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Saturday, July 9, 2022

IBM Watson

From Wikipedia, the free encyclopedia

Watson's avatar, inspired by the IBM "Smarter Planet" logo

IBM Watson is a question-answering computer system capable of answering questions posed in natural language, developed in IBM's DeepQA project by a research team led by principal investigator David Ferrucci. Watson was named after IBM's founder and first CEO, industrialist Thomas J. Watson.

The computer system was initially developed to answer questions on the quiz show Jeopardy! and, in 2011, the Watson computer system competed on Jeopardy! against champions Brad Rutter and Ken Jennings, winning the first place prize of $1 million.

In February 2013, IBM announced that Watson software system's first commercial application would be for utilization management decisions in lung cancer treatment at Memorial Sloan Kettering Cancer Center, New York City, in conjunction with WellPoint (now Anthem).

Description

The high-level architecture of IBM's DeepQA used in Watson

Watson was created as a question answering (QA) computing system that IBM built to apply advanced natural language processing, information retrieval, knowledge representation, automated reasoning, and machine learning technologies to the field of open domain question answering.

IBM stated that in Watson "more than 100 different techniques are used to analyze natural language, identify sources, find and generate hypotheses, find and score evidence, and merge and rank hypotheses."

In recent years, Watson's capabilities have been extended and the way in which Watson works has been changed to take advantage of new deployment models (Watson on IBM Cloud), evolved machine learning capabilities, and optimized hardware available to developers and researchers. It is no longer purely a question answering (QA) computing system designed from Q&A pairs but can now 'see', 'hear', 'read', 'talk', 'taste', 'interpret', 'learn' and 'recommend'.

Software

Watson uses IBM's DeepQA software and the Apache UIMA (Unstructured Information Management Architecture) framework implementation. The system was written in various languages, including Java, C++, and Prolog, and runs on the SUSE Linux Enterprise Server 11 operating system using the Apache Hadoop framework to provide distributed computing.

Hardware

The system is workload-optimized, integrating massively parallel POWER7 processors and built on IBM's DeepQA technology, which it uses to generate hypotheses, gather massive evidence, and analyze data. Watson employs a cluster of ninety IBM Power 750 servers, each of which uses a 3.5 GHz POWER7 eight-core processor, with four threads per core. In total, the system has 2,880 POWER7 processor threads and 16 terabytes of RAM.

According to John Rennie, Watson can process 500 gigabytes (the equivalent of a million books) per second. IBM master inventor and senior consultant Tony Pearson estimated Watson's hardware cost at about three million dollars. Its Linpack performance stands at 80 TeraFLOPs, which is about half as fast as the cut-off line for the Top 500 Supercomputers list. According to Rennie, all content was stored in Watson's RAM for the Jeopardy game because data stored on hard drives would be too slow to compete with human Jeopardy champions.

Data

The sources of information for Watson include encyclopedias, dictionaries, thesauri, newswire articles and literary works. Watson also used databases, taxonomies and ontologies including DBPedia, WordNet and Yago. The IBM team provided Watson with millions of documents, including dictionaries, encyclopedias and other reference material, that it could use to build its knowledge.

Operation

Watson parses questions into different keywords and sentence fragments in order to find statistically related phrases. Watson's main innovation was not in the creation of a new algorithm for this operation but rather its ability to quickly execute hundreds of proven language analysis algorithms simultaneously. The more algorithms that find the same answer independently, the more likely Watson is to be correct. Once Watson has a small number of potential solutions, it is able to check against its database to ascertain whether the solution makes sense or not.

Comparison with human players

Ken Jennings, Watson, and Brad Rutter in their Jeopardy! exhibition match.

Watson's basic working principle is to parse keywords in a clue while searching for related terms as responses. This gives Watson some advantages and disadvantages compared with human Jeopardy! players. Watson has deficiencies in understanding the contexts of the clues. As a result, human players usually generate responses faster than Watson, especially to short clues. Watson's programming prevents it from using the popular tactic of buzzing before it is sure of its response. However, Watson has consistently better reaction time on the buzzer once it has generated a response, and is immune to human players' psychological tactics, such as jumping between categories on every clue.

In a sequence of 20 mock games of Jeopardy, human participants were able to use the six to seven seconds that Watson needed to hear the clue and decide whether to signal for responding. During that time, Watson also has to evaluate the response and determine whether it is sufficiently confident in the result to signal. Part of the system used to win the Jeopardy! contest was the electronic circuitry that receives the "ready" signal and then examined whether Watson's confidence level was great enough to activate the buzzer. Given the speed of this circuitry compared to the speed of human reaction times, Watson's reaction time was faster than the human contestants except when the human anticipated (instead of reacted to) the ready signal. After signaling, Watson speaks with an electronic voice and gives the responses in Jeopardy!'s question format. Watson's voice was synthesized from recordings that actor Jeff Woodman made for an IBM text-to-speech program in 2004.

The Jeopardy! staff used different means to notify Watson and the human players when to buzz, which was critical in many rounds. The humans were notified by a light, which took them tenths of a second to perceive. Watson was notified by an electronic signal and could activate the buzzer within about eight milliseconds. The humans tried to compensate for the perception delay by anticipating the light, but the variation in the anticipation time was generally too great to fall within Watson's response time. Watson did not attempt to anticipate the notification signal.

History

Development

Since Deep Blue's victory over Garry Kasparov in chess in 1997, IBM had been on the hunt for a new challenge. In 2004, IBM Research manager Charles Lickel, over dinner with coworkers, noticed that the restaurant they were in had fallen silent. He soon discovered the cause of this evening hiatus: Ken Jennings, who was then in the middle of his successful 74-game run on Jeopardy!. Nearly the entire restaurant had piled toward the televisions, mid-meal, to watch Jeopardy!. Intrigued by the quiz show as a possible challenge for IBM, Lickel passed the idea on, and in 2005, IBM Research executive Paul Horn supported Lickel, pushing for someone in his department to take up the challenge of playing Jeopardy! with an IBM system. Though he initially had trouble finding any research staff willing to take on what looked to be a much more complex challenge than the wordless game of chess, eventually David Ferrucci took him up on the offer. In competitions managed by the United States government, Watson's predecessor, a system named Piquant, was usually able to respond correctly to only about 35% of clues and often required several minutes to respond. To compete successfully on Jeopardy!, Watson would need to respond in no more than a few seconds, and at that time, the problems posed by the game show were deemed to be impossible to solve.

In initial tests run during 2006 by David Ferrucci, the senior manager of IBM's Semantic Analysis and Integration department, Watson was given 500 clues from past Jeopardy! programs. While the best real-life competitors buzzed in half the time and responded correctly to as many as 95% of clues, Watson's first pass could get only about 15% correct. During 2007, the IBM team was given three to five years and a staff of 15 people to solve the problems. John E. Kelly III succeeded Paul Horn as head of IBM Research in 2007. InformationWeek described Kelly as "the father of Watson" and credited him for encouraging the system to compete against humans on Jeopardy!. By 2008, the developers had advanced Watson such that it could compete with Jeopardy! champions. By February 2010, Watson could beat human Jeopardy! contestants on a regular basis.

During the game, Watson had access to 200 million pages of structured and unstructured content consuming four terabytes of disk storage including the full text of the 2011 edition of Wikipedia, but was not connected to the Internet. For each clue, Watson's three most probable responses were displayed on the television screen. Watson consistently outperformed its human opponents on the game's signaling device, but had trouble in a few categories, notably those having short clues containing only a few words.

Although the system is primarily an IBM effort, Watson's development involved faculty and graduate students from Rensselaer Polytechnic Institute, Carnegie Mellon University, University of Massachusetts Amherst, the University of Southern California's Information Sciences Institute, the University of Texas at Austin, the Massachusetts Institute of Technology, and the University of Trento, as well as students from New York Medical College. Among the team of IBM programmers who worked on Watson was Ed Toutant, who himself had appeared on Jeopardy! in 1989 (winning one game).

