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Gilda Haas

Mondragon Team Academy

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The U.S. has a lot of wealth without a lot of values about it. Mondragon has strong values, but wants more results (wealth). The problem isn’t “more” –– money is just an indicator of how well you are doing. The problem is about how do you get the wealth and how do you share and then, how do you share the wealth.

Liher Pillado
Mondragon Team Academy

The making of Mondragon from the 1950s to the first time I visited in the 1980s is an inspiring example of collective entrepreneurship. Although the cultivation of that experiment is rightfully credited to the remarkable vision and mentorship of Father Arizmendiarretta, there was plenty in the DNA of the Basque region, history, and people that may have supported its success. The Basques are among the oldest people in Europe, with a unique language, unrelated to any others. They have a strong sense of culture and solidarity, were the first to join the resistance to Franco’s fascist regime, and then suffered suppression of their language, culture and economy under that same dictatorship.

By the 1990s, however, while the Mondragon cooperative system was by many measures very successful, a concern emerged about the fact that 85% of their cooperative companies had been created in those first thirty years ––a single generation had created 85% of the system. The system responded by taking up the challenge of recreating the original entrepreneurial spirit and capacity that created Mondragon.

Among their many efforts in this regard was the creation of the Mondragon Team Academy,  a university-based undergraduate degree program in entrepreneurship, (or as they prefer to say, “teampreneurship”) that was created in 2008 in partnership with the Tilmiakatemia in Jyväskylä, Finland, based on their teaching and learning methods.

According to Team Academy faculty member, Liher Pillado, who led our Praxis Peace Institute tour and conversation with student team representatives, “Finland is a front-runner in [entrepreneurial] education.” The purpose of the Mondragon program, as stated on their website is “to transform (the environment) through team entrepreneurship based on active learning and cooperative values.”

Liher explained that key features of the Mondragon Team Academy are:

  1. Students create real coops.
  2. Students learn in entrepreneurial teams that are supported by faculty coach/mentors over four years.
  3. Teaching and learning is based on Finnish education methods [Team Academy].
  4. All students obtain international experience, as part of their learning and aspiration to become global citizens.
  5. Student projects are based on their passions, and as such, contain an element of fun.

From day one of their degree program in “Leadership, Entrepreneurship, and Innovation,” students are placed into initial teams of 15-17 people that are constructed around the diverse strengths and personalities of individuals based on the team role theory model developed by British psychologist Meredith Belbin. They stay in these teams for their four year college career and create companies that earn money from customers (the goal being gross revenue of about $5,000 euros by their fourth year). Companies have their own office space, business cards, bank accounts, and are legally registered.

Team Academy offices

Team Academy offices

Team Academy students receive faculty coaching and take core classes such as math, law, economics, business, English, and computer science for no more than three months of the year (about 15-20% of their time). Students are also required to read and report to their teams on 20-30 books a year (there is a point system) of their choosing selected from a list of 1,000.

But most of their time and learning occurs through the trial and error entrepreneurial activities of their team company, which is encouraged to build enterprises that are based on shared passions. The team company is the center of all learning. There are no individual grades, but rather 360 degree team evaluations that are based on the university’s “Rocket Model” of evaluation that includes company learning, team learning, and individual learning with different competencies under each category that the student must achieve over their four years in the program. The understanding is that results are team-based, depending on the skill and responsibility that members apply to lead each other.

rocket-model-2

Rocket Model

Team Projects, based in individual companies, function both as learning environments that build an individual’s competency as well as a method for creating enterprises. Projects vary in size from small project teams of 2-3 people to one that may involve the entire team (which usually ends up being 12-13 people)

A typical small project first step is to raise money for the company by taking on smaller entrepreneurial activities in small groups. Students and faulty coaches consistently referred to this initial fundraising as “milky money” or “milky projects.” (in English, with references to “fast cash” and “cash cow”) and gave examples of events, raffles, car washes, and small entrepreneurial activities. One small company was grounded in a shared passion for music and set as a goal to produce a three-day music festival.

In this way students learn how to be engaged in parallel activities at the same time, with the idea that companies typically have parallel projects and/or products going on at the same time. All income is generated from real relationships with real customers. Teams share a bank account and make decisions together about where to invest the money that they have earned, building towards larger projects.

I had lunch with several Mondragon Team Academy students, including first year student Sara Odriozola Azkue, co-founder of the TEWO “company”, who, over the course of our conversation explained how team dynamics work. Sara emphasized the importance of diversity of personalities and skills on her team and the different kinds of team leaders that emerge as a result (such as team vision, customer leaders, financial leaders, leaders of internal and external communication) that teams consist of very different people.

