Mondragon Overview

Lionsberg is working to create a New Operating System for Humanity that enables a New Way of Being that balances all economic, social, political, spiritual, and environmental pillars.

One example of an instantiation of such a Model is Mondragon.

The numbers change continually, but at the time of visiting Mondragon consisted of a federation or Cooperative Of Cooperatives spanning:

• 102 Cooperatives

• 140 Subsidiaries

• 26 Umbrella Companies and Foundations

• = 268 Total Organizations

• ~70,000 cooperative members

Massive Transformative Purpose

• All purpose and goals must align up to One
• A new technology for organizing and aligning my Vision and Purpose, with the Highest Vision and Purpose

Mission

• Transformed every 4 years around the Central Animating Spirit of entrepreneurial development and job creation

Everything A Tool / Process / Pattern

• A co-op is a tool
• To accomplish the Goal of what? Human and social development.

Entrepreneurial Spirit

• Team based entrepreneurship
• What is the right reward for entrepreneurs? Social honor? Status?
• Who owns the idea and work and good fortune that rises on top of such a society?

Core Enterprise / Headquarters

Serving 268 Organizations and ~70,000 members was a small "federal" headquarters, with only about 60 members.

Self Governance

The relatively tiny size of the federal service, communications, and coordination hub was made possible by the fact that all cooperatives in the system are Self Governing and Independent of the the federal government.

Big Ideas

1. Dignity of the Human Person

2. Solidarity

3. Work

Meaningful Work is the positive Way we develop our Selves and our Society.

In Mondragon, the elders say "We are going to help God finish our world."

Work is not a curse, but a primary source of Purpose and Meaning.

4. Education

Arizmendi believed that education, along with meaningful work, were the core elements that transformed human beings.

In Mondragon, Sirimiri is a Word Tool they use to point to a light little rain. Arizmendi used this as a metaphor for teaching, and would give little Fireside Chats. A little rain, a little enlightenment at a time, recognizing that the seeds of Wisdom and Knowledge take many years to grow.

• Meta Skills - training series
  • Future proofing through meta skills training

The Pedagogy of Trust

• Mendiberri
• Learning to learn
• Active, student centered, problem, project, and group based learning
• Cooperative content
• Cooperative citizens values
• Ability to work together in community, manage conflict, know how to find resources and knowledge, assemble and present plans, debate, persuade

Mondragon University

• Applied Focus: Students spend 1/3 of credits in live businesses
• Jr. Co-op for students
• Learn by starting to do business
• Learn by teaching one another
• Coaches guide
• Profits used to pay learning journies to silicon valley, finland, india, china, etc.
• Tuition 6k to 9 k / year - 41% of budget
• 40% of budget from tuition
• 20% of budget - knowledge transfer to businesses
  • Not just thesis - applied knowledge generation and transfer
• Mondragon University is a 2nd Degree Co-Op
  • Each School is a 1st degree co-op
    • Each School Has 3 constituencies on General Assembly
      • 1/3 Students
      • 1/3 Faculty
      • 1/3 Collaborating Members (MCC, City Hall, Businesses, etc.
      • Cross pollinates students, with MCC, with businesses etc. great opportunity
  • Each Co-op general assembly appoints their Dean...
    • and must approve their choices for key staff
• Break the waste of the University Industry
  • Online learning
  • Project based leaning
  • Coaching
  • Vocational Training
  • Learning Support - Tutoring, peer coaching, on the job training
  • Assuring that learning is real and applied
  • Universal access to high speed internet to facilitate distributed wisdom and knowledge sharing, problem solving, and coordination
  • Research separated from teaching
    • Often skills of learning facilitator and researcher do not overlap
  • Active Work...
    • with off-hours distance learning
    • active coaching, mentoring, tutoring
    • peer coaching / co-operative learning
• Ideal
  • Technical degree + management degree
  • A well suited vocational skill, and the ability to cooperatively organize the world around you
• Lane Labs
  • Classroom / laboratory to work on a business
  • 5 teams competing to solve real issues
• Leveraging external resources such as Udemy

Consulting Co-Ops

Inception

• 1936 to 1939 - Civil War
• In 1943, he raised money from the local townspeople to start a School.
• Convinced 11 local students to study engineering via correspondence, visiting Arizmendi to take the exams.
• Arizmendi spent 10 years speaking and giving conferences. People agreed with the ideas, but no one changed. Bad strategy.
• Conclusion: It is not possible to transform the Old companies. We need to create our own New companies.
• 1956 - Convinced 5 guys to quit and start the first Cooperative - ULGOR.
• 1959 - Started the Bank
• 1976 - Introduced Humanities Department to University
• 1991 - shifted from regional to industry organization structure
• 2011 - Introduced Gastronomy Department to University
• 2016 - Revived Regional organizational structure (in addition to Industry) in order to fuel Social Innovation