Jeopardy!

Preparation

Watson demo at an IBM booth at a trade show

In 2008, IBM representatives communicated with Jeopardy! executive producer Harry Friedman about the possibility of having Watson compete against Ken Jennings and Brad Rutter, two of the most successful contestants on the show, and the program's producers agreed. Watson's differences with human players had generated conflicts between IBM and Jeopardy! staff during the planning of the competition. IBM repeatedly expressed concerns that the show's writers would exploit Watson's cognitive deficiencies when writing the clues, thereby turning the game into a Turing test. To alleviate that claim, a third party randomly picked the clues from previously written shows that were never broadcast. Jeopardy! staff also showed concerns over Watson's reaction time on the buzzer. Originally Watson signaled electronically, but show staff requested that it press a button physically, as the human contestants would. Even with a robotic "finger" pressing the buzzer, Watson remained faster than its human competitors. Ken Jennings noted, "If you're trying to win on the show, the buzzer is all", and that Watson "can knock out a microsecond-precise buzz every single time with little or no variation. Human reflexes can't compete with computer circuits in this regard." Stephen Baker, a journalist who recorded Watson's development in his book Final Jeopardy, reported that the conflict between IBM and Jeopardy! became so serious in May 2010 that the competition was almost canceled. As part of the preparation, IBM constructed a mock set in a conference room at one of its technology sites to model the one used on Jeopardy!. Human players, including former Jeopardy! contestants, also participated in mock games against Watson with Todd Alan Crain of The Onion playing host. About 100 test matches were conducted with Watson winning 65% of the games.

To provide a physical presence in the televised games, Watson was represented by an "avatar" of a globe, inspired by the IBM "smarter planet" symbol. Jennings described the computer's avatar as a "glowing blue ball criss-crossed by 'threads' of thought—42 threads, to be precise", and stated that the number of thought threads in the avatar was an in-joke referencing the significance of the number 42 in Douglas Adams' Hitchhiker's Guide to the Galaxy. Joshua Davis, the artist who designed the avatar for the project, explained to Stephen Baker that there are 36 triggerable states that Watson was able to use throughout the game to show its confidence in responding to a clue correctly; he had hoped to be able to find forty-two, to add another level to the Hitchhiker's Guide reference, but he was unable to pinpoint enough game states.

A practice match was recorded on January 13, 2011, and the official matches were recorded on January 14, 2011. All participants maintained secrecy about the outcome until the match was broadcast in February.

Practice match

In a practice match before the press on January 13, 2011, Watson won a 15-question round against Ken Jennings and Brad Rutter with a score of $4,400 to Jennings's $3,400 and Rutter's $1,200, though Jennings and Watson were tied before the final $1,000 question. None of the three players responded incorrectly to a clue.

First match

The first round was broadcast February 14, 2011, and the second round, on February 15, 2011. The right to choose the first category had been determined by a draw won by Rutter. Watson, represented by a computer monitor display and artificial voice, responded correctly to the second clue and then selected the fourth clue of the first category, a deliberate strategy to find the Daily Double as quickly as possible. Watson's guess at the Daily Double location was correct. At the end of the first round, Watson was tied with Rutter at $5,000; Jennings had $2,000.

Watson's performance was characterized by some quirks. In one instance, Watson repeated a reworded version of an incorrect response offered by Jennings. (Jennings said "What are the '20s?" in reference to the 1920s. Then Watson said "What is 1920s?") Because Watson could not recognize other contestants' responses, it did not know that Jennings had already given the same response. In another instance, Watson was initially given credit for a response of "What is a leg?" after Jennings incorrectly responded "What is: he only had one hand?" to a clue about George Eyser (the correct response was, "What is: he's missing a leg?"). Because Watson, unlike a human, could not have been responding to Jennings's mistake, it was decided that this response was incorrect. The broadcast version of the episode was edited to omit Trebek's original acceptance of Watson's response. Watson also demonstrated complex wagering strategies on the Daily Doubles, with one bet at $6,435 and another at $1,246. Gerald Tesauro, one of the IBM researchers who worked on Watson, explained that Watson's wagers were based on its confidence level for the category and a complex regression model called the Game State Evaluator.

Watson took a commanding lead in Double Jeopardy!, correctly responding to both Daily Doubles. Watson responded to the second Daily Double correctly with a 32% confidence score.

However, during the Final Jeopardy! round, Watson was the only contestant to miss the clue in the category U.S. Cities ("Its largest airport was named for a World War II hero; its second largest, for a World War II battle"). Rutter and Jennings gave the correct response of Chicago, but Watson's response was "What is Toronto?????" with five question marks appended indicating a lack of confidence. Ferrucci offered reasons why Watson would appear to have guessed a Canadian city: categories only weakly suggest the type of response desired, the phrase "U.S. city" did not appear in the question, there are cities named Toronto in the U.S., and Toronto in Ontario has an American League baseball team. Dr. Chris Welty, who also worked on Watson, suggested that it may not have been able to correctly parse the second part of the clue, "its second largest, for a World War II battle" (which was not a standalone clause despite it following a semicolon, and required context to understand that it was referring to a second-largest airport). Eric Nyberg, a professor at Carnegie Mellon University and a member of the development team, stated that the error occurred because Watson does not possess the comparative knowledge to discard that potential response as not viable. Although not displayed to the audience as with non-Final Jeopardy! questions, Watson's second choice was Chicago. Both Toronto and Chicago were well below Watson's confidence threshold, at 14% and 11% respectively. Watson wagered only $947 on the question.

The game ended with Jennings with $4,800, Rutter with $10,400, and Watson with $35,734.

Second match

During the introduction, Trebek (a Canadian native) joked that he had learned Toronto was a U.S. city, and Watson's error in the first match prompted an IBM engineer to wear a Toronto Blue Jays jacket to the recording of the second match.

In the first round, Jennings was finally able to choose a Daily Double clue, while Watson responded to one Daily Double clue incorrectly for the first time in the Double Jeopardy! Round. After the first round, Watson placed second for the first time in the competition after Rutter and Jennings were briefly successful in increasing their dollar values before Watson could respond. Nonetheless, the final result ended with a victory for Watson with a score of $77,147, besting Jennings who scored $24,000 and Rutter who scored $21,600.

Final outcome

The prizes for the competition were $1 million for first place (Watson), $300,000 for second place (Jennings), and $200,000 for third place (Rutter). As promised, IBM donated 100% of Watson's winnings to charity, with 50% of those winnings going to World Vision and 50% going to World Community Grid. Similarly, Jennings and Rutter donated 50% of their winnings to their respective charities.

In acknowledgment of IBM and Watson's achievements, Jennings made an additional remark in his Final Jeopardy! response: "I for one welcome our new computer overlords." Jennings later wrote an article for Slate, in which he stated:

IBM has bragged to the media that Watson's question-answering skills are good for more than annoying Alex Trebek. The company sees a future in which fields like medical diagnosis, business analytics, and tech support are automated by question-answering software like Watson. Just as factory jobs were eliminated in the 20th century by new assembly-line robots, Brad and I were the first knowledge-industry workers put out of work by the new generation of 'thinking' machines. 'Quiz show contestant' may be the first job made redundant by Watson, but I'm sure it won't be the last.

Philosophy

Philosopher John Searle argues that Watson—despite impressive capabilities—cannot actually think. Drawing on his Chinese room thought experiment, Searle claims that Watson, like other computational machines, is capable only of manipulating symbols, but has no ability to understand the meaning of those symbols; however, Searle's experiment has its detractors.

