Cooperative Economics | "Impact-First" Investing | Transformative Leadership

Innovative Companies Change their Customers: My CPA Co-op Experience

Michael Schrage’s insight about how innovative companies change their customers has stuck with me. And it’s changed the way I understand the work my organization does.

Successful innovations go beyond the quid pro quo; they’re targeted investments in the customer’s future value. 

Most customers believe that “the market” sets the terms of engagement for service delivery.

At CPA Co-op, we shape an experience for customers where they have the power to reset the terms to align with their interests.

If we organize a group of customers with a collective contract value (or the promise thereof) that provides sufficient motivation for service providers, the nature of the relationship can be re-shaped.

CPA Co-op plays the role of building these trusted relationships with service providers and customers, synthesizing insights gleaned from both sides, and then negotiating the terms that facilitate this market shift.

CPA Co-op’s Process follows 6 basic steps:

  1. Listen well to customer challenges, probing for areas of dissatisfaction that could be improved
  2. Understand service providers’ business model, where they want to go, and what they look for in a good customer relationship
  3. Craft a group solicitation process that is fair to vendors and brings in proposals that meet key customer interests
  4. Organize a group evaluation meeting (and others if helpful) where customers openly share concerns, bad experiences, fears and also what they will need to move forward / how they’d like to make it happen.
  5. Facilitate the meeting in such a way that people share openly and respond to other’s concerns and fears. The process builds trust. Then ask them who they want to select and propose a path forward that meets their needs and will be within reason for vendors.
  6. Follow-through by negotiating the new framework with finalist service providers and then threading the needle with each individual customer, by drawing on specific customer stories, and/or additional group meetings to clinch the deal.

Justin, a customer and member-owner of CPA Co-op, named the dynamic for me this week:

“Each time the co-op organizes a group RFP process, you change the game.”

As I look back on the origins of our work, I see the common thread of our group processes driving change.

  • Our first group energy aggregations in 2011 and 2012, re-wrote the energy supply services agreement, mitigating the most significant risks for customers.
  • Our trash & recycling negotiations in 2013 and 2014 eliminated fees and auto-renewal provisions.
  • Our landscaping efforts in 2014 gave explicit expectations for turf height and specific scope of work during each visit.
  • Our solar work in 2014 pushed developers to give rates below what anybody else was offering.
  • Our janitorial process in 2015 integrated best practices for transparency in wages and profit margins to even the smallest customer types and opened opportunity for women and minority-owned businesses to access much large contracts.
  • Our copier work in 2016 brought dramatic savings, incorporated service guarantees with real teeth, and cut unfair profit-making provisions from service agreements and leases.
  • Our security efforts in 2016 brought accountability for chronic scheduling errors, and built opportunity for local, black-owned firms to show how quality guards could re-shape a school’s culture.
  • In 2017, our solar work flipped the standard contract, delivered more value to customers than anything anybody in DC had previously offered, and opened the door to roof replacements as part of even small solar projects.

At the core of each of these processes was a well-facilitated group space that built trust between participants and delivered practical insight.

If we can continue to do this in new areas, I think we create a new type of member worldview that believes they have the power to reshape any industry.

If we keep building this, I believe we’ll have the keys to an unstoppable vehicle for innovation and social change. We’ll have innovated something that changes the game on what’s possible for groups of customers acting together.

“Successful innovations go beyond the quid pro quo; they’re targeted investments in the customer’s future value.”

Because of this realization, I propose we invest significantly more resources in organizing group processes to help customers change the game in the contracting areas they identify as priority areas for improvement.

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