Meet the Co-op Leaders podcast

Meet the Co-op Leaders is a chance to hear from innovative and inspiring leaders in the co-operative and mutual sector, and to hear the stories behind these remarkable organisations.

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Melina Morrison (MM): I’m Melina Morrison, CEO of the Business Council of Co-operatives and Mutuals. Welcome to Meet the Co-op Leaders, the podcast series that features insightful conversations with the people leading our most innovative and inspiring co-op and mutual businesses.

(MM): Co-ops and mutuals are the businesses owned by members rather than shareholders. They’re all around us and they include some of our biggest brand names. In fact, 80 per cent of us are a member of at least one co-operative or mutual, but most of us don’t even know that. In an age of putting purpose before profits, it’s more important than ever to learn about the original people-centred business model. So, we’re bringing the leaders to you, to tell you in their own words what makes this a better way to do business.

(MM): My co-pilot in this new series is co-operative developer Antony McMullen. Antony’s founder of Co-op Bonds, a worker-owned business that was set up to help other people learn to form co-operatives. Over the next series, Antony and I will be bringing you a new conversation with a co-op leader every couple of weeks to lift the lid on this incredible business model.

MM: Hi Antony, I’m looking forward to hearing from another one of our co-op leaders in today’s episode. So, who do you have lined up for us?

AM: I’ll be talking to Lynne McLennan, who was the CEO of UFS, that’s the United Friendly Society Dispensaries, for many years. She’s one of those people that’s shown a great commitment to the co-op and mutual movement.

MM: Wonderful! Lynne has recently retired, and she was the 2022 inductee to the BCCM Honour Roll for her service to the co-operative and mutual sector. So, what did you talk about?

AM: Well, look, we talked about growth, a real focus on, not only being a viable business, but that community impact. And I know a lot of people in that community that have really talked very highly about what they did when Covid came along – UFS just jumped in there and they really made a difference. They just stepped up to the challenge and looked after their members and the broader community.

MM: Great, I can’t wait to hear more.

AM: Lynne, if I can start with asking you a little bit of a question so we can get to know you a little bit more. So, before you were at UFS, you’ve had a really interesting career, but one of the interesting ones is that you were a senior advisor to the John Cain Government in 1980s Victoria. So you’ve been very much in the political sphere. Just wondering, to kick off, what did you learn then that you could sort of apply later to your professional life? That must have been a very formative time for you.

Lynne McLennan (LM): It is more than 30 years ago, so I did do a few other things in between that job and coming to UFS 21 years ago. I guess the thing I learnt, and it’s just inevitable, but you know I only wish now that back then I knew what I know now, but of course when you’re in your 20s, you’re full of verve and enthusiasm and you’re not really aware of how much you don’t know. So, I certainly see that playing out now with my adult children.

The interesting thing that I did find, because Premier and Cabinet in the mid-1980s when John Cain was the Premier was a very well-oiled machine, but back then there was a lot less politicisation, so over the intervening 30 years, we’ve seen, you know, ministers and premiers grow huge kind of shadow departments almost of advisers, they’re like mini bureaucracies of themselves, but back then there was so much more reliance on advice from public servants. So….

AM:

AM: Getting the right information and the data, is that something that has informed you professionally at UFS?

LM: Yes, it has, and I find that if I find a decision difficult to make as a senior executive, it’s often because I don’t have the right data and we haven’t asked the right questions and just going back again to our members. It’s really and I think at UFS, a board member said this to me when I first started there 21 years ago was every decision, every strategic and big decision made at Board level, they tested through the lens of their members. So how does this benefit our members? So, when we’re looking at business development, which we have done a lot of, or a change to how we do business, we have to test that and always always always put yourself in the member’s head or the customer’s head. Just go: how’s the customer to see this? And it’s inevitable, as organisations grow and become larger, that they can lose that customer centricity. I mean, they’ll be all blah blah blah about customer service, but it’s actually inside their heads that people have to think like that and test every decision they make and and really have it in the culture.

AM: Yeah, that that culture piece is really important. It’s, it’s what happens when no one’s looking, you know, like how actually people really operating, you know, apart from the procedure manual so culture’s so important and and speaking of culture, I mean UFS has got a long history and I’m sure that that informs culture but so maybe talk a little bit about that history and how  we can honor organisational history without it actually weighing you down moving into the future. There’s there’s a for a lot of co-ops and mutuals that very long history, and I know UFS has got an extraordinarily long history, so it’d be fascinating to hear a little bit more about that.

