The Workers' Paradise A Discussion of Workers Cooperatives and Building the New Economy

October 5, 2015

The People’s Ride: A Co-op Response to Uber

Filed under: Management,Movement,Worker Rights — Tags: , , , , — John McNamara @ 11:23 am

I haven’t been a fan of the “sharing economy” primairlity because it really isn’t about sharing, it is about extraction. Uber, Lyft, AirBnB, TaskRabbit aren’t sharing anything, they are providing a technological interface for people to do menial jobs and extracting a huge percentage for the service.

In the case of cab drivers, Uber and Lyft disrupt a market that is closed and generally united against drivers and the passengers. The modern day taxi market is designed to maximize wealth for the owner of the company without regard for the people who generate the wealth or the public who need transportation. Uber and Lyft disrupt this by allowing basically anyone to be a cab driver and open up the market to make getting a ride as easy as it seems on tv (reality check: on TV the cab shows up instantly, but in reality it takes 15-30 minutes to hail a cab in New York City and up to 45 minutes during rush hour).

The thing is, Uber and Lyft aren’t changing the model. They have just found a way to beat the monopoly owners in most communities. They offer a high tech solution to ordering cabs, but this has already been offered in a number of cities (San Francisco and Madison are two that come to the top of my head). Drivers and consumers are still preyed upon and have their wealth extracted. One of the reasons that attempts by exisitng taxicab owners to defeat Uber’s growth have failed is that  most taxicab companies have already sacrficied any consumer or driver loyalty to their personal profit. The unknown devil of Uber is, at worst, going to be the same as the known devil of ABC Cab, but people might be able to get a cab quicker.

In general, Uber succeeds because it offers immediacy and convenience in an industry that has refused to modernize or focus on customer service and loyalty (in fact, most cab companies have moved away from hiring drivers as employees and made the driver the customer through charging them for the priviledge of driving which has removed the owner of the company from the people who use the company’s services–it was good for consistent profits, but horrible for customer service and loyalty from drivers and consumers).

In Grand Rapids, Michigan, a new model is underway. Since Uber has spent millions of dollars to re-write laws to exempt their model from existing taxi ordinances, they created a new market for drivers through a “Transportation Network Company”. This new model is basically the old cab owner model created by cab owners to distance themsleves from any responsiblity to their drivers or customers; however, now that it also distances the owners of the TNC form local laws, it offers the ability for drivers to form new driver-owned and customer-focused cooperatives.

Matthew Bair is leading the effort. They are working for a better work environment for the drivers. In there GoFund Me Campaign he writes:

“I am a substitute teacher in Grand Rapids, Michigan.  I believe in creating a new world for tomorrow’s youth.  Change needs to happen everywhere.  My whole higher education involved figuring out what that would look like.  People’s Ride is about creating a new economy and a better future.  It is about creating a different kind of job.  One where people are able to use both their brain and muscle together and be wholly human.  
People’s Ride is a worker co-op where those who drive also own and control the business.  If a work week is 5 days, a driver picks up people and collects fares 4 days while on the 5th sit in meetings to make decisions about the company.      
The co-op community here in Grand Rapids is growing.  Housing, live/ work co-ops, land, food, beer, bicycling, honey bee, ride sharing co-ops are working together in solidarity to bring about an alternative.     
People’s Ride has been up and running.  We have been following the Cooperative Development Institute’s guide to starting cooperatives.  As in the spirit of the cooperative movement, we collaborate and learn from other ride sharing cooperatives from around the nation.  We have the potential to grow very fast.  Right now we are focusing on putting in place a solid infrastructure.
We are raising money to pay for a car and to have a grand opening.  Any amount makes a difference!  Big or small, $10, $50, $100, $500, you name it.  A contribution of $50 makes you a consumer member and gives you 10% off, $100 gives you 10 rides for half off, $200 gives you 20 rides, $500 gives you 50 rides.   Help build the co-op community in Grand Rapids.  
People who do crowdfunding say that their success is owed to how many people are reached.  So please, after you make a contribution, send this to all the friends you can think of.  “

TNC’s may allow cab co-ops to thrive where previously they were shut out by shenanigans of the owners limiting the number of cabs in a community through medallions or out-right leglislation. TNC’s break open the oligopolies that exist in most cities. While I still dislike Uber and Lyft (and think that they need more regulation to protect workers and consumers), I can see the value of the TNC model in a modern technological age. I am hoping that the Grand Rapids project works and spreads to other cities. Ideally, with a collaboration between drivers in cooprativ TNC and cooperativ tech companies, a national or even international model of a collectivized TNC could take hold and propser benefitting drivers and customers alike.



