Thursday, September 23, 2010

The Mondragon Cooperative

Father José María Arizmendiarrieta
The Mondragon story is a little bit too sweet for my taste. I guess I'm getting old. In any case, I'm impressed, the experience seems to defy gravity.

If the co-op model is so efficient, it may well be the model that companies may have to adopt in the future, or risk the fate of the dodo.

In light of the current turmoil in the publishing industry, the co-op model seems to be an excellent alternative for bloggers, journalists and photographers, or content providers, to offer their services.

To peak your curiosity, I have an interesting proposition to make to you down below.

This amazing story begins in 1941 with the arrival of a young Catholic priest to the Spanish civil war devastated Basque region.

It doesn't take long for father José María Arizmendiarrieta to realize that if he is going to be of any help, he must find a solution to the desperate unemployment situation of the region. In 1943, he starts a technical school funded by the people of the small village of Mondragon.

ULGOR founders
Father Arizmendiarrieta plants the seeds of cooperativism into a few of his pupils, whom he would later help to raise funds to start an undetermined venture to provide work for the locals. In 1956, they buy the patents and build a factory to produce a simple paraffin heater.

From ULGOR's modest initial 26 workers, Mondragon's cooperatives have surprisingly grown to employ nowadays over 85,000 worldwide within more than 250 companies (approximately half are co-ops), with annual revenues that exceed $15 billion Euros.

Remarkably, only three of these companies have failed so far. Or an insignificant 1.2%, despite the fact that the failure average for start-ups is 80 to 90%.

Let's take a look at their structure and see how they're organized.

  1. One man, one vote.
  2. The cooperative is run as a democracy, members elect their Board of Directors, General Manager, and Social Council.
  3. One worker, one member.
  4. Only workers can become members. When a worker leaves the company, he receives the proceeds of his share in the co-op. Workers may not sell their share to outsiders. This way, the co-op is preserved because no external control is allowed.
  5. Each new worker must buy his share into the co-op.
  6. He has the choice to buy his share with a loan that the co-op extends to him.
  7. 10% of the profits are given back to the community.
  8. The charter mandates that the co-op donate this amount to schools, hospitals or other community needs.
  9. 20% of the profits are held as reserves or for reinvestment into the co-op.
  10. 70% of the profits are added to the members' shares.
  11. These profits are distributed in proportion to each individual member income. At the end of the year, these profits are added to each member's share, which are held in individual interest bearing accounts till retirement.
  12. The ratio of the highest to lowest income is 15:1.
  13. Although, the initial ratio was 3:1, it was increased to 6:1 for a period, and then, to its actual ratio due to the need to retain the higher earners' capabilities.
  14. The members' representatives are elected for a period of 4 years.
  15. Elections are held every 2 years to renew half of them.
  16. The Social Council deals with human resources issues.
  17. One representative is elected from each department of the company to represent them in the Social Council. The council deals with personnel issues: wages, hiring, grievances, pensions, health care, etc.

I could go on. I'm sure there are many details that I left out, but, the important thing is that you get the basic idea.

(You'll find the entire BBC documentary, circa 1980, here).

I propose that we form a co-op to provide content services. If you're a writer, blogger or pro-journalist, produce photos or videos, you're invited to join this co-op, which I will call the "What to do scoop".

As its name implies, it would cover forward looking themes. Like, "what to do" with your decoration, health, travel, weekends, clothes, food, technology and social life.

For this purpose, I'm setting up a site where you can register and post your stories, with a price tag.

(It'll be ready in a couple of days.)

Do I need to remind you that this is a unique opportunity?
You will be an owner, with a share in the profits, proportional to the revenue that your content generates.

Any questions, comments? You know what to do.

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