LM: I think I’m a bit of a co-operative and mutual history nerd, not quite as nerdy as you or Tim Mazzarol, but it’s really important for me to honor the history. So UFS started in 1880, the company was formed. Opened the first pharmacy in 1881, and I was fond of saying when I started 20 odd years ago that some of the personnel practices dated from that time because they’re, well it’s a place where people stay a long time, and I’ve accidentally stayed 21 years. So, oops. Because it’s such a great place to work and the ethos and the driving force and the purpose of the company is so energising I think for the majority of the employees.

So, it’s really important I think to honor the history and particularly the values. It’s important to consider the values and our values really haven’t changed. They’ve been described sort of a little differently over time. But it’s “we only exist to benefit our members and to improve the health of our members and the communities in which we operate” so and doing that we respond to changing needs in order to fulfil those needs.

So, it is really important to consider the values that originally drove you and how that plays out in your contemporary community may be different but I think it’s really really important to not let that history weigh you down or let it create inertia. It’s really important to look to the future all the time and  right out to the future, you know, right out five, 10, 20 years to the future and particularly in health, you know, there’s huge opportunities and huge technological advances happening now, so much will change massively and I, you know, certainly at UFS, we’re trying to make sure we’re positioned so we’re actually right on that early wave. We’re not a big enough organisation, our total turnover’s sort of eighty-five mil, something like that, we’re not going to be doing that cutting edge research and work. But we want to be early adopters and really be brave enough to try out a few things.

AM: Maybe give us a little bit more detail about UFS and and how you’re currently operating, so just give a little bit of that context to people, but maybe a couple of examples of how  you’re doing practically doing some things a little bit differently.

LM: Okay, um, yes so UFS now operates 21 pharmacies across Western Victoria and in inner Melbourne in Coburg, and we also have, we’ve run medical centers for the last 12 years, which I jokingly say it’s a reinstatement of the old UFS Medical Institute, which operated from 1919 to 1938.

AM: Wow.

LM: So, we also run a number of connected businesses and we have a number of government contracts related to those business.

LM: So, we have a thriving work Health practice. We have a little well-being center/day spa called Peace and Quiet because everybody needs some, and we’re running supercare nursing contracts across the state on behalf of Victorian government. We’re running nursing service in 16, 24-hour pharmacies, and we also operate a 24-hour pharmacy in Ballarat, which is a government contract.

LM: We’ve done a lot during the pandemic. We’ve really stepped up, particularly in the Ballarat region, and worked collaboratively with the other public health providers still running a Covid testing and vaccine clinic, on a contract with the Commonwealth Government, which has been [an] extremely important part of our local response to Covid and we’re running, through our pharmacies and medical centers right across the board, vaccination services for Covid and doing our best to be out doing the public advocacy on Covid best practice and some other health related issues.

AM: Something that I’ve just picked up, in terms of something interesting like not I’m wondering how many co-ops and mutuals would be front facing like running a pharmacy customer members are coming in. But also, you’ve got some significant government contracts there and that’s a little bit unusual. So, I think that’s very interesting and I think that’s also maybe that’s something for our sector to kind of think about a little bit.

LM: So, I think my view, and I come from the Friendly Society Pharmacy perspective, but obviously, I’m a member of other mutuals health fund, motoring organisations, all those other things.

AM: Yeah.

LM: If mutuals are in a state of being high functioning, there are huge opportunities at the moment. You know, there are hazards for mutuals. Just having  a glorious purpose and being a lovely feel good for-purpose organisation is not enough. You can still find boards and organisations get subject to hubris and just become so thoroughly delighted with themselves, they don’t actually pay attention to what’s happening in the environment and can become self-serving, I guess.

LM: So, there are risks to being a mutual which should not be underestimated, but I think the future for mutuals is really: now is our moment. Like I just feel so strongly that now is our moment, just in terms of banking. You know, it’s been the Banking Royal Commission. No one was up fronting those fearsome QCs during the Banking Royal Commission, which is not to say the mutual sector is perfect, but we had none of those corporate institutionalised sanctioned scandalous and unethical behaviours, not to speak of the corruption.

LM: So, there’s a great opportunity to gain the trust of people who are disenchanted before that, you know, knowledge and awareness in the general public sort of dissipates. The same with health. Huge opportunities in health for co-operatives and mutuals, I think at the moment and particularly in aged care.

LM: So, there’s a great opportunity there for mutuals who are considering looking at healthcare to actually show what a purpose driven organisation can look like and how that can play out in aged care.

AM: Yeah, it feels like there is that moment but there’s also a moment for  different parts of the co-operative and mutual landscape to maybe even partner and  be able to offer things together in this environment as well.