September 8, 2014

Teamwork vs. Collaboration

Filed under: Governance,Management — Tags: , , , — John McNamara @ 1:17 pm

One of my weekly “must-reads” includes the Monday Morning Memo from the “Wizard of Ads” marketing guru Roy H. Williams. His weekly thoughts offer insight into the world of advertising and the human condition. Often illuminating, the Wizard delves into the more qualitative world of the psyche (and relationship marketing) rather than the data-driven quantitative marketing formats that tend to dominate mass-marketers and require a greater working knowledge of excel than I can to know. Both methods offer a version of “truth” for those seeking to communicate their message and meet their sales goals.

Today, the Wizard offered up a challenge to the concept of teamwork declaring it, with a certain level of understatement, “highly overrated.” This concept focuses on the nature of the creative person, the artist, as the driver of business, communication, and human development. Williams argues that “every bureaucracy begins as a well intentioned committee.” In reading today, I thought about how this concept engages in the cooperative model. Cooperate literally means “work together” and quite often that means collective action, collective decision making, and, yes, committees and teams.

At heart of this discussion lies the tension between individual action and community needs. Williams argues that is the allure of tribalism, but I see it more as a necessity of community survival. Subscribing to the “Great Man” theory of community that Williams appears to do ignores a lot of reality. Great Men rarely become “great” without a lot of help. Even the individuals that he mentions as “tribal leaders” only managed to attain those roles through the collective action of a larger community–often it is because people are acting on their own interests that have little to do with the goals of the “great man”.

So perhaps the real question isn’t about teamwork vs. individual action, but about the role of leadership in organizations. In the cooperative model, we value self-help and self-responsibility but temper those individualistic ideals with the values of solidarity, equity, equality, and democracy. This enhances the community (or the tribe) while also helping to create leadership responsible to the stakeholders (both the members of the cooperative and the larger community). This allows the expression of individual creativity (and allows people to be creative by removing barriers that the title “leadership” imposes) yet may also act as a brake on the more destructive aspects of personality cults.

Yes, poorly managed committees and teams can be incredibly oppressive to the individual and cooperative spirit along with being a massive waste of time and money. However, committees and teams focused and trained in creative expression and communication can create a synergy of those same individual creative forces that can truly create sums bigger than the whole. It is a temptation to seek the isolation of the ego that softly coos to us “how can I soar like an eagle when I am weighed down by turkeys”, but ideas only go into the ether without committed people ready to implement them. To make a vision become more than a dream requires buy-in and support and that either means finding enough people who think exactly the same way or forming a consensus.

The role of a leader in a cooperative should be to help people dream and express their vision while creating a culture of a learning organization so that the competing visions work together instead of against one another. “Leaders” don’t create mass movements. Mass movements create leaders and those leaders change depending on the needs of the movement.

November 4, 2013

Managing Old Industries: A lesson for aging coops

Filed under: Management — Tags: , , , — John McNamara @ 12:56 pm

Last week, Mondragon’s General Consul announced that it had decided to cease its efforts to stabilize the FAGOR Cooperative Group. FAGOR electronics makes kitchen appliances: stoves, ovens, refrigerators, and even pressure cookers. It is the original Mondragon cooperative that began life as ULGOR (an acronym consisting of the first letter from the last name of each of the five founders).

Mondragon, for those new to this blog, is a system of hundreds of individual worker cooperatives that link together vertically and horizontally to creation one of the largest corporations in the world. The Mondragon Experience, as they call themselves, includes manufacturing, transportation, retail, k-University education, finance, and even their own social security system that rivals that of Spain and other European nations. FAGOR, itself, is not a single cooperative, but made up of hundreds and it is one of the larger sectors within Mondragon.

When I visited Mondragon in 2007, the warning signs were already present. Mondragon had just negotiated the purchase of Brand Corp, a French “white-appliance” manufacturer. This purchase would make Mondragon the third largest manufacturer of kitchen appliances in the world. Even then, however, they realized that the nature of the industry would only leave room for two, not three.

Part of the problem arises from the aging of the industry of kitchen appliances. The oven, range, and refrigerator have not changed since their inception with the exception of various bells and whistles (self-cleaning, timers, and electronics that can tell you your milk is about to curdle). One could even argue, that the biggest advent in refrigerators occurred when we no longer had to put blocks of ice in the back for cooling. Likewise, the stove and oven’s biggest advance was being able to use electricity or natural gas instead of wood or charcoal. These advances happened during a different century. Old industries are hard to compete within. The main way of competition is reducing costs and the biggest costs are that of labor and transportation. Without a US manufacturing base, FAGOR has little options and spreading its workforce outside of the Basque Country runs against its mission and creates its own problems (as the strike in Poland during 2012 pointed out).