Match against members of the United States Congress

On February 28, 2011, Watson played an untelevised exhibition match of Jeopardy! against members of the United States House of Representatives. In the first round, Rush D. Holt, Jr. (D-NJ, a former Jeopardy! contestant), who was challenging the computer with Bill Cassidy (R-LA, later Senator from Louisiana), led with Watson in second place. However, combining the scores between all matches, the final score was $40,300 for Watson and $30,000 for the congressional players combined.

IBM's Christopher Padilla said of the match, "The technology behind Watson represents a major advancement in computing. In the data-intensive environment of government, this type of technology can help organizations make better decisions and improve how government helps its citizens."

Current and future applications

According to IBM, "The goal is to have computers start to interact in natural human terms across a range of applications and processes, understanding the questions that humans ask and providing answers that humans can understand and justify." It has been suggested by Robert C. Weber, IBM's general counsel, that Watson may be used for legal research. The company also intends to use Watson in other information-intensive fields, such as telecommunications, financial services, and government.

Watson is based on commercially available IBM Power 750 servers that have been marketed since February 2010.

Commentator Rick Merritt said that "there's another really important reason why it is strategic for IBM to be seen very broadly by the American public as a company that can tackle tough computer problems. A big slice of [IBM's profit] comes from selling to the U.S. government some of the biggest, most expensive systems in the world."

In 2013, it was reported that three companies were working with IBM to create apps embedded with Watson technology. Fluid is developing an app for retailers, one called "The North Face", which is designed to provide advice to online shoppers. Welltok is developing an app designed to give people advice on ways to engage in activities to improve their health. MD Buyline is developing an app for the purpose of advising medical institutions on equipment procurement decisions.

In November 2013, IBM announced it would make Watson's API available to software application providers, enabling them to build apps and services that are embedded in Watson's capabilities. To build out its base of partners who create applications on the Watson platform, IBM consults with a network of venture capital firms, which advise IBM on which of their portfolio companies may be a logical fit for what IBM calls the Watson Ecosystem. Thus far, roughly 800 organizations and individuals have signed up with IBM, with interest in creating applications that could use the Watson platform.

On January 30, 2013, it was announced that Rensselaer Polytechnic Institute would receive a successor version of Watson, which would be housed at the Institute's technology park and be available to researchers and students. By summer 2013, Rensselaer had become the first university to receive a Watson computer.

On February 6, 2014, it was reported that IBM plans to invest $100 million in a 10-year initiative to use Watson and other IBM technologies to help countries in Africa address development problems, beginning with healthcare and education.

On June 3, 2014, three new Watson Ecosystem partners were chosen from more than 400 business concepts submitted by teams spanning 18 industries from 43 countries. "These bright and enterprising organizations have discovered innovative ways to apply Watson that can deliver demonstrable business benefits", said Steve Gold, vice president, IBM Watson Group. The winners were Majestyk Apps with their adaptive educational platform, FANG (Friendly Anthropomorphic Networked Genome); Red Ant with their retail sales trainer; and GenieMD with their medical recommendation service.

On July 9, 2014, Genesys Telecommunications Laboratories announced plans to integrate Watson to improve their customer experience platform, citing the sheer volume of customer data to analyze.

Watson has been integrated with databases including Bon Appétit magazine to perform a recipe generating platform.

Watson is being used by Decibel, a music discovery startup, in its app MusicGeek which uses the supercomputer to provide music recommendations to its users. The use of Watson has also been found in the hospitality industry. Go Moment uses Watson for its Rev1 app, which gives hotel staff a way to quickly respond to questions from guests. Arria NLG has built an app that helps energy companies stay within regulatory guidelines, making it easier for managers to make sense of thousands of pages of legal and technical jargon.

OmniEarth, Inc. uses Watson computer vision services to analyze satellite and aerial imagery, along with other municipal data, to infer water usage on a property-by-property basis, helping districts in California improve water conservation efforts.

In September 2016, Condé Nast started using Watson to help build and strategize social influencer campaigns for brands. Using software built by IBM and Influential, Condé Nast's clients will be able to know which influencer's demographics, personality traits and more best align with a marketer and the audience it is targeting.

In February 2017, Rare Carat, a New York City-based startup and e-commerce platform for buying diamonds and diamond rings, introduced an IBM Watson-powered artificial intelligence chatbot called "Rocky" to assist novice diamond buyers through the daunting process of purchasing a diamond. As part of the IBM Global Entrepreneur Program, Rare Carat received the assistance of IBM in the development of the Rocky Chat Bot. In May 2017, IBM partnered with the Pebble Beach Company to use Watson as a concierge. Watson's artificial intelligence was added to an app developed by Pebble Beach and was used to guide visitors around the resort. The mobile app was designed by IBM iX and hosted on the IBM Cloud. It uses Watson's Conversation applications programming interface.

In November 2017, in Mexico City, the Experience Voices of Another Time was opened at the National Museum of Anthropology using IBM Watson as an alternative to visiting a museum.

Healthcare

In healthcare, Watson's natural language, hypothesis generation, and evidence-based learning capabilities are being investigated to see how Watson may contribute to clinical decision support systems and the increase in artificial intelligence in healthcare for use by medical professionals. To aid physicians in the treatment of their patients, once a physician has posed a query to the system describing symptoms and other related factors, Watson first parses the input to identify the most important pieces of information; then mines patient data to find facts relevant to the patient's medical and hereditary history; then examines available data sources to form and test hypotheses; and finally provides a list of individualized, confidence-scored recommendations. The sources of data that Watson uses for analysis can include treatment guidelines, electronic medical record data, notes from healthcare providers, research materials, clinical studies, journal articles and patient information. Despite being developed and marketed as a "diagnosis and treatment advisor", Watson has never been actually involved in the medical diagnosis process, only in assisting with identifying treatment options for patients who have already been diagnosed.

In February 2011, it was announced that IBM would be partnering with Nuance Communications for a research project to develop a commercial product during the next 18 to 24 months, designed to exploit Watson's clinical decision support capabilities. Physicians at Columbia University would help to identify critical issues in the practice of medicine where the system's technology may be able to contribute, and physicians at the University of Maryland would work to identify the best way that a technology like Watson could interact with medical practitioners to provide the maximum assistance.

In September 2011, IBM and WellPoint (now Anthem) announced a partnership to utilize Watson to help suggest treatment options to physicians. Then, in February 2013, IBM and WellPoint gave Watson its first commercial application, for utilization management decisions in lung cancer treatment at Memorial Sloan–Kettering Cancer Center.

IBM announced a partnership with Cleveland Clinic in October 2012. The company has sent Watson to the Cleveland Clinic Lerner College of Medicine of Case Western Reserve University, where it will increase its health expertise and assist medical professionals in treating patients. The medical facility will utilize Watson's ability to store and process large quantities of information to help speed up and increase the accuracy of the treatment process. "Cleveland Clinic's collaboration with IBM is exciting because it offers us the opportunity to teach Watson to 'think' in ways that have the potential to make it a powerful tool in medicine", said C. Martin Harris, MD, chief information officer of Cleveland Clinic.

In 2013, IBM and MD Anderson Cancer Center began a pilot program to further the center's "mission to eradicate cancer". However, after spending $62 million, the project did not meet its goals and it has been stopped.

On February 8, 2013, IBM announced that oncologists at the Maine Center for Cancer Medicine and Westmed Medical Group in New York have started to test Watson in an effort to recommend treatment for lung cancer.

On July 29, 2016, IBM and Manipal Hospitals (a leading hospital chain in India) announced the launch of IBM Watson for Oncology, for cancer patients. This product provides information and insights to physicians and cancer patients to help them identify personalized, evidence-based cancer care options. Manipal Hospitals is the second hospital in the world to adopt this technology and first in the world to offer it to patients online as an expert second opinion through their website. Manipal discontinued this contract in December 2018.

