Guest blog by Ed Mayo, Chief Executive, Pilotlight

What do you think is the number one cause of failure in member-owned businesses? Is it capital constraints, competition or governance? Is it regulators setting the wrong rules?

The answer may be a surprising one. According to academic research on co-operative and mutual enterprises around the world, the primary cause of failure is culture.

The importance of culture is increasingly recognised across the business world. It is included for example in the most recent update to the UK Governance Code for listed companies and Stewardship Code for institutional investors.

HR Directors have been at the top table over the pandemic for good reasons, and the agenda of culture and values should now keep them there. Where cultures become toxic, enterprises face a raft of risks, from reputation and staff and customer turnover through to a simple loss of relevance. According to the Institute of Directors, culture and values are “the next frontier for business”.

But there is an added flavour to culture in a mutual that elevates to such a key position in determining whether an organisation thrives or withers over time, which is the need for a mutual to develop a culture of mutuality.

The academic term for the pressures on mutual culture is ‘isomorphism’, a form of shape shifting. The reason is that all the reference points for mutuals tend to come from investor-owned businesses. They are your competitors. They are a source of new staff. And they are what the regulator and markets default to in their understanding of how business works. As a result, if mutuals lack a strong culture of mutuality, then over time they lose sight of what makes them different, they are judged by their wrong markers and they lack confidence in their own brand and identity. 

Take this for granted and you may already be falling back. A culture of mutuality needs constant refreshment, not least in longstanding businesses who tend to look back and who are therefore most at risk of romanticising past values rather than being relevant today, with their reference points locked into founding stories from a different world.

Here at Pilotlight, a charitable social enterprise, we are exploring ways to build the values of mutuality through an unusual learning experience for employees, which is to find ways for them to use their skills to give back to society.

Pilotlight was started by Jane Tewson, the co-founder of Comic Relief. In Comic Relief, she had found a new way to encourage people to give money. With Pilotlight, she was looking for a new way to encourage people to give time. What was needed above all was support in the form of professional skills and support that smaller charities simply couldn’t afford, but all too often, businesses saw their role as telling those running charities what to do, while those in charities played the supplicant role of asking for help and support. Through Pilotlight, what evolved was new, a programme of mutual exchange, in which each learns from the other.

Today, there are around 550 members of Pilotlight in the UK, giving their skills for public good using this methodology – in short forming teams that provide strategic coaching support for small charities and social enterprises through a process that is curated and evaluated with care, to ensure that the skills exchange is effective.

Businesses that take part, with support for their employees who volunteer in this way, include Wesleyan and Midcounties Co-operative as well as financial service companies. In BlackRock, the programme has been taken up by the women’s network as a way to build skills and board-readiness for women looking to take on leadership roles. In Morgan Stanley, an annual Strategy Challenge sees teams of graduates work together, facilitated by Pilotlight, to support charities, which this year of pandemic included NHS Charities Together and Great Ormond Street Hospital Children’s Charity.

This is learning by doing good. Charities that are supported in this way increase on average their reach, the number of service users or beneficiaries, by 30% in the two years after the support and their income by 27%. For the Pilotlighters, they not only get to use their valuable professional skills in a new way, they also improve their coaching and listening skills, build their empathy and widen their worldview. These are among the key skills for mutuality.

The building society movement has taken past steps towards this, including the Masters on Leadership and Development with Loughborough University. Skills based employee volunteering complements such formal, accredited learning by using practical action as a hands-on learning experience. All this builds a confidence and ability to fulfil the difference that mutuals can offer.

As Richard Sennett, the great sociologist argues, there is often a profound mismatch between the language of values in modern businesses and the experience of it. The language of teamwork in many an enterprise sits uncomfortably with the reality of hierarchies and inequalities of power and reward.

Mutuals can be different. But to stay different and to stay on top, finding new ways to nurture and sustain a mutual culture can make all the difference.

Is this one your society is ready to explore?

Ed is Chief Executive of Pilotlight and author of the book Values (Routledge, 2016)

The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.