The second problem arises from sentimentality. FAGOR isn’t just any group of cooperatives in the Mondragon experience. It is, literally, the stuff of legends. It is the physical embodiment of the vision of spiritual leader Don Josê Marîa Arizmenidaretta and his five students. It created the foothold that led to the creation of the Caja Labora Popular. Without FAGOR, there would be no Mondragon.  In 2007, we met with members of FAGOR and they seemed resigned to their fate. They knew that the Brand purchase was treading water. I asked about the idea of re-tooling the plants for other products, but that is apparently not an option for reasons that I don’t understand, not knowing the manufacturing industry.

Under Mondragon’s system, each cooperative kicks in about 10% of its surplus to a solidarity fund that then assists struggling cooperatives. Over the last several years, FAGOR has accepted close to 300 million Euros (close to half a billion, US). It seems, from reading the press release, that Mondragon has finally decided to cease life-support for lack of a better word. This will likely bring a process of bankruptcy.

I am uncertain as to how this will effect the workers and their substantial equity in the organization. Each member invests 14,500 Euros. Membership also provides benefits through the system. Hopefully, there will be some ability for workers to move to other areas of Mondragon with their equity. In any event, this will be a painful time for the cooperative.

I also think that it will be an important time for Mondragon planners to learn. This will be the first, but not the last, time that they will need to effectively shut down a industry that has become too old to produce decent jobs. It might provide some lessons about how to transition factories from one industry to another, how to build economic diversity within cooperatives so that as an industry becomes too unproductive, it won’t have such a heavy effect on the group. Most importantly, it might be a good thing to let the founders finally become the past. Mondragon will soon celebrate it 60th anniversary. The retelling of the creation myth will be central to that celebration, but so should the future. Mondragon doesn’t need to rely on”borrowing” designs from other companies, they now have the ability to enter new industries and be a commanding force. Part of learning to let go, involves embracing the new. This might involve reconsidering how the Solidarity Fund is used. Instead of propping up an aging industry, it could be used to retool for the future.

Of course, these are my musings from America. Mondragon is famous for “building the road as they travel” and have a great track record of learning as they go. It will be interesting to see how this story develops.

April 16, 2012

Getting Back to Normal?

Filed under: Governance,Management,Movement — Tags: , , — John McNamara @ 10:03 am

I am looking forward to the future! For the last nine months, I have been in the role of General Manager of my co-operative. It has been a very difficult time made more difficult by the ebbs and flows of a business cycle based, in part, on government funded programs and bad weather. This year, the money was mostly ebb with little flow.

The biggest lesson that I am walking away with is the realization that hierarchy in a worker cooperative is dangerous at best. Creating a “boss” and recreating the dynamics of the traditional workplace do not allow a worker cooperative to succeed. It creates a fertile ground for petty political maneuvering around personal agendas instead of open and transparent discussions about the value of cooperation. It causes the workforce to engage in a bizarre form of sibling rivalry in which the GM and the Board play the role of indulgent parents.

I am very happy that our co-op decided to get rid of our GM position and replace it with a council consisting of department leaders and senior workers. We have yet to see how this will work, but we have spent the last nine months practicing. Although I accepted the title of Interim General Manager, I attempted to diffuse as much power as possible to the various work teams. By a previous board decision, discipline and accountability issues had already been turned over to a Behavior Review Council-this made me the first GM without the authority to discipline.

It is an exciting time to be in the worker coop world. New worker coops are starting every day. Older worker coops, like mine, are reinventing themselves, and new energy is coming into the movement from the Steelworkers and Academia. Hopefully, now that my interim period is coming to an end, I can return to chronicling and commenting on the exciting energy that is out there!

I will be in Halifax for two months beginning May Day. I hope to return to my Monday postings, so please start checking. The world really is changing. After 170 years, co-operatives are finally coming into their own and we get to be a part of this incredible transition.

August 8, 2011

The Power of the Mission

Filed under: Education,Management — Tags: — John McNamara @ 11:37 am

Recently, I was presenting a session on expansion and I discussed the role of mission statements. The main idea is that a first step at planning significant change in our co-ops should begin with an examination of our mission statements. Does the thing that we want to do fall within the mission of the co-operative? What I suddenly realized was something quite different! Sometimes the mission might lead us to do foolish things that either hurt our co-operative or cause us to stray from the co-operative identity.