On January 7, 2017, IBM and Fukoku Mutual Life Insurance entered into a contract for IBM to deliver analysis to compensation payouts via its IBM Watson Explorer AI, which resulted in the loss of 34 jobs. The company said it would speed up compensation payout analysis via analyzing claims and medical records, and increase productivity by 30%. The company also said it would save ¥140m in running costs.

Several startups in the healthcare space have been effectively using seven business model archetypes to take solutions based on IBM Watson to the marketplace. These archetypes depends on the value generate for the target user (e.g. patient focus vs. healthcare provider and payer focus) and value capturing mechanisms (e.g. providing information or connecting stakeholders).

By 2022, IBM Watson Health was generating about a billion dollars in annual gross revenue, but was facing a lack of profitability and increased competition. One expert assessed to CNN that "IBM was clearly not gaining much traction in the healthcare market". On January 21, 2022, IBM announced the sell-off of its Watson Health unit to Francisco Partners.

IBM Watson Group

On January 9, 2014, IBM announced it was creating a business unit around Watson, led by senior vice president Michael Rhodin. IBM Watson Group will have headquarters in New York's Silicon Alley and will employ 2,000 people. IBM has invested $1 billion to get the division going. Watson Group will develop three new cloud-delivered services: Watson Discovery Advisor, Watson Engagement Advisor, and Watson Explorer. Watson Discovery Advisor will focus on research and development projects in pharmaceutical industry, publishing, and biotechnology, Watson Engagement Advisor will focus on self-service applications using insights on the basis of natural language questions posed by business users, and Watson Explorer will focus on helping enterprise users uncover and share data-driven insights based on federated search more easily. The company is also launching a $100 million venture fund to spur application development for "cognitive" applications. According to IBM, the cloud-delivered enterprise-ready Watson has seen its speed increase 24 times over—a 2,300 percent improvement in performance and its physical size shrank by 90 percent—from the size of a master bedroom to three stacked pizza boxes. IBM CEO Virginia Rometty said she wants Watson to generate $10 billion in annual revenue within ten years. In 2017, IBM and MIT established a new joint research venture in artificial intelligence. IBM invested $240 million to create the MIT–IBM Watson AI Lab in partnership with MIT, which brings together researchers in academia and industry to advance AI research, with projects ranging from computer vision and NLP to devising new ways to ensure that AI systems are fair, reliable and secure. In March 2018, IBM's CEO Ginni Rometty proposed "Watson's Law," the "use of and application of business, smart cities, consumer applications and life in general."

Chef Watson

Chef Watson is Bon Appétit magazine's and IBM's artificial-intelligence cooking web app. IBM's collaboration with the Institute of Culinary Education to pair the expertise of chefs with cognitive computing, produced Institute of Culinary Education; IBM (2015). Cognitive cooking with Chef Watson : recipes for innovation from IBM & the Institute of Culinary Education. Naperville, Illinois. ISBN 978-1-4926-2571-1.

Watson helped a team of chefs create five new poutines for the 2015 La Poutine Week food festival in Toronto and Montreal. It analyzed the demographics and popular cuisines of the cities and drew from a database of tens of thousands of recipes to create fusion pairings for each city.

Chatbot

Watson is being used via IBM partner program as a chatbot to provide the conversation for children's toys.

Building codes

In 2015, the engineering firm ENGEO created an online service via the IBM partner program named GoFetchCode. GoFetchCode applies Watson's natural language processing and question-answering capabilities to the International Code Council's model building codes.

Teaching assistant

IBM Watson is being used for several projects relating to education, and has entered partnerships with Pearson Education, Blackboard, Sesame Workshop and Apple.

In its partnership with Pearson, Watson is being made available inside electronic text books to provide natural language, one-on-one tutoring to students on the reading material.

As an individual using the free Watson APIs available to the public, Ashok Goel, a professor at Georgia Tech, used Watson to create a virtual teaching assistant to assist students in his class. Initially, Goel did not reveal the nature of "Jill", which was created with the help of a few students and IBM. Jill answered questions where it had a 97% certainty of an accurate answer, with the remainder being answered by human assistants.

The research group of Sabri Pllana developed an assistant for learning parallel programming using the IBM Watson. A survey with a number of novice parallel programmers at the Linnaeus University indicated that such assistant will be welcome by students that learn parallel programming.

Weather forecasting

In August 2016, IBM announced it would be using Watson for weather forecasting. Specifically, the company announced they would use Watson to analyze data from over 200,000 Weather Underground personal weather stations, and data from other sources, as a part of project Deep Thunder.

Fashion

IBM Watson together with Marchesa designed a dress that changed the colour of the fabric depending on the mood of the audience. The dress lit up in different colours based on the sentiment of Tweets about the dress. Tweets were passed through a Watson tone analyzer and then sent back to a small computer inside the waist of the dress.

Tax preparation

On February 5–6, 2017, tax preparation company H&R Block began nationwide use of a Watson-based program.

Advertising

In September 2017, IBM announced that with its acquisition of The Weather Company's advertising sales division, and a partnership with advertising neural network Cognitiv, Watson will provide AI-powered advertising solutions.

Cooperative

From Wikipedia, the free encyclopedia
 
The volunteer board of a retail consumers' cooperative, such as the former Oxford, Swindon & Gloucester Co-op, is held to account at an annual general meeting of members

A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise". Cooperatives are democratically owned by their members, with each member having one vote in electing the board of directors. Cooperatives may include:

  • businesses owned and managed by the people who use their services (a consumer cooperative)
  • organizations managed by the people who work there (worker cooperatives)
  • multi-stakeholder or hybrid cooperatives that share ownership between different stakeholder groups. For example, care cooperatives where ownership is shared between both care-givers and receivers. Stakeholders might also include non-profits or investors.
  • second- and third-tier cooperatives whose members are other cooperatives
  • platform cooperatives that use a cooperatively owned and governed website, mobile app or a protocol to facilitate the sale of goods and services.

Research published by the Worldwatch Institute found that in 2012 approximately one billion people in 96 countries had become members of at least one cooperative. The turnover of the largest three hundred cooperatives in the world reached $2.2 trillion.

Cooperative businesses are typically more productive and economically resilient than many other forms of enterprise, with twice the number of co-operatives (80%) surviving their first five years compared with other business ownership models (41%) according to data from United Kingdom. The largest worker owned cooperative in the world, the Mondragon Corporation (founded by Catholic priest José María Arizmendiarrieta), has been in continuous operation since 1956.

Cooperatives frequently have social goals, which they aim to accomplish by investing a proportion of trading profits back into their communities. As an example of this, in 2013, retail co-operatives in the UK invested 6.9% of their pre-tax profits in the communities in which they trade as compared with 2.4% for other rival supermarkets.

Since 2002, cooperatives have been distinguishable on the Internet through the use of a .coop domain. In 2014, the International Co-operative Alliance (ICA) introduced the Cooperative Marque, meaning ICA cooperatives and WOCCU credit unions can also be identified through a coop ethical consumerism label.

Origins and history

Cooperation dates back as far as human beings have been organizing for mutual benefits. Tribes were organized as cooperative structures, allocating jobs and resources among each other, only trading with the external communities. In alpine environments, trade could only be maintained in organized cooperatives to achieve a useful condition of artificial roads such as Viamala in 1472. Pre-industrial Europe is home to the first cooperatives from an industrial context. The roots of the cooperative movement can be traced to multiple influences and extend worldwide. In the English-speaking world, post-feudal forms of cooperation between workers and owners that are expressed today as "profit sharing" and "surplus sharing" arrangements existed as far back as 1795. The key ideological influence on the Anglosphere branch of the cooperative movement, however, was a rejection of the charity principles that underpinned welfare reforms when the British government radically revised its Poor Laws in 1834. As both state and church institutions began to routinely distinguish between the 'deserving' and 'undeserving' poor, a movement of friendly societies grew throughout the British Empire based on the principle of mutuality, committed to self-help in the welfare of working people.