LM: I would agree with that, and I think some of the work that the BCCM has done in recent years has actually been on those lines and I went to the presentation a few years ago on the supply nation, but there are other forms of co-operation, certainly at UFS. We’ve had a philosophy for many years, we formally put in a policy maybe seven or eight years ago, that we would, our preference is we  actually want to partner with organisations whose values align with ours.

LM: So, for us the values alignment is really important with our partners. So it’s not necessarily we have an absolute preference for co-operatives and mutuals, but the values alignment, and very often that means it’s a co-operative or a mutual business or a you know, a B-corp certified private business or , something that’s classified technically as a social enterprise, which I think is 50% or more of profits are returned. So, they’ll be a private business but they can still be called a social Enterprise.

LM: I like to say that we are the original social enterprise as a Friendly Society group.

AM: Yeah. Yeah, and I love friendly society as well, its friendly.

LM: It’s so good when new staff come, and we’ve had a few new staff come in lately because we we’re dealing with you know, the great supposedly post-Covid (except we’re still in it) the turnover of people and  people come in after about a week, I say, “hey how’re you going?” and they go “Oh everyone is so friendly.” And I say: “We’re a friendly Society.”

AM:  Thank you very much Lynne.

MM: Thanks Antony, I can understand why UFS thrived with Lynne at the helm. She’s found the balance between honouring the history, you know, the values of the organisation, while thinking very strategically about their growth.

AM: That’s so true. They’ve stuck to their purpose, they’ve stuck to their member focus, but they’ve also responded to new opportunities without, you know, losing the core of what they do, and that’s a real challenge. And so that’s why it was such an inspiring conversation, I think.

MM: Thanks Antony for another great episode. Who have we got on the podcast next time?

AM: Well, it will all be about co-operative housing. We will have Heidi Lee who is the Chair of Common Equity Housing Limited.

MM: Great, see you then!

MM: Thanks for listening to this episode of Meet the Co-op Leaders. To learn more about the purpose and incredible variety of co-ops and mutuals, please visit our website www.bccm.coop. That’s C-O-O-P.

MM: As the original social business, co-operatives and mutuals offer genuine solutions to some of the significant challenges in the world today. So, if you’ve enjoyed today’s conversation, please share it with your friends and colleagues so that they can learn more about the co-operative difference. And remember, in a world of crisis and uncertainty, we will always be stronger together.

MM: I’m Melina Morrison, and I look forward to seeing you next time on Meet the Co-op Leaders.

Melina Morrison (MM): I’m Melina Morrison, CEO of the Business Council of Co-operatives and Mutuals. Welcome to Meet the Co-op Leaders, the podcast series that features insightful conversations with the people leading our most innovative and inspiring co-op and mutual businesses.

MM: Co-ops and mutuals are the businesses owned by members rather than shareholders. They’re all around us and they include some of our biggest brand names. In fact, 80 per cent of us are members of at least one co-operative or mutual, but most of us don’t even know that. In an age of putting purpose before profits, it’s more important than ever to learn about the original people-centred business model. So we’re bringing the leaders to you, to tell you in their own words what makes this a better way to do business.

MM: My co-pilot in this new series is co-operative developer Antony McMullen. Antony’s founder of Co-op Bonds, a worker-owned business that was set up to help other people learn to form co-operatives. Over the next series, Antony and I will be bringing you a new conversation with a co-op leader every couple of weeks to lift the lid on this incredible business model.

MM: HiAntony, welcome to Meet the Co-op Leaders. So tell me, who did you sit down with for this episode?

Antony McMullen (AM): I had a great conversation with Paul Ransom, he’s the CEO of Bank of Us, the aptly named bank, Bank of Us. It’s actually Tasmania’s last mutual bank. It started as a ye-oldy Building Society way back in 1870.

MM: Wow, that must be a sign of their resilience and success as a business. What does Paul put their longevity down to?

AM: Look, they’ve stuck to their guns basically. And they’ve really thrilled by continuing to offer people in Tasmania something different. They’re keeping purpose at the heart of what they do.

MM: Great! Let’s have a listen!

AM: Bank of Us is based in in Tasmania, Paul. And before we talk a little bit more about Bank of us and where it comes from. I just wanted to start with where you kind of come from professionally. We spoke last week, and you mentioned that you’d been the council clerk. Now they have changed terminology. But I love that. So what were some of the things that you learned when you were working in local government that you carried with you when you started to work at a mutual customer owned bank?

Paul Ranson (PR): Yeah. No. Thanks, Antony. It was probably a little bit of an unusual move to change to banking. I think it probably it would be somewhat more challenging today just because of the way the sector’s evolved. But yeah, I guess back then, when you looked at I mean local government really had to have like three key functions in Tasmania.

