This field study is an examination, by a partisan participant observer, of the Neighbourhood Community Centre and its first year of operation as the Co-operative Peoples School, in the ACT government school system. The Neighbourhood Community Centre was a small, alternative, independent school for children from three to eight years of age. The school's philosophy was progressive and its management policies and structures co-operative and non-hierarchical. For two years, parents campaigned to become part of the ACT government school system. In February 1978, the school opened as a government school, with funding and staffing arrangements similar to other schools in the ACT. Soon after incorporation, the distinctive attributes of the Neighbourhood Community Centre began to disappear. Conflict became the dominant characteristic of the new school: the degree, extent and duration were extreme for a group that had asserted a commitment to consensus and co-operation. Two identifiable and, ultimately, irreconciliable parent factions emerged. Three factors were linked in the events of 1978: conflict, ideology and power struggles in a situation of change. These factors do not easily fit into the dominant sociological paradigm, functionalism, as an explanation of the events of 1978, for the concept of power has been, at best, slow to be incorporated into that sociological tradition. Yet the events, to this observer, were linked to a political struggle between competing groups for the domination of the school: power was a major dimension. Only at a superficial level was the conflict ideological. Parent factions concealed a third group, the teachers, who were striving to dominate the school, a domination that was not accepted unequivocally in the new school. Their ultimate success depended not on their coalition with a parent faction, the support of the Schools Office, strategies for isolating criticism and critics and their professional ideology; their success depended on their structural power within the school system which provided resources, support and justification for their position. This analysis endorses sociological theorists who maintain that power, and structural power in particular, is a central concern in organisational life. The failure of the Co-operative Peoples School was linked to the unequal distribution of power within the co-operative.