A Quick Trip to Mondragon
February 2015

In the heart of the Spanish Basque Country, Mondragon Cooperative Corporation's head office is the picture of prosperity. We are greeted in a small, comfortable cinema room, art fills the walls and a scale model of the Mondragon complex reigns in a vast and luminous hall where we soon gather. Pointing to the model, an employee comments: "This is one of our supermarkets; here is one of our research centres and one of the university's buildings and over there is one of our plants…"

Mondragon. The mythical Mondragon. A prime example of a cooperative group that is steadfastly committed to the market. Its installations, scattered all over the world, generate nearly 12.6 billion Euros in revenue (some 17.1 million Canadian dollars). Its activities are divided into four key sectors: Finance, industry, distribution and… knowledge! It is the source from which 74,000 workers earn their daily bread. One would expect some degree of administrative strain when faced with the immensity of the operation, but quite the opposite, the Corporation demonstrates a lithe, flexible and extremely innovative business model. 

It is lithe and flexible because Mondragon is highly decentralized. It is essentially an inverted conglomerate made up of independent, self-governing entities that are connected by very simple coordinating structures to ensure that inter-cooperation is adequately managed. The hundred worker cooperatives that own the Corporation are specialized and limit their expansion to preserve internal proximity. Diversification, just like growth, is achieved via the network. Thus, new activities are developed by new cooperative start-ups, which remain independent and self-governing yet supported by the Corporation as a whole.

Inter-cooperation is at the heart of this business model's strategy: workers flow from one cooperative to another and money does the same through loans (guaranteed by the head office) and knowledge is shared thanks to common education, research and development activities. This extraordinary combination of assets allows the Corporation to fully explore its potential for innovation. In 2012, 19% of sales came from products that were inexistent barely five years before. Today, the Corporation owns 467 patents and more than 1,600 researchers work full-time testing new ideas and products. 

In terms of governance, solidarity is key. There is an internal non-compete rule in effect that is adhered to by all. Cooperatives send their monthly financial statements to the head office to ensure rigorous safeguards. Furthermore, a portion of the surplus is paid out annually to a solidarity fund from which struggling cooperatives can receive help; as long as their worker-members agreed to certain salary adjustments - they may ask for support from each other, but they must support themselves first. In fact, confirmation has been obtained stating that the ratio separating the lowest and the highest paid worker never exceeds 1/6 in the Corporation's cooperatives.

No one, or in this case, no thing, is perfect! Most of Mondragon's criticism is aimed at the two worker categories it maintains: Worker-members in the Corporation's cooperatives and non-member workers from plants acquired outside the country. One can certainly understand that implementing a cooperative culture where there has never been any can be huge challenge, particularly because a cooperative is, first and foremost, built by the community it serves.   

It's true, Mondragon Corporation is not perfect. But it experiments, dares and proceeds through trial and error and continues to go forward. It is driven by an ideal, placing education as its keystone. One must know that Mondragon was born from a school, and now it has its own cooperative university. Not a small feat! In fact, the head office's entry hall sports a quote from Father Arizmendiarrieta, a source of inspiration for Mondragon, and it reads: "In order to democratize power you need to socialize education." There. Need I say more?

 

Colette Lebel, agr.
Director Cooperative Affairs
La Coop fédérée
Email: colette.lebel@lacoop.coop
Fax: 514 850-2567
 



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