PR: One was around service provision and you think quite broadly about what Councils actually have responsibility for or take on. The second was both working as a regulator and within provision of regulating regulatory services, so you think planning, building, plumbing, health, etc. And probably the third part was around development of community. So that was often, you know, working with communities on particular plans, strategies, to make communities more livable and to help support economic development.

PR: So I think from a lot of that involvement over 20-odd years in the sector, you sort of learned to work quite strategically and had to do a lot of collaboration with stakeholders and within the council but also a more broadly government and other players that were part of that that local community. And also probably think that some of the skills you build up during that time stand you up quite well from a leadership point of view and coming to be involved in mutuals and I think you did touch on Antony in your presentation. It sort of sits, now mutuals sit somewhere between private sector and government, and local government sort of sits at the lower end of government in terms of how it works.

AM: Yeah

PR: Probably it’s not too far away from being a mutual or be it it’s a little bit different.

AM: A corporative academic Tim Mazzarol mentioned that a managing director or a CEO of a co-op is somewhere like a cross between a CEO and a Mayor. You’ve kind of got to have both sort of skill sets.

AM: But let’s get into Bank of Us. Now, it was originally a building society so and it was founded in 1870. So you go back a long long way. So why did Bank of Us stay, stay a mutual for from the roots through to where you are now?

PR: Yeah and a great question. So if we go back, I mean I want try to dwell on this too long. But 1870 there was a need for, was very difficult housing finance back then so, you know a group of like-minded citizens effectively put together a building society. They establish it as what’s called a permanent building society which means it could continue on, whereas in there were often terminating doing societies that were established for the sole purpose of helping establish a township for example, and then they sort of they effectively ceased operating after a certain period.

PR: So it was really a slow start and was actually called the Launceston Equitable Savings Building and Investment Society. So it was very formal. In fact, then everything was green, long names. I was into what I saw that video you showed, one was called the Equitable Pioneer Society. Yeah, so Equitable was a great term for the day, but it really just slowly built up a deposit base and helped fund housing finance, initially in Launceston and then grew a little bit later into Hobart in the sort of the late 80s early 1900s.

PR: To be fair didn’t do a lot probably for quite a while but by the late 1960s we started to see a lot more private housing being established and that’s where the building societies, which back then along with the banks, were the only way you could access housing finance in Australia. So they started to come more into their own and a sister building society got started on the northwest coast, which is along if you’ve been to Tassie, Devonport through to Wynyard and it grew very quickly and by the late 80s, it was a similar size to the much older Equitable. But so they sort of essentially had a building society coverage within Tasmania, but at the same time the industry was changing. The 1980s brought the opening up of competition. Credit unions were started to allow to do housing finance before it was just personal loans. And non-banks were layered to lean for housing, and there was a lot of shift in terms of how the sector was regulated. It moved from being state-based to national. And of course, we think about you know technology and what impacts that’s had within the sector and required a lot of investment. So there was naturally a lot of consolidation. Across Australia, went from being thousands of mutual banking institutions to less than 70 today during that time. So the two came together in the late 1980s, formed Bass and Equitable and I think that’s really where the fundamental change came for what was a pretty sleepy building society to something that’s been a lot more active and it was really founded on the principle of really strong, contemporary governance and staying true to what was the original purpose which it was about putting people into own homes, but really seeing our members as our owners. And so I think if you look at the, since then, there’s been a very strong focus from the board on, you know, getting the right directors, strong focus on cultural fit, the skills and experience. They really been early adopters of new governance practices. Now, I think in around 2002, we had the first female chair of a building society ever in Australia.

PR: So they were just small example, but I guess it’s it’s a relevant one.

PR: And the board’s never been afraid to be brave and I guess the reality is we’ve looked at is how do we start relevant? And at times we’ve had to make brave decisions. It was 20 years ago, we moved away from calling ourselves a building society because you know, we just, the research we were doing, you know doing building societies won’t well understood, so we couldn’t call ourselves a bank at that point because under the old until recently you had to have a certain size of capital base over 50 million, we weren’t there but by 2017 we were. So we took that opportunity to really change the whole organisation and who you know to really set ourselves up for growth. Because we’re relatively small we could only really do it once. You know, we’re talking about for our size, it was quite a substantial investment and change. So it was a whole business change project which focused on you know, the culture, people, capability, products, distribution, and then the whole thing around the name. So we went from calling ourselves at the time B&E, and traded at the time as B&E Personal Banking, to Bank of Us and that was really a deliberate research about the purpose of being there for customer, community and for Tasmania.

