written in stone” could be “filed down” implementing what is described in the previous paragraph, that there is no one person capable of knowing more than all of the people together, and that each person knows and can contribute – as Edmundo López, a cooperative leader says, “The illiterate person is not the one who cannot read letters, but the one that cannot read their reality.” If a member receives profits in a cooperative in accordance with their contributions, the member will want to know about all the activities of their cooperative, will increase their contributions, and will contribute to the balance sheet of their organization.
This change in attitude requires an organizational change in the cooperatives. Informal institutions have governed the economic side of the cooperatives, and from there its associative side. “The board has the responsibility, the rest are followers”, “we always need a patron”, “some of us are born to be in charge, and others to obey orders,” “if I leave my post others will ruin the principles of the cooperative”. With this basis, the technocratic-administrative elite, faithful to their interests, understood that “information is power”. The structure of democratic organization from the associative side can be a reality if the business side functions under the modality of a circular rather than pyramid organization: owners (members), board and management, communicating openly and together, involved in meeting collectively defined objectives and goals. There the key is that the grassroots cooperatives be the first to move, because of those below improve, those above will have no other option but to improve.
Taking as a reference “open books management”, the innovation is in changing as cooperatives and in being a means for their owners to improve their lives and contribute to social, environmental and gender equity. It is important that cooperatives know that there is a means of achieving this open book status, through training and practice. They can do it as first and second tier cooperatives, as part of the fair trade chain, or from other forms of integration. It requires the members to be like the sailor who hurried to save the boat, aware that their lives depend to a large extent on saving cooperativism.
If you want to get a harvest in two months, plant beans, if you want to harvest in five years, plant avocados, and if you want to harvest your whole life, plant a transparent and participatory cooperative.
* René (firstname.lastname@example.org) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (WPF) (http://peacewinds.org/research/), associate researcher of IOB-University of Antwerp (Belgium) and the Nitlapan-UCA Research and Development Institute. Steve, the current director of WPF, was manager of the Foldcraft corporation bought by its 350 employees. Mark is director of WPF in Nicaragua and of the Central for Global Education and Experience at Augsburg College.