Robert Owen (1771–1858) was a social reformer and a pioneer of the cooperative movement.

In 1761, the Fenwick Weavers' Society was formed in Fenwick, East Ayrshire, Scotland to sell discounted oatmeal to local workers. Its services expanded to include assistance with savings and loans, emigration and education. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, and his partners purchased the New Lanark mill from Owen's father-in-law, David Dale, and proceeded to introduce better labour standards, including discounted retail shops where profits were passed on to his employees. Owen left New Lanark to pursue other forms of cooperative organization and develop coop ideas through writing and lecture. Cooperative communities were set up in Glasgow, Indiana and Hampshire, although ultimately unsuccessful. In 1828, William King set up a newspaper, The Cooperator, to promote Owen's thinking, having already set up a cooperative store in Brighton.

Also in 1810, Rev. Henry Duncan of the Ruthwell Presbyterian Church in Dumfriesshire, Scotland founded a friendly society to create a cooperative depository institution at which his poorest parishioners could hold savings accounts accruing interest for sickness and old-age, which was the first established savings bank that would be merged into the Trustee Savings Bank between 1970 and 1985. The Rochdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful cooperative enterprise, used as a model for modern coops, following the 'Rochdale Principles'. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. Within ten years there were over a thousand cooperative societies in the United Kingdom.

"Spolok Gazdovský" (The Association of Administrators or The Association of Farmers) founded in 1845 by Samuel Jurkovič, was the first cooperative in Europe (Credit union). The cooperative provided a cheap loan from funds generated by regular savings for members of the cooperative. Members of cooperative had to commit to a moral life and had to plant two trees in a public place every year. Despite the short duration of its existence, until 1851, it thus formed the basis of the cooperative movement in Slovakia. Slovak national thinker Ľudovít Štúr said about the association: "We would very much like such excellent constitutions to be established throughout our region. They would help to rescue people from evil and misery. A beautiful, great idea, a beautiful excellent constitution!"

Other events such as the founding of a friendly society by the Tolpuddle Martyrs in 1832 were key occasions in the creation of organized labor and consumer movements.

Friendly Societies established forums through which one member, one vote was practiced in organisation decision-making. The principles challenged the idea that a person should be an owner of property before being granted a political voice. Throughout the second half of the nineteenth century (and then repeatedly every twenty years or so) there was a surge in the number of cooperative organisations, both in commercial practice and civil society, operating to advance democracy and universal suffrage as a political principle. Friendly Societies and consumer cooperatives became the dominant form of organization amongst working people in Anglosphere industrial societies prior to the rise of trade unions and industrial factories. Weinbren reports that by the end of the 19th century, over 80% of British working age men and 90% of Australian working age men were members of one or more Friendly Society.

From the mid-nineteenth century, mutual organisations embraced these ideas in economic enterprises, firstly amongst tradespeople, and later in cooperative stores, educational institutes, financial institutions and industrial enterprises. The common thread (enacted in different ways, and subject to the constraints of various systems of national law) is the principle that an enterprise or association should be owned and controlled by the people it serves, and share any surpluses on the basis of each member's cooperative contribution (as a producer, labourer or consumer) rather than their capacity to invest financial capital.

The International Co-operative Alliance was the first international association formed (1895) by the cooperative movement. It includes the World Council of Credit Unions. The International Cooperative Alliance was founded in London, England on 19 August 1895 during the 1st Cooperative Congress. In attendance were delegates from cooperatives from Argentina, Australia, Belgium, England, Denmark, France, Germany, Holland, India, Italy, Switzerland, Serbia, and the US. A second organization formed later in Germany: the International Raiffeisen Union. In the United States, the National Cooperative Business Association (NCBA CLUSA; the abbreviation of the organization retains the initials of its former name, Cooperative League of the USA) serves as the sector's oldest national membership association. It is dedicated to ensuring that cooperative businesses have the same opportunities as other businesses operating in the country and that consumers have access to cooperatives in the marketplace.

In 1945 Artturi Ilmari Virtanen received the Nobel Prize in Chemistry for his invention of the AIV silage. This invention improved milk production and created a method of preserving butter, the AIV salt, which led to increased Finnish butter exports. He had started his career in chemistry in Valio, a cooperative of dairy farmers in which he headed the research department for 50 years and where all his major inventions were first put to practice.

Cooperative banks were first to adopt online banking. Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in October 1994. In 1996 OP Financial Group, also a cooperative bank, became the second online bank in the world and the first in Europe.

By 2004 a new association focused on worker co-ops was founded, the United States Federation of Worker Cooperatives.

The cooperative movement has been fueled globally by ideas of economic democracy. Economic democracy is a socioeconomic philosophy that suggests an expansion of decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders. There are many different approaches to thinking about and building economic democracy. Anarchists are committed to libertarian socialism and have focused on local organization, including locally managed cooperatives, linked through confederations of unions, cooperatives and communities. Marxists, who as socialists have likewise held and worked for the goal of democratizing productive and reproductive relationships, often placed a greater strategic emphasis on confronting the larger scales of human organization. As they viewed the capitalist class to be politically, militarily and culturally mobilized for the purpose of maintaining an exploitable working class, they fought in the early 20th century to appropriate from the capitalist class the society's collective political capacity in the form of the state. Though they regard the state as an unnecessarily oppressive institution, Marxists considered appropriating national and international-scale capitalist institutions and resources (such as the state) to be an important first pillar in creating conditions favorable to solidaristic economies. With the declining influence of the USSR after the 1960s, socialist strategies pluralized, though economic democratizers have not as yet established a fundamental challenge to the hegemony of global neoliberal capitalism.

Meaning

Identity

Co-op principles and values

Many cooperatives follow the seven Rochdale Principles:

  1. Voluntary and open membership
  2. Democratic member control, with each member having one vote.
  3. Economic participation by members
  4. Autonomy and independence
  5. Education, training and information
  6. Cooperation among cooperatives
  7. Concern for community

Co-op Marque and domain

The Co-op Marque, a symbol used by co-operatives internationally

Since 2002, ICA cooperatives and WOCCU credit unions could be distinguished by use of a .coop domain. In 2014, ICA introduced the Global Cooperative Marque for use by ICAs Cooperative members and by WOCCU's Credit Union members so they can be further identified by their coop ethical consumerism label. The marque is used today by thousands of cooperatives in more than a hundred countries.

The .coop domain and Co-operative Marque were designed as a new symbol of the global cooperative movement and its collective identity in the digital age. The Co-operative Marque and domain is reserved just for co-operatives, credit unions and organisations that support co-operatives; is distinguished by its ethical badge that subscribes to the seven ICA Cooperative Principles and Co-op Values. Co-ops can be identified on the Internet through the use of the .coop suffix of internet addresses. Organizations using .coop domain names must adhere to the basic co-op values.

Cooperatives as legal entities

A cooperative is a legal entity owned and democratically controlled by its members. Members often have a close association with the enterprise as producers or consumers of its products or services, or as its employees. The legal entities have a range of social characteristics. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Economic benefits are distributed proportionally to each member's level of participation in the cooperative, for instance, by a dividend on sales or purchases, rather than according to capital invested. Cooperatives may be classified as either worker, consumer, producer, purchasing or housing cooperatives. They are distinguished from other forms of incorporation in that profit-making or economic stability are balanced by the interests of the community.

