Scripting a success story: Workers at one of the thriving Shri Mahila Griha Udyog Lijjat Papad unit

Jyoti J. Naik was only 12 when she started accompanying her mother to learn how to roll papads at the local Shri Mahila Griha Udyog Lijjat Papad. She soon excelled at the art, and was moved up the ladder to the packaging function. After that, she earned a promotion to the masala zone. Her good track record saw her becoming a 'Sanchalika' (each of the organisation's 62 branches is headed by a Sanchalika who looks after the operations of each branch). Then came the membership to the central managing committee. This core group of 21 ladies-or 'sisters' as all members are referred to-manage the affairs of the organisation on behalf of the 40,000 lady members. Today, Naik has been President of the Shri Mahila Griha Udyog Lijjat Papad for the past four years-and its annual sales are estimated to exceed Rs 300 crore.

The group's functioning is simple. Each member is paid according to the quantity produced of papad (or Khakra, vadi, masala, atta, bakery products, chapati, appalam and detergent). In addition, everyone is entitled to a share of the company's profits at the end of the year. Explains Irene Almeida, spokesperson for the organisation, "The system is self-sustaining. Each member works to improve efficiency and reduce wastage. They know that both profits and losses have to be borne by them." Branches that do well get an additional bonus according to their productivity. Look closely, and you will find a matrix organisation, bound together by self-motivated workers rather than a stiff command-and-control hierarchy. The success is based on employee ownership, profit sharing and an incentivised work culture.

Cut to the Rs 2,336-crore Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF). As in the Lijjat case, this organisation is owned and operated by the very people who work for it. It's a large network that starts at the village level, where dairy farmers band together to form a society. At last count, GCMMF had 10,852 societies, each maintaining its own profit and loss account. These societies sell milk to the unions (at the district level), which are separate legal entities. The unions then send the milk to the state level federation, still another entity. But the money made flows all the way back. Profits work their way backward to reach the farmer, since the federation shares are held by the union, union shares held by the societies and the society shares by the farmers. "The beauty of the structure," explains S.K. Panigrahi, General Manager (HRD), gcmmf, "lies in the fact that each level of the hierarchy is separate economically and legally, and yet they are united by the same cause."

Needless to say, mobilising milk supplies is one thing, operating milk processing units and marketing the output is quite another. So the federation appoints a board that is charged with the responsibility of using the best available management talent-be it human resources, administration, finance or marketing-to maximise value. GCMMF markets India's leading dairy brand, Amul.

Now that competition has finally been given a freer rein in India's dairy sector, and the private sector is making inroads, GCMMF is confident of maintaining Amul's supremacy.

Most of this confidence can be traced to the benefits of mass ownership. Explains Anil Sachdev, managing director Grow Talent Company, "The owner is the farmer who is not there for the short term. He is not concerned of short term quarterly targets. His real concern is the long-term health of the system."

It's a matter of commitment, and buying Amul, to many, is reflective of a respect for that farmer's commitment. If the brand doesn't always give you a fuzzy warm feeling, it's understandable. All mass cooperative movements are vulnerable to the influence of local vote-lords. In fact, the big failing of cooperatives in India has been the failure to extricate them from political manipulation.

Otherwise, the cooperative model remains a powerful grassroots-level tool to empower the masses and generate value. Cooperatives have played a critical role in the agri-industries of several countries around the world.

According to a research conducted by McKinsey, cooperatives in the US grew from $67 billion (Rs 3,21,600 crore) in 1983 to $99 billion (Rs 4,75,200 crore)in 1999. Sure, the cooperative movement has suffered on account of regular competition from their corporate counterparts. But the basic model remains robust. Ground level participation can work wonders, especially if it results in the level-by-level integration of a long supply chain. With an operational structure in place, brand appeal must do the rest. And here too, cooperative brands have an advantage. Research shows that the typical consumer prefers a cooperative approach to essential services. People think of cooperatives as providers of solutions that are reliable and priced reasonably.