Government Relations

• Over time have lobbied government repeatedly to change laws to allow for easier operations and compliance

Governance Structure

• General Assembly
  • Elected by Members
  • Most important annual decisions
  • 4 year terms
  • 2 representatives from the smallest co-op, then graduated up according to size
  • Standing Committee - including President
• Governing Council
  • Elected by General Assembly
  • Given training on Management
  • 3 year terms
  • Responsible for appointing the General Manager
• General Manager
  • Nominates the Management Council
  • Every 2 years, Governing Council "renews trust" in GM
• Management Council
  • Includes a Director for each Functional Department
• Social Council
  • Communication Body
  • 1 to 2 year terms
  • At all fractal levels down to every department
  • Have 2 meetings per month
    • One meeting with Management Council and General Manager
    • One meeting with their department
      • Explain to their colleagues the Internal Context and External Context of the organization
      • Discover questions, problems, needs, opportunities
      • Relay answers to inquiries from previous month
  • Mandatory to serve if you are elected, no additional compensation for the extra service
• Consent
  • Key decisions must be anonymous.
  • Slow down and wait for the higher order solution to emerge, which reconciles all the apparently competing concerns
  • If you vote and it is 5-4, or 8-1, maybe that minority is sensing something that is genuinely wrong and will block progress
• No Campaigning
  • If you say "vote for me", you are essentially automatically excluded from the contest
• 1/2 the ballot renewed every 2 years
  • Governing Council proposes candidates to members
  • Or - members select and unify around candidates

Corporate Structure

• 1st Degree Cooperatives -
  • 102 Cooperatives
  • Divided into 14 Divisions
• 2nd Degree Cooperatives - "Industry Areas"
  • Divisions are like 2nd degree cooperatives
  • The General Manager of the 2nd Degree Co-Op is VP of Division
  • Every few years, the divisions rebalance

Step 1: Restructuring Results

• 15% to 40% of results are spread between the divisions...
• So that everyone "feels" gains and losses across the Whole

Step 2: Capital Allocation - Profitable Co-Ops

• 14% to MCC
• 10% to expand the System and create new jobs (Via Management Co)
• 2% to help struggling co-ops (Via Foundations and subsidies)
• 2% to help non-profit co-ops (Via Foundations and subsidies)

Step 3: Taxes

Step 4: Net Profits

• 10% - lifting up society, education
• 30% - worker profit sharing
• 60% - reserves and growth

Functional Areas and Shared Services

• "Social Management" - there are no Human Resources
• General Purchasing Department - can join if you want, no obligation
• Incubators and Labs
  • Saiolan - business incubator for tech
  • 16 companies / year
  • Most incubated businesses are not co-operatives because entrepreneurs don't want to give away (wrong understanding / cultural breakdown)
  • Some university teachers work a few hours a month for Saiolan incubator
• Central R&D to partner with each Co-Op
• Central service units also service outside organizations, not just Mondragon organizations
• No obligation to use internal service units
  • Culturally encouraged, but no obligation. Internal service units have to perform.
  • Small and medium co-ops tend to use more
  • Larger co-ops tend to develop their own
• Social Safety Nets
  • Private Social Security
    • Up to 2 years if not working
• R&D and other central services are also independent co-ops
  • Must market, contract, and ask for projects internally and externally
  • Generate revenue internally and externally
• Elkar-Lan
  • 2nd degree cooperative whose mission is to promote cooperative employment
  • Mostly very small coops of 2 to 4 people
• Mondragon central looking to create co-ops that can employ 100s
• Laboral Kutxa (which might be the bank)? has 20 person service to create companies
• Gaztenpresa foundation
  • in 2017 402 companies, only 700 emplooyees
  • Cultivating the entrepreneurial gene

Innovation

• Central R&D to partner with all businesses and cross-pollinate solutions
• M4 Future Innovation Model - on web page
• "The R&D department of each co-op is the most important"
  • Each co-op has an innovation and technology center
• Innovation is in our DNA, starting with our cooperative structure
• Renew facilities, buy new machines, never rest or become complacent or arrogant
• Missions to other industries and other parts of the world to see what they are doing
• There is always one more step to be done. The moment you become satisfied, it is the beginning of the end