Mission statements work best when they direct and easy to remember; however, this can also lose a lot of nuance. For example, the mission statement for my co-operative is “to create jobs at a living wage or better in a safe, humane and democratic environment by providing quality transportation to the greater Madison area.” If people only focus on the initial infinitive (and sometimes people do), it suggests that it is our mission to constantly grow the co-operative. I, however, see it as part of the larger statement. Our mission is to create jobs {ONLY IF WE CAN DO THAT IN A MANNER IN WHICH THOSE JOBS ARE} at living wage or better. . . . . .

I’ve heard some suggestions to change the “to create” to “maintain” but then I wonder what happens in an economic downturn when we simply can’t maintain all the jobs at a living wage.

When our mission was first written, we didn’t have the last bit about providing quality transportation. Our consultant thought it was a bit odd that our mission statement didn’t talk about what we did or how we would interact with consumers. It was (as you can see) incredibly internalized. I think that by adding the last phrase, we created a new consciousness among ourselves. I remember a General Manager in the 90’s specifically telling me that our passengers were our “oppressors” and our enemy (and I know that he wasn’t alone in that belief); today, I doubt that a single member of our co-op would have that analysis.

As kids we learn very quickly that words have a lot of power. They can hit us harder than a two-by-four and lifts our spirits higher than a kite. We don’t always extend that power to the business world. That mission statement hanging on the wall has a power too. It is a soft power that silently creates a culture around it. The words left off of the wall have just as much power as those included. We need to be cognizant of this and understand that a discussion of our mission statements needs to happen as new members enter the co-operative. We need to pass the nuance of our meanings onto the next generation of members so that they can manage the power of those words.

August 17, 2010

EdVisions Schools–Workplace and Educational Democracy

Filed under: Education,Management,Worker Rights — Tags: , , — John McNamara @ 10:11 pm

One of the great treats at a national worker coop conference is to learn about the incredible stories that exist. It is easy, sitting in our cooperatives at home, to imagine a world where we are the greatest thing since sliced bread. Then we come to a conference and get our mind blown–not just once, or twice, but several times.

One such event was learning of EdVisions. I had heard rumors of these folks. Located in the mystical Mississippi Valley of Southern Minnesota. They seemed like fairies from the days of Shakespeare’s England creating a magical place of learning and excitement. Needless to say, all we ever heard were the rumors of their existence. They are, after all, Charter Schools. Charter Schools, much like those fairies of Shakespeare are a dual edged sword as willing to spoil milk and ruin harvests as to help a poor Shepard. It shouldn’t be a surprise that the main stream media can’t figure out EdVisions as they don’t fit into the narrative of Charter Schools, School Reform, and Neo-liberalism.

As it was, I ended up sitting next to the Dee Grover Thomas, Principal of the flagship school: New Country Day School. She gave me a bit of a heads up for her speech. It was an incredible talk (I hope that this is an appropriate time to apologize for my grammar and spelling to Dee and my English teachers).

Ever the teacher, she asked the audience what they would like to study. Amazingly, the reply was “co-operatives!” she then asked if that would require history? yes. Writing? Yes. Math? yes. Art? yes. The point being that the core subjects can be worked into any field of study.

Rather than my telling you what they are about, here is their statement: “The belief is that teacher leadership is not about power, but about mobilizing the largely untapped attributes of teachers to strengthen student performance by working collaboratively in a shared capacity. Cooperatives are about working collaboratively and sharing in planning, action, and in results. Cooperatives are democratically owned and managed. The founders of EdVisions Cooperative believe in teacher voice and teacher empowerment. They also believe in modeling democratic action as a means toward teaching adolescents how to live in a democracy.”

Here is the problem that the market was dealing with:

  • Estimated 50% of teachers resign with in the first 5 years
  • Teaching is a non-promotion job only promotion to administration
  • Schools are losing 1 of 3 students to drop outs each yeas
  • Schools are seldom democratic
  • Teachers are not seen as professionals and little ed entrepreneurship has happened. Schools look and act the same today as they did 50 years ago.
  • She noted that The TSB kids, despite what they are doing, still have to raise their hand to go to the bathroom—that is messed up!

Minnesota New Country School as established in 1994.

  • Got rid of bells and classes or employees
  • 120 students 6-12
  • 40% special ed/35% low income

Project based learning—the ask the student what they are interested in (what turns them on) and then they apply to core principles (history, language, math, science, art)

School should be arranged like life—we don’t spend exactly 45 minutes on the math part of our jobs and then move to the writing part for another 45 minutes, so why do we run schools this way.