PR: And since then, you know, we’ve had a really great growth story. It’s not obviously the reason for existence but you know, that growth has been double-digit year-on-year-on over that five years and often during that period we’ve had to slow down growth because of our capital constraints.

PR: I guess it does really reply just to the last part of the question which is about well, why wouldn’t you then go and demutualise, and you obviously explain that earlier but what it means, but I guess from the board’s point of view, it’s well, we have a differentiation in market, history now has left us as the only mutual left in Tasmania in the banking space, and our view is provided that we can keep growing the business sustainably, then we can keep delivering on our purpose of placing people at the heart of banking. I think that just round off that final, the answer is you know, we often used to debate about, do we call ourselves a mutual or what is it in market, and for us we sort of landed on the simplest way to describe ourselves was as being “customer owned” so that it just sort of seemed to be the simplest way to resonate in market to explain what is different about Bank of us to all the other banks that existing in our marketplace.

AM: One of the things that we talked about last week, which really interested me was that you you’ve really gotten into back, back to the roots really. You’ve got, you really looked at affordable housing and you’ve been doing some really interesting work in that area. Could you could you tell us a little bit more about that?

PR: Yeah no, happy to share. It’s still relatively modest at this point, but it goes back about 10 years ago when one of our actual SME customers was growing quite strongly who were a residential builder and we we had a conversation about how we could support their growth. And we effectively developed some white-label housing products that were pitched at the affordable housing space and that company which is called Wilson Homes and still going strong today, has been a key partner with us. And so we developed a couple, developed over time initially and a product where it just capitalised the interest during the construction of a home and anybody who’s built a new home would know often, you know, you still potentially renting somewhere while you’re building that home so, you know, that’s become quite onerous if you’ve got to then find the additional money for you as you’re repayments start while you’re still renting, so you can move in. So that proved to be very popular and then more recently we moved to another product, where effectively you just pay a small upfront deposit and of Wilson’s capitalise the interest in their actual building costs during that period, so that’s also been a great product.

PR: But more recently we’ve been keen to get into the shared equity space with the Tasmanian Government and they’d run along term scheme which Bendigo used to provide. But they did do a major review several years ago and with some ongoing advocacy, we ultimately got an opportunity to pitch for that business along with with others and we’ve met we did get awarded that scheme. And what we’ve been able to do, working with the government, is to expand the scheme to now provide opportunities for people to access shared equity for not only the original purpose of the scheme, which was about, you know, a director of housing property or new house land packages, but now to existing dwellings in the market, which you will appreciate is the biggest part of the market and is a more traditional space for first home buyers to participate in.

PR: So we’re finding, you know, we’ve been doing that now for three or four months and we’ve had fantastic inquiry levels and you know, it is really growing quite quickly. But it’s interesting because I think for as a as a customer owned bank, one of the benefits we brought to the table for the government is a really good understanding about how we deliver a much better customer experience. So we’ve been able to help them improve significantly the process which will, you know, I’m sure, also help us with the scheme, but get more people to be able to access the housing market. And I think that just as you start to look at those opportunities, we’re starting to see other opportunities now emerge that could see us doing more in the space like under the NDIS scheme with access to housing for people with a disability. So I think it’s certainly, as we know, a very topical subject, yeah, but I think well we are well place as a sector to do some innovative work across that, to make a difference.

MM: That was a fascinating conversation, Antony. I love that they are still focused on people’s housing needs after more than 150 years.

AM: Yes, it’s the story that I think we hear from a lot of co-ops and mutuals, they’ve got this original commitment to make a difference, to actually address a problem, and you know, we’ve had issues around housing ups and downs over many years, and now they’re doing things to meet the housing needs to people in their community as part of a broader co-operative and mutual approach to these problems. They are being part of the solution.

MM: I grew up in Tasmania. It is a beautiful island and it has a great sense of community. I really felt the community values shine through in your interview with Paul. Thanks again Antony, I can’t wait for the next conversation.

AM: We will be talking to the legendary Lynne McLennan, a character, an innovator and a really successful CEO, CEO of UFS Dispensaries, with UFS standing for United Friendly Society, so they are keeping it friendly.

MM: Thanks for listening to this episode of Meet the Co-op Leaders. To learn more about the purpose and incredible variety of co-ops and mutuals, please visit our website www.bccm.coop. That’s C-O-O-P.

MM: As the original social business, co-operatives and mutuals offer genuine solutions to some of the significant challenges in the world today. So if you’ve enjoyed today’s conversation, please share it with your friends and colleagues so that they can learn more about the co-operative difference. And remember, in a world of crisis and uncertainty, we will always be stronger together.

MM: I’m Melina Morrison, and I look forward to seeing you next time on Meet the Co-op Leaders.