Change for the Change Resistant

I found the Spartan case this week incredibly interesting because it dealt with the potential overthrow of traditional and time-tested business structure.  Food wholesalers like Spartan have existed for many years, but the introduction of conglomerate companies like Wal-mart and Meijer are seriously calling their continued longevity into question.  Spartan's Co-op structure may end up proving unnecessary due to the demise of the smaller independent supermarkets that are the company's shareholders.

Co-ops exist to support and benefit their shareholders who are also their customers (in Spartan's case, a number of grocery stores).  What that means, however, is that in order for the company to make decisions, they have to satisfy a board of directors that represent the interests of hundreds of separate businesses.  While those business owners have the best interest of Spartan in mind, their primary concern is their own business and not Spartan.  With all of those shareholders pulling the business in so many different directions, the decision-making process becomes incredibly convoluted and inefficient.  A Co-op can never be as efficient as a single conglomerate company can when it comes to making decisions, because with a unified company, the interests of all of the shareholders are in sync with one another.  Implementing new technology for a single company is easy...the decision just has to be made, but with a Co-op, making a change in technology requires convincing all of the constituent companies to make the change as well.

In order to solve this fundamental structural deficiency, I think that Spartan needs to ensure compliance with the decisions they make.  They could require some kind of contractual assurance that the individual members of the Co-op comply with the decisions made by the company.  They could also refuse to sell to companies that fail to comply with their decisions.  This would solve most of the problems involved in the implementation of decisions for a Co-op company.  There seems to be little that can done to resolve the inefficiencies in the decision making process itself for Co-ops.  Becoming more like a conglomerate defeats the purpose of the Co-op itself which is to support the companies owned by its shareholders, so the company will always operate like a several hundred headed monster.  It will be interesting to see if companies like Spartan will ultimately be able to withstand competition from companies like Wal-mart.