They chose to limit the school size to 120 students to keep a sense of community

Student ownership of their education with teachers as guides on the side.

It is more about learning than about teaching. They have to design their project and have to sit down with three adults and defend their project. At  the end, they sit down with three adults to show what they have learned. Sometimes, they have to unlearn before they can begin to learn.

EdVisions Cooperative

What would happen if teachers became owners instead of employees? Would they look at teaching differently? Eliminate the “us” vs. “them” in the battle between teachers and administration and parents.

Started with one school (MNCS) and 13 owners.  Today: 12 members schools and 3 affiliated non-profits, 150 members and 8.6 million budget, (the non-profits help to fund the school through different mechanisms).

Expected Behavior

  • Collaboration—build and sustain strong professional relationships
  • Civility—respect, dignity, kindness (train on restorative justice)
  • Communication—clear ideas
  • Co-creation—everyone plays a role
  • Accountability—every members assumes responsibility for the organization’s performance
  • Commitment to improvement and development.

Desired Ends

  • Take charge of professional lives (normal school dictates to the teachers)
  • Accountability for the learning program
  • Embrace change—technology, cell phones, communication.
  • Gain independence
  • Be leaders
  • Be able to contribute to each others’ professional development
  • Become Owners.

I’ll give Dee a lot of credit. She got some tough questions about labor unions*, the lack of sports programming, and others. Also note the number of special ed and lower income children. This isn’t a school designed (as mine was) to replace the aristocracy of corporate Vice-Presidents, this is about fundamentally changing the way we educate in this country.

It reminds of a certain Spanish priest who believed that the workers’ kids could be just as productive with their mind as the bosses’ kids. Those kids grew up to create Mondragon. The work of EdVest clearly makes the 5th Principle of Cooperatives as active as it can be. The have taken the cooperative economic model with an educational element and truly made it an educational model with an economic element.

If the Charter Schools were all like EdVisions, I would be on the front-line pushing for more. This is a fantastic model.

*Her response to the Union question? She said that the teachers are free to join the union, but don’t want to. Further, what she would like to see is for the union to start opening and running their own schools just like EdVision did.

July 5, 2010

Producer Co-operatives and Workers

Filed under: Management,Worker Rights — Tags: , — John McNamara @ 1:22 pm

In his work over the last decade, Professor Daniel Côté has developed a new principle of management for non-worker co-operatives. The core of this work focuses on loyalty of the stakeholders. In his argument, Côté argues that all stakeholders of the co-operative must experience the co-operative benefit.

It is important, I found out over the weekend, to identify to whom the word “stakeholder” refers. Stakeholder has become a term used in business circles over the last couple of decades to identify interested parties that may not have a fedicuiary interest or responsibility but still value the enterprise (or benefit from it). In our cities, neighborhoods (and the people living in them) have a stakeholder role in the businesses that operate in their neighborhoods. Much to their dismay, many tavern owners in Madison have come to realize that the thousands of people living around them (who may never spend a penny in the tavern) have a stake in how the tavern operates.

In the more direct sense, workers form a primary stakeholder group of every co-operative. In the case of a consumer co-operative, the consumer member can easily find another store to shop. If the consumer co-op were to close or demutualize, their would be little effect on the consumer member other than a change in habit and a sense of loss For the worker of a consumer co-op, however, the closing of the store could mean long-term unemployment, loss of housing, healthcare and other hardships.

To some extent, the same can be said for a producer co-op. Farmers might, however, face a harsher marketplace. It is exactly this reason that Agricultural co-ops should embrace the Co-operative Paradigm. Côté makes this point in his description of the NCP: “A third assumption may therefore be made on the basis of this experimentation, relating to the social value attached to the co-operative organization: the NCP opens the way for the creation of social value based on (1) a business model that makes a significanf difference for stakeholders (2) while providing the footing for creating solidarity (3) and strengthening the community, (4) through the development of citizen values (5) leading to a different society, one that is more human and more egalitarian.” (Côté, 2005)

In other discussion about the NCP, Côté he comments that “Loyalty is based on the vision and reliability of senior management. Organizations that have it rely on long-term commitment and regard people (clients, employees and shareholders) as their best assets. . . it requires a focus on human dignity, and needs to find an equilibrium between personal and collective interest.” (Côté, 2000)

My personal experience with producer co-operatives is somewhat limited. When I have attended conferences and training sessions, I tend to meet very conservative (politically and socially) people from the generation of my parents (or pre-Viet Nam). I don’t want to suggest that they are negative people, but they see the co-op world as a form of collectivized capitalism and don’t necessarily see the big picture of humanity and social change. Workers tend to be hired hands (and they often prohibit members and the family of members from working for the co-op).