There are specific forms of incorporation for cooperatives in some countries, e.g. Finland and Australia. Cooperatives may take the form of companies limited by shares or by guarantee, partnerships or unincorporated associations. In the UK they may also use the industrial and provident society structure. In the US, cooperatives are often organized as non-capital stock corporations under state-specific cooperative laws. Cooperatives often share their earnings with the membership as dividends, which are divided among the members according to their participation in the enterprise, such as patronage, instead of according to the value of their capital shareholdings (as is done by a joint stock company).

Cooperative share capital

The cooperative share capital or co-operative share capital (in short cooperative capital or co-operative capital) is the form of capital that the cooperative accumulates from the paid participation shares of its members. The total amount of participation shares the paid to the cooperative constitutes the cooperative capital. The co-operative share capital is usually non-withdrawable and indivisible to the cooperative members.

Economic stability

Capital and the Debt Trap reports that "cooperatives tend to have a longer life than other types of enterprise, and thus a higher level of entrepreneurial sustainability". This resilience has been attributed to how cooperatives share risks and rewards between members, how they harness the ideas of many and how members have a tangible ownership stake in the business. Additionally, "cooperative banks build up counter-cyclical buffers that function well in case of a crisis," and are less likely to lead members and clients towards a debt trap (p. 216). This is explained by their more democratic governance that reduces perverse incentives and subsequent contributions to economic bubbles.

In Europe

A 2013 report by ILO concluded that cooperative banks outperformed their competitors during the financial crisis of 2007–2008. The cooperative banking sector had 20% market share of the European banking sector, but accounted for only 7 per cent of all the write-downs and losses between the third quarter of 2007 and first quarter of 2011. Cooperative banks were also over-represented in lending to small and medium-sized businesses in all of the 10 countries included in the report.

A 2013 report published by the UK Office for National Statistics showed that in the UK the rate of survival of cooperatives after five years was 80 percent compared with only 41 percent for all other enterprises. A further study found that after ten years 44 percent of cooperatives were still in operation, compared with only 20 percent for all enterprises.

A 2012 report published by The European Confederation of cooperatives and worker-owned enterprises active in industry and services showed that in France and Spain, worker cooperatives and social cooperatives "have been more resilient than conventional enterprises during the economic crisis".

In North America

In the United States of America

In a 2007 study by the World Council of Credit Unions, the five-year survival rate of cooperatives in the United States was found to be 90% in comparison to 3-5% for traditional businesses. Credit unions, a type of cooperative bank, had five times lower failure rate than other banks during the financial crisis and more than doubled lending to small businesses between 2008 and 2016, from $30 billion to $60 billion, while lending to small businesses overall during the same period declined by around $100 billion. Public trust in credit unions stands at 60%, compared to 30% for big banks and small businesses are five times less likely to be dissatisfied with a credit union than with a big bank.

In Canada

A 2010 report by the Ministry of Economic Development, Innovation and Export in Québec found that the five-year survival rate and ten-year survival rate of cooperatives in Québec to be 62% and 44% respectively compared to 35% and 20% for conventional firms. Another report by the BC-Alberta Social economy Research Alliance found that the three-year survival rate of cooperatives in Alberta to be 81.5% in comparison to 48% for traditional firms. Another report by the aforementioned Research Alliance found that in British Columbia, the five-year survival rates for cooperatives between 2000 and 2010 to be 66.6% in comparison to conventional businesses that had 43% and 39% in the years 1984 and 1993 respectively.

Types of cooperatives

Co-op City in The Bronx, New York City is the largest cooperative housing development in the world, with 55,000 people.
 
The two largest supermarkets chains in Switzerland, Migros and Coop, are cooperatives. The third largest bank, Raiffeisen, is a cooperative as well.

The top 300 largest cooperatives were listed in 2007 by the International Co-operative Alliance. 80% were involved in either agriculture, finance, or retail and more than half were in the United States, Italy, or France.

Consumers' cooperative

A consumers' cooperative is a business owned by its customers. Members vote on major decisions and elect the board of directors from among their own number. The first of these was set up in 1844 in the North-West of England by 28 weavers who wanted to sell food at a lower price than the local shops.

Retail cooperative

Retail cooperatives are retailers, such as grocery stores, owned by their customers. They should not be confused with retailers' cooperatives, whose members are retailers rather than consumers. In Denmark, Singapore, Italy, and Finland the company with the largest market share in the grocery store sector is a consumer owned cooperative. In Switzerland both the largest and the second largest retailer are consumer owned cooperatives.

Housing cooperative

A housing cooperative is a legal mechanism for ownership of housing where residents either own shares (share capital co-op) reflecting their equity in the cooperative's real estate or have membership and occupancy rights in a not-for-profit cooperative (non-share capital co-op), and they underwrite their housing through paying subscriptions or rent.

Housing cooperatives come in three basic equity structures

  • In market-rate housing cooperatives, members may sell their shares in the cooperative whenever they like for whatever price the market will bear, much like any other residential property. Market-rate co-ops are very common in New York City.
  • Limited equity housing cooperatives, which are often used by affordable housing developers, allow members to own some equity in their home, but limit the sale price of their membership share to that which they paid.
  • Group equity or zero-equity housing cooperatives do not allow members to own equity in their residences and often have rental agreements well below market rates.

Members of a building cooperative (in Britain known as a self-build housing cooperative) pool resources to build housing, normally using a high proportion of their own labor. When the building is finished, each member is the sole owner of a homestead, and the cooperative may be dissolved.

This collective effort was at the origin of many of Britain's building societies, which however, developed into "permanent" mutual savings and loan organisations, a term which persisted in some of their names (such as the former Leeds Permanent). Nowadays such self-building may be financed using a step-by-step mortgage which is released in stages as the building is completed. The term may also refer to worker cooperatives in the building trade.

Utility cooperative

A utility cooperative is a type of consumers' cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications services to its members. Profits are either reinvested into infrastructure or distributed to members in the form of "patronage" or "capital credits", which are essentially dividends paid on a member's investment into the cooperative. In the United States, many cooperatives were formed to provide rural electrical and telephone service as part of the New Deal. See Rural Utilities Service.

In the case of electricity, cooperatives are generally either generation and transmission (G&T) co-ops that create and send power via the transmission grid or local distribution co-ops that gather electricity from a variety of sources and send it along to homes and businesses.

In Tanzania, it has been proven that the cooperative method is helpful in water distribution. When the people are involved with their own water, they care more because the quality of their work has a direct effect on the quality of their water.

Credit unions, cooperative banking and co-operative insurance

The Co-operative Bank's head office in Manchester. The statue in front is of Robert Owen, a pioneer in the cooperative movement.

Credit unions are cooperative financial institutions owned and controlled by their members. Credit unions provide the same financial services as banks but are considered not-for-profit organizations and adhere to cooperative principles.

Credit unions originated in mid-19th-century Germany through the efforts of pioneers Franz Herman Schulze'Delitzsch and Friedrich Wilhelm Raiffeisen. The concept of financial cooperatives crossed the Atlantic at the turn of the 20th century, when the caisse populaire movement was started by Alphonse Desjardins in Quebec, Canada. In 1900, from his home in Lévis, he opened North America's first credit union, marking the beginning of the Mouvement Desjardins. Eight years later, Desjardins provided guidance for the first credit union in the United States, where there are now about 7,950 active status federally insured credit unions, with almost 90 million members and more than $679 billion on deposit.

Financial cooperatives hold a significant market share in Europe and Latin America, as well as a few countries in Sub-Saharan Africa. They also have a strong presence in Asia, Australia, and the United States. According to the World Council of Credit Unions (WOCCU), there were 68,882 financial cooperatives in 109 countries in 2016, serving more than 235 million members, with total assets exceeding 1.7 trillion dollars. It is worth noting that the WOCCU's data do not include some major financial cooperative networks in Europe, such as Germany, Finland, France, Denmark, and Italy. In many high-income economies, financial cooperatives hold significant market shares of the banking sector.

