Q3: Case Study: Food Co-op Engages Its Members                                                  In the years since it was founded in 1973, the Sacramento Natural Foods Co-op has blossomed into a $15 million business. With 7,000 member-owners, it is the second-largest single-store grocery cooperative in the nation in terms of sales and volume. However, when a vocal minority of its democratic membership quashed plans to expand to a second store, the business was at a crossroads. “Things were so bad,” said the board of director’s member Peter Keat, “that we literally felt paralyzed as an organization.” With tensions running high, Cultrera interviewed Eric Douglas of Leading Resources Inc. (LRI). Cultrera was impressed by Douglas’s track record for managing change and gaining consensus within large organizations. “I was looking for someone with really good communication skills,” Cultrera said. “Someone skilled at working with diverse constituencies.” D2K: Establishing Trust as a Foundation for Long-term Growth Together Douglas and Cultrera mapped out a five-stage process they called “Directions 2000” or “D2K.” The process was carefully crafted to engage as many member-owners as possible in a productive dialogue with management and each other. At each stage of the process, Douglas guided the participants toward an understanding of the complex business issues under consideration while improving their communication and problem-solving skills. Because the issues were complex, and emotions were running high around the issue of expansion, flexibility had to be at the heart of the process itself. Stage 1: Identifying Basic Values Organizational Core ValuesThe guiding force behind any effective strategic plan is a clearly articulated set of values and a strong vision. But with member-owners representing a broad demographic spectrum, getting their agreement on a common vision was extremely challenging. Douglas and LRI consultants addressed the challenge by organizing 13 focus groups – 200 people representing specific constituencies such as top shoppers, most active owners, and staff – to brainstorm about values and vision. Stage 2: Casting a Wider Net Using input from the focus groups, LRI drafted a survey with 50 questions about values and visions and distributed it to all 7,000 Co-op member-owners. LRI’s analysis of the 1,645 returned surveys confirmed that pricing was most important to members. Member-owners were evenly divided on the question of whether to expand to additional locations. A third issue that came into focus from the survey was the 5% member-owner discount: Owners did not want to give it up, even if it meant they paid higher prices in the store. Stage 3: Moving Beyond Conflict to Strategy With the survey data in hand, a group of 25 people – comprised of 15 member-owners, seven members of the Board of Directors, and three members of management – began working together as the D2K Planning Team under the guidance of LRI consultants. Within a few weeks, the team had defined the purpose and values – what Douglas calls the “strategic foundation.” The team then faced the question of vision – and the deep conflict over whether or not the Co-op should expand to a second store. Stage 4: Honoring the Process through Feedback The next step was presenting the draft plan to member-owners. Rather than ask for “thumbs up or thumbs down,” LRI created a survey asking member-owners to rate each component of the plan, as well as the process itself. Member-owners were also invited to attend “town hall” forums to discuss the draft and provide feedback. The resulting feedback was overwhelmingly positive. More than 95% of those responding said they supported the process. More than 90% said they supported the vision. Stage 5: From Approval to Action After unanimously voting to approve the plan, the Board handed it over to management to implement. “It makes my job as general manager a whole lot easier,” Cultrera said. “Now, when we run into pockets of controversy or resistance, it’s very easy to say, ‘Well, thank you. I really appreciate your input. But we heard from a lot of people who said this is what they want us to do.’ I feel like when there are other issues we need to face on a nitty-gritty level, we can call that process up again.” Question: Identify the learning loop by the company and how they used these stages to bring development? Provide reasoning.