However, one of the new kids on the block is Organic Valley that has been shaking up the stereotypes. They certainly have a different view. I was pleasantly surprised to see that their web master is none other than mIEKAL aND. He spent a couple of decades in Madison as an artist and maintained a house in my neighborhood called the “Museum of Temporary Art”.

Organic Valley makes the natural leap that comes from organic farming. If happy cows produce better milk, then happy workers produce better service. The organic movement has to treat its workers as good as it treats the non-humans in the production chain. Of course, in the commercial farming world, the co-operatives still have an obligation to treat the workers well. The values and ethics of co-operatives apply to all stakeholders within the community, not just the membership.


Côté, Daniel (2005) “Loyalty and Co-operative Identity: Introducing a New Co-operative Paradigm” published (en Francais) in Revue Internationale de l’Economie Sociale RECMA, #295

Côté, Daniel (2004) “Co-operative Cohesiveness and the Democratic Process: The Key to Managing a Large C-operative” (French version: Revue du CIRIEC-Economies et solidarité, Vo. 34, No. 2

Côté, Daniel (2000) “Co-operative and the new millenium: The emergence of a new paradigm” in Fairbairn and Russel (eds) Canadian Co-operatives in the Year 2000: Memory, Mutual Aid and the Millenium. Saskatoon: Centre for the Study of Co-operatives.

October 29, 2007

The Co-operative Management Model

Filed under: Management — Tags: , — John McNamara @ 3:20 pm

José Luis LaFuente discussed the management model being developed by Mondragon. He began by placing the model in perspective with the overall philosophy of Mondragon. It begins with the Inspirational Philosophy (the principles, the culture, and the values of Mondragon). Then, the Management Model, which flows to the Systems, set to deal with situations, and the Tools (methodologies and instructions).

The pursuit of the Model began with a re-drafting of the MCC Mission, which referred to the Management model. Once that draft was accepted, then MCC’s council and management felt obligated to create it.

The creation of the model has followed a long evolution beginning in 1996 with an appreciation of Total Quality Management. Mondragon, at the time, essentially copied TQM (a concept reviled by US labor unions). In 2002, Mondragon caught the next flavor of the month and developed “Good Corporate Practices”. In 2006, Mondragon began a massive re-write with a specific internal focus. It created focus groups with the mission to focus on the Basic Principles and Mondragon culture. It created a draft of the model and tested it in three sectors: Eroski, Caja Laboral, and the industrial cooperatives. Once the model was adjusted, it was adopted. Instructors are now being taught in order to teach the “model” throughout the system.

Why is the model needed?

•To foster the development of management dynamics consistent with Basic Principles
•To increase business competitiveness (especially since the model cannot be copied by investor owned businesses)
•To make our management style a mark of identity that generates a feeling of well being, belonging, and helping to create synergies.
•It must be remembered that the model is a “tool, not a rule.”

The model consists on one core and four elements.  The center of the model is the Basic Principles of Mondragon. The elements include “people in cooperation”, “joint projects and participatory organization”, “excellence” and “socio-entrepreneurial results.”

The Basic Principles are divided into an internal and external focus. Internal includes democracy, finance, labor, etc while the external include other cooperatives, society and the environment.

The People in Cooperation include such things as team spirit, dedication of the owners, cooperative conduct, leadership and development. Joint Projects include the mission, vision and values of MCC, inter-cooperation, strategic perspective and deployment. Participatory organization includes corporate development, self-management, and communication. Excellent Company stresses a focus on the customers, processes, innovation, partnerships and social engagements. Finally, the social-entrepreneurial results also include a customer focus and innovation but also stresses profitability and people.

The next step is to create an implementation and assessment plan. This involves building awareness to create the implementation plan and also developing an individual approach for each cooperative. Each cooperative gets assigned a coordinator and elects a work team. They work together to assess the cooperative according to the model and develop an implementation plan. Overall, the important aspect is to bring cooperative ideals into the management model.