According to the European Association of Cooperative Banks, the market share of cooperative banks in the Small and Medium Enterprises (SMEs) credit market by the end of 2016 was 37% in Finland, 45% in France, 33% in Germany, 43% in the Netherlands, and 22% in Canada. In Germany, Volksbanken-Raiffeisen banks have a market share of approximately 21% of domestic credit and domestic deposits. In the Netherlands, Rabobank holds 34% of deposits, and in France cooperative banks (Crédit Agricole, Crédit Mutuel and BPCE Group) possess more than 59% of domestic credit and 61% of domestic deposits. In Finland, OP financial group holds 35% and 38% of domestic credit and deposits, respectively, and in Canada, Desjardins holds around 42% of domestic deposits and 22% of domestic credit.

There are many types of cooperative financial institutions with different names across the world, including financial cooperatives ('cooperativa financiera' is the Spanish term used in Latin America), cooperative banks, credit unions, and savings and credit cooperatives ('cooperativa de ahorro y crédito' in Spanish or 'coopérative d’épargne et de credit' in French-speaking countries).

Cooperative banking networks, which were nationalized in Eastern Europe, work now as real cooperative institutions. In Poland, the SKOK (Spółdzielcze Kasy Oszczędnościowo-Kredytowe) network has grown to serve over 1 million members via 13,000 branches, and is larger than the country's largest conventional bank.

In Scandinavia, there is a clear distinction between mutual savings banks (Sparbank) and true credit unions (Andelsbank).

The oldest cooperative banks in Europe, based on the ideas of Friedrich Raiffeisen, are joined together in the 'Urgenossen'.

Worker cooperative

A worker cooperative or producer cooperative is a cooperative owned and democratically controlled by its "worker-owners". There are no outside owners in a "pure" workers' cooperative, only the workers own shares of the business, though hybrid forms exist in which consumers, community members or capitalist investors also own some shares. In practice, control by worker-owners may be exercised through individual, collective or majority ownership by the workforce, or the retention of individual, collective or majority voting rights (exercised on a one-member one-vote basis). A worker cooperative, therefore, has the characteristic that the majority of its workforce owns shares, and the majority of shares are owned by the workforce. Membership is not always compulsory for employees, but generally only employees can become members either directly (as shareholders) or indirectly through membership of a trust that owns the company.

The impact of political ideology on practice constrains the development of cooperatives in different countries. In India, there is a form of workers' cooperative which insists on compulsory membership for all employees and compulsory employment for all members. That is the form of the Indian Coffee Houses. This system was advocated by the Indian communist leader A. K. Gopalan. In places like the UK, common ownership (indivisible collective ownership) was popular in the 1970s. Cooperative Societies only became legal in Britain after the passing of Slaney's Act in 1852. In 1865 there were 651 registered societies with a total membership of well over 200,000. There are now more than 400 worker cooperatives in the UK, Suma Wholefoods being the largest example with a turnover of £24 million.

Business and employment cooperative

Business and employment cooperatives (BECs) are a subset of worker cooperatives that represent a new approach to providing support to the creation of new businesses.

Like other business creation support schemes, BEC's enable budding entrepreneurs to experiment with their business idea while benefiting from a secure income. The innovation BECs introduce is that once the businesses are established, the entrepreneurs are not forced to leave and set up independently, but can stay and become full members of the cooperative. The micro-enterprises then combine to form one multi-activity enterprise whose members provide a mutually supportive environment for each other.

BECs thus provide budding business people with an easy transition from inactivity to self-employment, but in a collective framework. They open up new horizons for people who have ambition but who lack the skills or confidence needed to set off entirely on their own – or who simply want to carry on an independent economic activity but within a supportive group context.

Purchasing cooperative

A "purchasing cooperative" is a type of cooperative arrangement, often among businesses, to agree to aggregate demand to get lower prices from selected suppliers. Retailers' cooperatives are a form of purchasing cooperative.

Major purchasing cooperatives include Best Western, ACE Hardware and CCA Global Partners.

Agricultural service cooperatives provide various services to their individual farming members, and to agricultural production cooperatives, where production resources such as land or machinery are pooled and members farm jointly.

Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down members' costs. Supply cooperatives may provide seeds, fertilizers, chemicals, fuel, and farm machinery. Some supply cooperatives also operate machinery pools that provide mechanical field services (e.g., plowing, harvesting) to their members. Examples include the American cranberry-and-grapefruit cooperative Ocean Spray, collective farms in socialist states and the kibbutzim in Israel.

Producer cooperative

Producer cooperatives have producers as their members, and provide services involved in moving a product from the point of production to the point of consumption. Unlike worker cooperatives, they allow businesses with multiple employees to join. Agricultural cooperatives and fishery cooperatives are such examples.

Agricultural marketing cooperatives operate a series of interconnected activities involving planning production, growing and harvesting, grading, packing, transport, storage, food processing, distribution and sale. Agricultural marketing cooperatives are often formed to promote specific commodities.

Commercially successful agricultural marketing cooperatives include India's Amul (dairy products), which is the world's largest producer of milk and milk products, Dairy Farmers of America (dairy products) in the United States, and Malaysia's FELDA (palm oil).

Producer cooperatives may also be organized by small businesses for pooling their savings and accessing capital, for acquiring supplies and services, or for marketing products and services.

Producer cooperatives among urban artisans were developed in the mid-19th-century in Germany by Franz Hermann Schulze-Delitzsch, who also promoted changes to the legal system (the Prussian Genossenschaftsgesetz of 1867) that facilitated such cooperatives. At about the same time, Friedrich Wilhelm Raiffeisen developed similar cooperatives among rural people.

Multi-stakeholder cooperatives

Multi-stakeholder cooperatives include representation from different stakeholder groups, such as both consumers and workers.

Social cooperative

Cooperatives traditionally combine social benefit interests with capitalistic property-right interests. Cooperatives achieve a mix of social and capital purposes by democratically governing distribution questions by and between equal but not controlling members. Democratic oversight of decisions to equitably distribute assets and other benefits means capital ownership is arranged in a way for social benefit inside the organization. External societal benefit is also encouraged by incorporating the operating-principle of cooperation between co-operatives. In the final year of the 20th century, cooperatives banded together to establish a number of social enterprise agencies that have moved to adopt the multi-stakeholder cooperative model. In the years 1994–2009 the EU and its member nations gradually revised national accounting systems to "make visible" the increasing contribution of social economy organizations.

A particularly successful form of multi-stakeholder cooperative is the Italian "social cooperative", of which some 11,000 exist. "Type A" social cooperatives bring together providers and beneficiaries of a social service as members. "Type B" social cooperatives bring together permanent workers and previously unemployed people who wish to integrate into the labor market. They are legally defined as follows:

  • no more than 80% of profits may be distributed, interest is limited to the bond rate, and dissolution is altruistic (assets may not be distributed)
  • the cooperative has legal personality and limited liability
  • the objective is the general benefit of the community and the social integration of citizens
  • those of type B integrate disadvantaged people into the labour market. The categories of disadvantage they target may include physical and mental disability, drug and alcohol addiction, developmental disorders and problems with the law. They do not include other factors of disadvantage such as unemployment, race, sexual orientation or abuse.
  • type A cooperatives provide health, social or educational services
  • various categories of stakeholder may become members, including paid employees, beneficiaries, volunteers (up to 50% of members), financial investors and public institutions. In type B cooperatives at least 30% of the members must be from the disadvantaged target groups
  • voting is one person one vote

SCIC

The SCIC – Société coopérative d'intérêt collective (co-operative society of collective interest) is a type of multi-stakeholder co-operative structure introduced in France in 1982. A SCIC must have at least three different categories of members, including users and employees. Other stakeholder groups that may be represented are volunteers, public authorities and other individual or corporate supporters. Voting is on a ‘one member, one vote’ basis, though voting in colleges is also provided for under certain circumstances.

