The Co-operative Management Model

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!