First of all, let me just say that, wow, it’s been a long time since I’ve been in school.
We had two half day sessions today. The first was with Cooperative Economics professor Stefano Zamagni, who lectured on economic theory from Adam Smith to today. The second was with Pier Luigi Sacco, from the IUAV University in Venice. Yesterday we heard from Professor Zamagni’s wife, Vera, who is also an economics professor here.
Professor Zamagni is a world renowned expert on economics, who discussed the distinction between the political economy, which is composed of the exchange of equivalence of value and redistribution, and the civil economy which layers in reciprocity.
What does that mean? It means that beyond the negotiated cost of a product or service, in the civil economy there is the concept of reciprocity. Families often work this way, in that they will give each other money or their time knowing that they might need to call in a favour at another time, but the deal of that exchange is organic and isn’t set out ahead of time. I wouldn’t sell my car where the agreement was that I gave over my car but we’d negotiate the price later. With social capital in place, the value of the exchange can be negotiated informally over a longer period.
Lots of interesting concepts here, but what strikes me is that the history of the region created tight communities who cared about individualism. Social capital is extremely strong. People don’t care about growing singular large companies, but in creating smaller companies, often as coops, which partner and work together to create the goods or services they wish to produce. Because social capital is so strong, deals are done on a handshake, and contracts are avoided most of the time. Seventy percent of companies in Italy have less than 100 employees, and only 10% are large companies, defined as having more than 500 employees. Companies with 500 employees at home would not even be considered large companies, and here they are in the top 10%.
A lot of what seems to work here is not necessarily directly exportable to North America, which is a less trusting and more litigious society. Having said that, I think the search for partnerships and the building of reciprocity has some lessons for us back home. Imagine if, instead of starting a new division in your company, you partnered with another company to achieve what you wanted. What if these partnerships were tight and based on trust, so not everything had to have an SLA and a legal contract? Would that fly?
Another concept I find interesting is the two models of competition. As an employee of a cooperative, we discuss coopetition when I get together with my credit union peers, and that’s what they have here. Traditional companies have positional competition, where companies compete to take the top position, and only one can win. Here they have cooperative competition, where competition helps companies focus and hone their edge to make themselves better, but not to drive their competitors out of business. They need each other to stay lean and innovative. This seems to me like the way credit unions compete back home.
It strikes me that we actually have a lot of cooperative competition at home, but with one key difference. I share lots of ideas with my peers at the banks and credit unions, but only once I meet them and develop some trust. It isn’t the default. Because companies here are very small, they are often family run, and the default is to trust because families know each other. The trust is inherent as opposed to built.
Tomorrow we’re out of the classroom to visit Imola and meet with a couple of cooperatives. Will write more in the next two days.
Also, my first of three guest columns on ChangeEverything.ca was published today.
Hello William, just back from a holiday so catchig up on your interesting news from Bologna. Here's my black hat: I would be keen to hear any view you may have on the career challenges for people in Italy who do not have established family/community business connections. The shadow side I've heard from three different people is that merit gives way to nepotism.
Thanks Desiree, so great to hear that my ramblings are making sense back home. Your comment means a lot to me!
William… wonderful and timely insight into the issue of "trust" and the business community. Trevor and I spoke this morning on a recurring and thorny issue and then I read this BLOG, amazingly simple concepts, that work! The question is – how to do that here.
Sorry, I could't fiqure out the "select profile" process prior to posting thus, I selected "anonymous".
Cheers
Detlef Beck
I haven't been able to get online in a couple of days. What great comments!
Matt, thanks so much for your thoughts. The scariest thing is to say: we need reciprocity and if no one else will join me I'll start by doing it, modeling the behaviour and trust that others will join in. Where's the business case on that? And yet it is needed.
I am starting to write my next blog post, which I will have up before I go to sleep tonight. My thoughts are flowing in random directions, but I'm experiencing some amazing stuff I hope I can do justice to.
Great thoughts and concepts being uncovered and discussed. In my view, social capital, partnerships, community building, trust, co-operation, are apects of our lives, organizations and work place that recieve little attention. The skills required to engender an evironment where these characteristics can be realized and lived out are not taught in any university or manangement class. What is required is a deep understanding of the ways systems work at the biological 'chaotic" level. "The Web Of Life" by Fritjof Capra comes to mind as a book that illuminates our new understanding of nature and our place it it.
As I may have opined to you some time ago, Robert Putnam's lecture here in Vancouver a couple of years ago on social capital, along with a (slightly demanding) read of his book, Bowling Alone, changed my life. Social capital in his view isn't just the key to economic relationships, but to the ties of community that bind us together – making our communities safer, making our economic circumstances more secure (because we have a community safety net), making life happier. I like how you've brought trust into this conversation – another indicator of what we need in North America to rebuild community.
I wonder how a trust-based economy would navigate the turbulent waters of accounting, finance, and legal – at least as it pertains to North American culture? In the U.S., true inter-credit union cooperation (by "true" I mean a flat-out "we're are in this together" mentality) hasn't materialized in a significant enough way, thus far, to truly take advantage of our structure's strength. There is simply too much duplication of efforts, too little pooling of resources, and precious little evidence that as a movement we're willing to go "all in" with this concept. I don't know if it's because such cooperation creates accounting nightmares, stress on financial planning, or if it's simply fear/distrust of fellow credit unions…but it's becoming increasingly clear that this notion of reciprocity is vitally important to the future of financial cooperatives.
I seem to be one of the few voices in American credit unions that believes the movement cares too much about our individual pieces of the credit union pie, and not even close to enough about growing credit unions' piece of the financial services pie. At some point the cream will rise to the top, but not at the expense of other credit unions. I don't get bent out of shape about the number of credit unions that goes away each year due to mergers or insolvency. I do worry, however, that we aren't doing a good enough job as a movement to make it easier to form new credit unions based on markets outside the realm of employers or geographic areas.