Teams meet face-to-face twice a week for four hours to touch base, trouble-shoot, and coordinate. These meetings serve to keep the team moving forward as a team and help build a shared way of getting things done.

Teams meet twice a week in a circle.

Teams meet twice a week in a circle.

Values are always a living question in student teams. One of the first thing new teas do is to create their own set of values and identify their passions. Examining and re-examining values is an ongoing endeavor. Each team reflects on its own mission, vision, and values 3-4 times a year and the entire community of 300 students come together to talk about shared values once a year.

All students participate in three “learning journeys.” The first one occurs in Europe (Finland, Holland, or Germany) and connects to what it means to create businesses within the European Union. The second is to Silicon Valley in the U.S. where the focus is primarily on new social, digital, and design businesses. And the third “journey” occurs in one of the emerging “BRIC” countries (Brazil, Russia, India, and China) which are considered emerging “advanced” economies, in order to learn about the obstacles and opportunities that those countries have in producing businesses there.

54% of Team Academy students continue with the (cooperative) businesses that they created. 37% end up working for existing companies (some in the Mondragon system, some not) –– some get hired by their customers, which may be businesses themselves.

Finally, Mondragon Team Academy is itself structured as a cooperative with a General Assembly and a Governing Council that consists of student, faculty and staff, and “collaborator” (typically partnering cooperatives, companies, and the local municipal administration) representatives, all with equal votes.

 

 

 

 

 

Mondragon: What is Solidarity?

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In an earlier post about how one becomes a member in a Mondragon cooperative, I discussed an example of Mondragon solidarity –– the idea of what is fair for pay as expressed through their standards for keeping the distance between lowest paid and highest paid worker relatively small.

Solidarity is deeply embedded in Mondragon’s business model starts with the notion that capital is subordinate to labor. This idea affects how profits are distributed within and between cooperatives, how those profits are used, and how the system works in times of crisis.

This is important, because it explains how Mondragon can support its own system of social welfare, the financing of new cooperatives, worker education, and research and development for innovation.

First off, it makes a difference that the highest paid worker in a Mondragon cooperative typically doesn’t make more than 6 times more than the lowest paid worker.  Compare that to Forbes magazine’s report on 2013 U.S. CEO salaries which averaged $11.7 million or 331 times that of the average worker (or 774 times as much as minimum-wage earners).

Having a ceiling on highest wages means that if a company is successful, more money is simply available to invest in other things.

With more surplus available to invest in creating jobs and supporting workers, Mondragon cooperatives invest in 15 research centers that support the development of new product lines, markets, and cooperative companies in sectors that share common interests. They support a social welfare system that complements what is available from the state. They support worker training and cooperative education, as well as university programs.

However, in my mind, perhaps the greatest recent test of Mondragon solidarity is related to the closure of Fagor Electrodomésticos, which produced consumer home appliances, and was one of the very first cooperatives in the system.

After the company, which employed 2,200 people, had been experiencing heavy losses for several years, they asked the system for help in 2012. According to Inake Belaus of Mondragon Services, the response of the Annual Congress of all the Mondragon Cooperatives (representing about 75,000 people) was a decision for all of the coops to take a 3% salary cut for the next 5 years in order infuse capital into Fagor Electrodomésticos in an effort to prevent a plant closure –– a clear position of solidarity, which was followed by a $70 million investment in the company.

However, when Fagor Electrodomésticos returned in the following year, 2013 with a request for additional support, that time, in 2013, the decision was made to close the plant.

There are many factors which affected the viability of the company –– competition from Asia, the devastating mortgage and foreclosure crisis in Spain and elsewhere in Europe which severely affected consumer demand for home appliances, and some analysts cite management issues. But as someone was very active in the 1980s movement for plant closure legislation in the U.S., and a witness to the broken lives that resulted from the deindustrialization of America during that period, I have a lot of regard for Mondragon’s tenacious response to the problem, which included providing two years of unemployment benefits through their Lagun Aro social welfare system, advice and support to those who asked for it, offering early retirement, and relocating hundreds of Fagor workers in other cooperatives in the system.

Mondragon representatives are still working with a few score of unemployed Fagor Electrodomésticos workers today, are still concerned, and still talking about it. Even with support, losing a job is a traumatic shock not only for a worker-owners (who like any other business owner lose the equity they have built up over the years in the company along with their job) but to the system as well, which has been committed to job creation for 60 years. But Mondragon seems to have designed a system better equipped to absorb that shock than anything I have experienced in the U.S.

 

Mondragon: How Do You Become a Member?