The actual model is unavailable to put on this site right now, but hit the link and you will see it. They do have another diagram related to the Model which they refer to as best practices:

What is unique about this model and the best practices is that the aspect of profitability is only one of several expected results. In the full model, the only reference to results is the phrase “socio-entrepreneurial results”.  Likewise, the Mission Statement of MCC clearly puts the focus on the principles and community of people:

“The Mondragón Corpración Cooperativa (MCC) is a socioeconomic reality of a business nature with deep cultural roots in the Basque Country, set up by and for people, inspired by the Basic Principles of our Co-operative Experience, committed to the community, competitive improvement and customer satisfaction, to generate wealth in society by means of business development and job creation, which:

•Is based on a commitment to solidarity and uses democratic methods for its organization and management.
•Encourages the participation and integration of people in the management, results and ownership of their companies, in order to carry out a joint project harmonizing social, business and personal progress.
•Promotes training and innovation, based on the development of human and technical skills, and
•Applies a Management Model of its own to achieve positions of leadership and promote Co-operation.”

In addition, this marks a true departure from Mondragon’s history. Mondragon, like most of Spain, came out of the cloud of fascism with an inferiority complex. They looked to the more energetic countries for lessons in business management. The timing could not have been worse as the Franco regime ended just as Breton Woods was changing to a neoliberal economic model. Thus, the models of Japan, Chicago School of Economics and Harvard held sway for many years. What is exciting about this model is that they are looking internally for guidance. One might argue that it is just so much Corporate Social Responsibility BS; however, after speaking with workers, managers, and trainers, one realizes that this is the genuine form of CSR that can only exist within the cooperative model.

Between the mission statement and a management model that clearly intends to institutionalize the principles of the cooperative, it appears that Mondragón’s leadership have finally found their footing and are beginning to create structures within the organization to properly deal with the effects of globalization and the European Union. I cam away from this discussion with the distinct feeling that, while MCC has a long way to go, they are not strictly being defensive anymore, but are on the move and now believe in exporting the revolution!

October 14, 2007

Management Training in a Worker Cooperative

Filed under: Education,Management — Tags: , , — John McNamara @ 2:41 pm

The day began early as we jumped on the bus to head off to Mondragon’s Otalora Management Training Institute for a full day of discussion about the methodology of training Mondragon’s managers, how Mondragon uses its system to help and enhance cooperatives, and a discussion with the International’s CEO regarding the future of Mondragon’s international operations. For this post, I will just focus on the management training concepts.

First, though, Otalora is housed in a midevel fortified home (a sort of small two story castle) from the middle ages. It is an incredibly beautiful building situated in rolling hills.

We met with Julio Cantón, head of the Management Training and Development Center (Otalora) for Mondragon. He has been involved with the cooperative movement for more than 50 years. Working mainly in the FAGOR group, in Human Resources, he has been in charge of management training since 2000. The following are my notes through a translated presentation.

He began his discussion by defining the two management teams in every worker cooperatives (and every cooperative for that matter): The Governing Council (Board of Directors) and the Professional Management Team. Both, he noted, need training but each has a different function.

The cooperative is an unfinished project. It was created in the late 1990’s as the Mondragon faced the realities of competition after Franco and Spain’s entry into the Common Market. MCC encompasses all of the different cooperatives and aligns them into sectors. This was done in a democratic way—the cooperative leaders had to “seduce” all the different cooperatives. In the end, all of the general assemblies of the cooperatives had to vote to join the MCC. It is this nature of the cooperatives, the constant dialect, that will keep this project, MCC, as an ongoing project and the leaders will have to constantly pursue, persuade and seduce the participants in the cooperatives.

Cooperative Manager need to be a different type of manager. Otalora undertook the attempt to determine a Mondragon vision of a cooperative manager. By this, they created a “Profile of a Cooperative Manager. The design process involved two levels. First, a working group was created of Otalora staff and cooperative directors. They proposed a profile. Second, the design was submitted for peer review to all of MCC’s directors (general managers). This provided important feedback and the profile was adjusted until consensus was reached.
I liked some of the ideas presented in the profile and that the MCC discussed this concept of what qualities make up a model manager. Especially, I enjoyed the discussion over encouraging dissenting opinions as a quality of leadership. Not simply allowing people to voice their minds, but actively placing critics onto key teams and committees. Winning over critics is a leadership quality and, I imagine, helps unify the cooperative when the final decision is reached.

On the other hand, this presentation didn’t really seem to present any real cooperative difference. It could have easily been a consultant lecturing from the dogma of any business school. How do Mondragon’s Basic Principles play into the role of a manager? How does the Identity Statement adjust the actions and attitudes of the manager?

Further, on the issue of technical knowledge, I was shocked that the MCC training program saw no need to create a cooperative response to management technique. How can they really believe that the method of managing corporations is separate from the ideology of the profit motive? Isn’t the whole concept of “human resources” itself a dehumanizing phrase that makes workers merely another “asset” to be manipulated and used up for the purpose of increasing shareholder value? Doesn’t the cooperative world have a better way of marketing its goods and services that doesn’t exploit people’s desires and fears?