SCICs must have a ‘general interest’ objective. Public bodies can subscribe for up to 20% of the capital. The status allows an association to convert into a co-operative without having to change its legal form. The relative rigidity of the structure, combined with the government's failure to grant tax relief, has limited its take-up.

Multi-stakeholding in retailing

Multi-stakeholder co-operatives also exist in the retail sector. An example is Färm, a Belgian wholefood retailing cooperative founded in 2015 which favours organic and local produce. It operates 16 shops, of which 11 are in Brussels.

Categories of members:

The cooperative brings together all the participants in the food chain from farm to fork, represented by six different categories of members:

  • A Investors: the people providing the financial means necessary to achieve the enterprise's ambitions, currently four of the project's founders. This category holds 94% of the shares but only exercises 50% of the votes. The board will consider applications from people wishing to invest in excess of €25,000;
  • B Managers: the members of Färm's management;
  • C Workers: members of staff working at Färm, who currently number 36;
  • D Sympathisers: clients and people who want to support the project without having a contractual or commercial relationship with it. Anyone can become part of this category by buying shares worth a minimum of €105 (currently 5 shares of €21), and a maximum of €5,000. As of September 2020 the cooperative was not accepting new members;
  • E Suppliers and producers: there is no obligation to hold shares in order to collaborate commercially with Färm, but the enterprise finds it nice that the two groups support each other;
  • F Supporters: self-employed people who have opened a store under the Färm brand.

Governance

Each member has one vote. The members elect the board of 10 at the annual general meeting. Each category of members has at least one board member to represent them.

An innovative governance provision ensure that one group of members can dominate the others. In practice board decisions are taken by consensus. In the event of a vote, each director has one vote, and except where the cooperative's registered or internal rules provide otherwise, decisions are taken by simple majority of those present or represented. But in the event of a tie, if the votes of a group of voters all belong to the same category, the votes of the other categories prevail.

To ensure that members are committed to the cooperative's values, vision and objectives, to guarantee its long-term finance and to limit financial speculation, shares are not transferable for a period of four years.

Members receive a 2% discount on purchases.

New generation cooperative

New generation cooperatives (NGCs) are an adaptation of traditional cooperative structures to modern, capital intensive industries. They are sometimes described as a hybrid between traditional co-ops and limited liability companies or public benefit corporations. They were first developed in California and spread and flourished in the US Mid-West in the 1990s. They are now common in Canada where they operate primarily in agriculture and food services, where their primary purpose is to add value to primary products. For example, producing ethanol from corn, pasta from durum wheat, or gourmet cheese from goat's milk.

Other

Platform cooperative

A platform cooperative, or platform co-op, is a cooperatively owned, democratically governed business that establishes a computing platform, and uses a protocol, website or mobile app to facilitate the sale of goods and services. Platform cooperatives are an alternative to venture capital-funded platforms insofar as they are owned and governed by those who depend on them most—workers, users, and other relevant stakeholders. Proponents of platform cooperativism claim that, by ensuring the financial and social value of a platform circulate among these participants, platform cooperatives will bring about a more equitable and fair digitally mediated economy in contrast with the extractive models of corporate intermediaries. Platform cooperatives differ from traditional cooperatives not only due to their use of digital technologies, but also by their contribution to the commons for the purpose of fostering an equitable social and economic landscape.

Volunteer cooperative

A volunteer cooperative is a cooperative that is run by and for a network of volunteers, for the benefit of a defined membership or the general public, to achieve some goal. Depending on the structure, it may be a collective or mutual organization, which is operated according to the principles of cooperative governance. The most basic form of volunteer-run cooperative is a voluntary association. A lodge or social club may be organized on this basis. A volunteer-run co-op is distinguished from a worker cooperative in that the latter is by definition employee-owned, whereas the volunteer cooperative is typically a non-stock corporation, volunteer-run consumer co-op or service organization, in which workers and beneficiaries jointly participate in management decisions and receive discounts on the basis of sweat equity.

Federal or secondary cooperative

In some cases, cooperative societies find it advantageous to form cooperative federations in which all of the members are themselves cooperatives. Historically, these have predominantly come in the form of cooperative wholesale societies, and cooperative unions. Cooperative federations are a means through which cooperative societies can fulfill the sixth Rochdale Principle, cooperation among cooperatives, with the ICA noting that "Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, regional and international structures."

Cooperative union

A second common form of cooperative federation is a cooperative union, whose objective (according to Gide) is "to develop the spirit of solidarity among societies and... in a word, to exercise the functions of a government whose authority, it is needless to say, is purely moral." Co-operatives UK and the International Cooperative Alliance are examples of such arrangements.

Cooperative political movements

In some countries with a strong cooperative sector, such as the UK, cooperatives may find it advantageous to form political groupings to represent their interests. The British Co-operative Party, the Canadian Cooperative Commonwealth Federation and United Farmers of Alberta are prime examples of such arrangements.

UK

The British cooperative movement formed the Co-operative Party in the early 20th century to represent members of consumers' cooperatives in Parliament, which was the first of its kind. The Co-operative Party now has a permanent electoral pact with the Labour Party meaning someone cannot be a member if they support a party other than Labour. Plaid Cymru also run a credit union that is constituted as a co-operative, called the 'Plaid Cymru Credit Union'. UK cooperatives retain a strong market share in food retail, insurance, banking, funeral services, and the travel industry in many parts of the country, although this is still significantly lower than other business models.

Former leader of the British Labour Party Jeremy Corbyn has publicly expressed support for worker cooperatives.

Women in cooperatives

Since cooperatives are based on values like self-help, democracy, equality, equity, and solidarity, they can play a particularly strong role in empowering women, especially in developing countries. Cooperatives allow women who might have been isolated and working individually to band together and create economies of scale as well as increase their own bargaining power in the market. In statements in advance of International Women's Day in early 2013, President of the International Cooperative Alliance, Dame Pauline Green, said, "Cooperative businesses have done so much to help women onto the ladder of economic activity. With that comes community respect, political legitimacy and influence."

However, despite the supposed democratic structure of cooperatives and the values and benefits shared by members, due to gender norms on the traditional role of women, and other instilled cultural practices that sidestep attempted legal protections, women suffer a disproportionately low representation in cooperative membership around the world. Representation of women through active membership (showing up to meetings and voting), as well as in leadership and managerial positions is even lower.

Cooperatives in popular culture

As of 2012, the number of memberships in cooperatives reached one billion, and so the organizational structure and movement has seeped into popular culture.

However, in comparison with the number of co-operatives, they are rarely the subject of literature. Among these, Ken Follett mentions their role in working-class life during the First World War in Fall of Giants (2010), the first volume of his Century Trilogy:

"Where's our mam?"
"Gone down the Co-op for a tin of jam."

The local grocery was a co-operative store, sharing profits among its customers. Such shops were popular in South Wales, although no one knew how to pronounce Co-op, variations ranging from "cop" to "quorp".

Less seriously, in Murder in the Collective, Barbara Wilson sets a murder mystery among radical printing collectives in Seattle, while Frances Madeson's 2007 comic novel Cooperative Village is set in the eponymous housing co-operative in New York.

In the HBO drama television series The Wire, several drug dealers create a democratic alliance called the New Day Co-Op with the interests of cutting back on violence and increasing business.

Co-opoly: The Game of Cooperatives is a popular board game by TESA Collective played around the world that challenges players to work together to start and run a cooperative and overcome major hurdles.

Cooperatives feature prominently in the Martian economy in Kim Stanley Robinson's Mars trilogy.

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