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I’m in Mondragon, Spain on a study tour with a dozen others, organized by the Praxis Peace Institute. It is day one and at least thirty years since I have visited before, and while much has changed, much has stayed the same. At that time, there had been a spike of U.S. interest in worker cooperatives in the wake of the 1980s plant closures that virtually wiped out U.S. core industry union jobs in auto, steel, rubber and more. The recent economic violence of the global financial crisis has evoked even broader interest in the possibilities for an economy that is built on more democratic values and relationships than the ones that have produced so much inequality, exclusion, and damage.

Mondragon-ValleyWe began our day at Mondragon headquarters which is located high above the Mondragon valley, looking down at an aerial view of the remarkable system of 103 worker cooperatives and attendant systems of support which employ 75,000 people in this Basque region.

The big take-away of the day was this idea of a value-driven system in action, or as Mondragon’s tag-line suggests “Humanity at Work.”

 

humanity-at-work

Most of the day was spent with our guide, Mikel Lezamiz, Mondragon’s Director of Cooperative Dissemination, a 34 year veteran of the place. Mikel’s Mondragon career began with a job in the Fagor cooperative’s domestic appliance division – one of the first cooperatives of Mondragon’s 60 year history. He then worked in the entrepreneurial division of what was then called the Caja Laboral, the bank that seeded cooperative development. He attended the same Polytechnical school that created the knowledge and skill capacity for Mondragon’s first cooperatives back in the 1950s and was able to study there for three years with Mondragon’s visionary founder, Jose Maria Arizmendiarrieta.

Screen Shot 2015-05-17 at 6.14.46 PM

Click the image for more information

Mondragon is celebrating the centennial of his birth https://www.dropbox.com/s/tzeelerlkgtg6bz/TU-enero-febrero-2015-INGL%C3%89S1.pdf?dl=0]

There is a lot of descriptive material available about Mondragon’s history and principles .Mikel also offered a general overview of the relationships between cooperatives and the system’s supportive infrastructure of education, mutual health and welfare, finance, and research and development that together, comprise Mondragon’s economic ecosystem. I’ll describe this more in a later post.

But for today, I think the best place to start is with a fellow traveler’s question: “How do you become a member?”

Embedded in the answer to that question is basic information about how individuals join a cooperative, what is fair for pay, and why Mondragon has low turnover in its workforce.

First off, its important to know that the Mondragon is comprised of a system of primarily industrial cooperatives that share inter-cooperative relationships between each other as well as with supporting (and cooperative) institutions of education, social welfare, finance, and research and development. Many of the cooperatives have been in existence in some form or another for half a century.

The path to becoming a member of one of the cooperatives begins much like any other employment relationship – a position must be available, and the individual needs to be the right person for the job, as well as pre-disposed to cooperation. Once that is established, the worker is hired into a six-month contract as a temporary employee, much like the provisional period for many employees in a conventional enterprise.

Depending on the proven suitability of the employee for the job and the availability of long-term work in the company, a good employee may be proposed for membership, or in cases where long-term work is not yet available, offered a renewed contract (for no more than three years). In some cases, “unsuitable” workers, who just don’t work out, may be asked to leave.

The membership process begins with the employee’s supervisor, who proposes the worker to the company’s personnel manager. The personnel manager creates a profile, (which in some cases may include a written statement by the prospective worker-owner about why they would like to be a member) and submits that package to the enterprise’s Governing Council, which is made up of elected representatives of the company’s membership. The Governing Council makes the final decision to offer the worker a membership position.

At any given time at least 80% of the workers of any Mondragon cooperative must be full-fledged members.

Once membership is mutually accepted, the worker has 36 months to contribute his or her initial capital share of €15,000 , which represents the system’s minimum annual salary. This can be amortized through salary deductions, or in some cases borrowed from a bank as “capital to work.”

Membership places workers in particular social and economic relationships with each other and the cooperative. Workers start out with the same salary for the same job, with raises for seniority kicking in every 3-5 years, depending on the cooperative, and retirement is compulsory at 65 years.

Principles of internal and external solidarity place restrictions on the distance between the highest and lowest paid workers, building from the basis of the €15,000 minimum salary. In most cases, no worker can earn more than 4.5 times that base amount (€67,500). In the largest cooperatives, where management responsibilities might be very high, the wage ceiling is six times the €15,000 base (€90,000).

Needless to say, no one gets rich working in a Mondragon cooperative.  However, turnover is very low because:

  • Possibilities for training are very high, because training and education are key values of the Mondragon system;
  • Promotion possibilities are very high, because workers are part of an interrelated cooperative system of 103 enterprises.

To be continued…

Next: What is Solidarity?