October 13, 2007

Mondragon and Globalization, Basque Country and Ghosts

Filed under: Management — Tags: , — John McNamara @ 2:38 pm

Today’s schedule: Group Discussion in the Morning. We then left Hotel Sandika and the mountains to have lunch and discussion with Anjel Herrassti in Donostia. We returned to Mondragon and checked in at the Mondragon Hotel.

The first part of the discussion was a review of why Mondragon has succeeded as a cooperative business: Sustainability, worker participation (sovereignty), education, integration, diversification, innovation and flexibility. How are these terms used in investor-controlled companies? How do we talk about cooperative businesses outside of the dominant paradigm?

As part of this we discussed the pillars or keys to success:

•Control and use of capital
•Redefinition of labor/management relations
•Management education
•cooperative development
•lack of “silo” mentality—horizontal and vertical integration
•Intercooperative fund mechanism.

All of these are the key to Mondragon’s success. It is hard to imagine that they would be the same cooperative without a commitment to these pillars.

Of course, Mondragon, like the rest of the cooperative world, is an island in a capitalist ocean. The problems of capitalism can’t help but creep into our cooperatives because we are part of society and societal norms get determined through a capitalist lens (for now). As a result, the issues of racism and paternalism play a role even in a cooperative structure. This is the primary focus of the Kismar ethnography and certainly Mondragon’s history has raised questions as to their ability to ascend the dominant paradigm of capitalism and create a new socio-economic order. Mondragon University teaches the neo-classical economics of the Chicago and Harvard business schools and, as was apparent by the discussion at Otalora, they have not developed a management training model based on cooperative economics.

We spent the remainder of this time preparing for the afternoon session with Anjel Herrasti as professor as the University of the Basque County.

Anjel wrote his dissertation on the internationalization of cooperatives and teaches business economics. He is working on developing a model for a multi-national cooperative that would be a democratic multi-national enterprise.

He gave a brief history of the globalized economy from the early 1990’s to the present. Mondragon was forced to follow suit as Multi-national moved jobs overseas and demanded that suppliers follow. Mondragon has responded defensively in an effort to keep jobs in Basque. As part of this, they have also kept their knowledge base in Mondragon, which the real power of any organization. Anjel presented some key criticisms of Mondragon:

  • Foreign workers see no difference between the cooperative and a corporation.
  • Mondragon has been promising change for 12 years with a “wait and see” approach.
  • They use a traditional top-down control model (basque managers).
  • Cooperative managers are resistant to creating expectations of ownership
  • Fagor bought Polish companies and cut jobs by 50% (to keep jobs in Basque); it is expected to do something similar with the purchase of the French Brandt Corp.
  • Fagor fired union organizers in Turkey and have created “yellow” or company unions elsewhere—a similar method of other MNEs.
  • On the postive side, at Irizer, workers are the richest workers in the world. The foreign workers get a 20% profit share and have a participatory model; however, the participation stops at governance. They are the birds in the gilded cage.

Finally, Anjel present his five-step or five level plan for converting foreign plants into worker cooperatives. It is a very solid, strong plan that allows for the necessary time to make the necessary changes to the system and the culture for conversion. It allows for the conversion in a way that as workers become educated about cooperatives, become champions of the cooperative model, and earn enough share of the profits to participate economically, that the plant can convert into a Mondragon cooperative with a minimum of stress to the organization.

I remember last semester when I proposed my idea for a multi-national to the class. I was essentially scoffed at by the group (in a polite way). I think that it is very hard for people to see cooperatives as being “big” and still being democratic. Part of that might be that we see the failure of “big government” and “big corporations” and translate that to the cooperative model which seems to thrive on the sense of community. However, the sense of community that we in the west think about it tends to be based on falsehood. As politicians and corporations peddle the myth of neighborhoods and family as the basic unit of society, Mondragon (and Arizmendiaretta) know that the real unit of society has actually become the corporation. Being “big” is only bad if it fails to live up to the principles and core values of the cooperative. I found a kindred spirit in Anjel and really appreciate his insight on how a global world of cooperation can work. He does see how democracy can be kept alive in a large, multi-national organization. It has been my argument that if we cooperators cannot figure this out (and insist on staying small regional or local entities) that the movement will wither and eventually succumb to the Wal-Marts, Tesco’s and Toyota’s of the world.

The rest of the evening was spent enjoying the old part of Donostia. Becky and I chose to return later (after the study trip) for a fuller afternoon of exploration. It is an amazing city, with wonderful food.

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