Article: Tuesday, 9 August 2022

The smooth running of peer groups such as cooperatives is often hindered by people who might lie, cheat, and deceive fellow members for their own advantage without being detected. While in more hierarchical organisations they wouldn’t get many chances to use their cunning, this sort of opportunistic behaviour can be fatal for cooperatives. But there are examples of successful and enduring cooperatives – like the world-renowned Magnum Photos – where trust among members based on shared personal values deters individuals from engaging in opportunistic behaviour. Researchers Dr Akhil Bhardwaj of Tilburg University and Dr Anastasia Sergeeva of Rotterdam School of Management, Erasmus University (RSM) wanted to understand how Magnum Photos mitigated the sort of problems that are typical of cooperatives, and how the agency enabled a continuous stream of creative innovation that has allowed it to remain a flagship photo agency for decades.

Decades of creatives and collectives

Magnum Photos celebrated its 75th anniversary in 2022 – it has been collecting photographers’ individual styles into one powerful collaboration since 1947. And now this business model is starting to see a resurgence thanks to new possibilities presented by Web3 technology: non-hierarchical organisations of colleagues who pursue common and creative goals that require creative efforts: think of blockchain technology and virtual reality environments. Besides that, lots of people actually prefer to work in a collective organisation – they find they can better develop their potential and be more satisfied with their work than they would in a hierarchical structure. So how do you get the best for your business out of your creatives?

Looking for shared values

Bhardwaj and Sergeeva spent a month exploring and analysing the archives of the Magnum Foundation, looking at meeting minutes, correspondence, memos, reports, and contracts, and conducted interviews with Magnum’s administrative personnel as well as experts in photojournalism. They pored over historical studies, memoirs, and biographies of the photographers.

The kind of people who can be relied on to not act opportunistically are those who refuse to be involved in acts that promise a bigger payoff because it violates their deeply held values. Bhardwaj and Sergeeva found that deciding who deserves trust in a peer group lies not in risk-probability calculus, but in observing the manifestation of shared values over time. This is particularly true in the sort of groups in which it is difficult to measure performance, where tasks require continuous innovation and where lying, cheating, and other kinds of deceptive behaviour may pass undetected.

Selecting members with shared values allows freelancers and creatives who work on commission to better shield themselves from market selection forces, especially because regulations that protect freelancers are often weak. This gives collective organisations a better chance of being economically viable too.

Values-based trust

To sum up, the benefit for organisations that rely on individuals using their creativity to do tasks that are never repetitive comes from screening team members based on shared values. This can give rise to values-based trust that reduces concerns about opportunism.

In fact, value-based trust can promote a spirit of generosity in a group. When this happens, members freely help each other, and often care so much about the survival of the organisation that they are willing to make personal sacrifices to maintain it.

How does values-based trust foster innovation?

The researchers observed that screening prospective members based on their shared values results in more creativity and innovation because members know that they have the discretion to take creative risks – and this won’t be seen as an act of opportunism. Moreover, members are more likely to engage in more creative endeavours when it’s part of the shared values of the organisation. Of course, free rein to be creative is counterbalanced by the responsibility of the individual to accept the penalties of failure as well as the fruits of reward.

This model of using shared values to encourage creativity has its limits though. When cooperative peer groups reach a certain size, it becomes a problem to maintain the homogeneity of shared values. Between 30–50 members is optimum.

Four tips for good business from creative co-operatives

1. Evidence of values

Instead of assessing how the candidate fits the organisation based on what they say their values are, try looking for evidence of those values in action by observing what they have done in the past.

2. Monitoring & Control

If your organisation has peer groups in which individual performance is difficult to measure (e.g., creative and knowledge-intensive industries) then selecting members based on shared values reduces the need for control and monitoring.

3. Screening

Screening for shared values exists in some organisations – for example the tenure track promotion system in universities – but it has a wider unrealised potential. There are benefits from this approach for traditional partnerships and decentralised autonomous organisations made possible by Web3, as well as separate R&D units created to explore uncharted territories like the metaverse.

4. Individual rights

And finally, two important caveats to remember: it’s crucial to clearly delineate individual property rights (e.g., photographers’ copyrights) within such a group, and collectives with between 30–50 members do it best.

Dr A. (Anastasia) Sergeeva
Rotterdam School of Management (RSM)
Erasmus University Rotterdam
Anastasia Sergeeva
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