Changes in AI, Robotics, Automation

• Even in 2018, were beginning to progressively discover that most jew were for those with advanced Vocational Training Or Better
• Disruptive technology is coming - 20% to 40% of jobs will disappear
• Estimating that 20% to 40% of the population would soon be unable to participate in the economy
• By 2030 to 2035 most low to mid skill jobs gone
• "Can't pay 25x the wages in other countries and still be competitive"
• What is next wave of work for students and blue collar with coming wave of automation and robotics?
• How to deal with increasing globalization and the dramatic wage and productions disparities
• Innovation and education are the key

Big Bets

• Of the 10% that goes to Mondragon to expand the system and create new jobs...
  • ~80% to infrastructure and technology improvements, job creation
  • ~ 20% goes towards subsidies and the big bets / moonshots
• Pooling central capital and de-risking / incentivizing moonshot projects that may provide a future for citizens

Challenges

• Smart cities
• Manufacturing 4.0 - automated, back in country
• Big data
• AI
• Raw Materials
  • Future is less weight

Powerful Help, With No Guarantees

• MCC can help, but guarantees nothing among the independent co-ops
• Every co-op is self-governing and responsible for its own sustainability and success
• Sovereign autonomous co-operatives with no guarantees
• Very important that both culturally and legally there is no perceived claim on the Whole
• MCC usually helps with a stage 1 restructuring, no obligation beyond
• Ensure relationship between the Core Enterprise and the distributed network is arms length to protect against Black Swans / Titanic events taking down the Whole

Sovereignty and Autonomy

• No one is here to save you. You are the first Agent.
• The boss is not responsible, you are
• The federation is not responsible, you are
• The federation and the leaders are there to serve and coordinate the autonomy and responsibility of the distributed network
• Like a federation of City States
• At Team / Local Level
  • Empowering those experiencing issues to propose and implement solutions that lift up the team, therefore the co-operative, therefore society, therefore the whole living system

Worker Replacement

• If you are moved to another co-op, placed back on temporary contract for ~1 year while remaining a member of the old co-op for a year.
• If it is a good fit, you become a member in the new co-op and your capital moves
• If the old co-op is bankrupt, Mondragon puts in the 15k euros to restart your capital account with the new co-op

Financial Crises

• Example - bankruptcy of Fagor, largest co-op
• Lenders and Social Security made whole first, worker / member / owners last
• Lessons
  • Stop losses sooner
  • Hope is often the last thing we lose
  • Face Reality early and often

Co-Operate Internally, Compete Externally

• internal co-operation not competition

Reporting, Audits, Checks and Balances

• Regular reporting to MCC Headquarters
• Annual audits
• Checks and Balances
• Close Attention and Disciplined Management

What Did Not Work

• Arizmendi spent 10 years speaking and giving conferences. People agreed with the ideas, but no one changed. Bad strategy.

Mondragon Learnings

• Fireside Chats - Sirimiri
• Don't transform the Old, Co-Create the New
• Need for an internal Bank
• Mondragon Experience - Not Mondragon Model
• Internal co-operation, not competition
• Education was the foundation of Mondragon
• Community organizing, social organizing, education of both children and adults
• "Organize a group to do something - elect two coordinators, and I'll be back to check on you" ~ Arizmendi (approx)
• Individual and Community Projects
• Basque - premier linguistic mystery. Not discernibly related to any other language.

Applied Values

• If values are not applied and embodied, we don't really have them
  • The radical separation of the values discussed on Sunday and verbally assented to, and those embodied and lived out during the week
• What form of business and self-governance enables us to translate these values into work and society and life with integrity?
• Applied value clash with pop-culture values of consumption, leisure, whim, short term... vs. traditional co-op values...

Mondragon Sayings

• We are going to help God finish our world.
• Work begets Virtue. Virtue begets Honor.
• Worker = Member = Owner.
• What is on our minds is the Mission: A Better Society (through empowered work and education).
• If we believe in democracy and self-governance, shouldn't that also be applied to economics?
• Living and working for God and humanity

Concepts

How to Transform the World

The core idea is the transformation of the world from the bottom up. To do that, you have to create New People.

Transformed People -> Transformed Society.

The primary way to elevate and transform humanity is through meaningful work and enlightening education.

Economic, Social, and Personal development in service to humanity

Catholic Religion

Mondragon is not a Catholic organization, however Arizmendi was a priest and placed a spiritual foundation underneath all that was built.

Three Elements Present Throughout Inception

1. Daily Church / Religion

2. Technical School / Vocational Training / Work

3. Social and Cultural Action

• Free time organizations
• Music, plays, parades, lotteries to raise money for the poor, debates, football clubs
• The social activity often engaged the youth, whose parents were fighting and divided
• Cultural events, carnival etc.
• Frequent cultural activities for the youth

Blend of For-Profit and Social Organizations

• It is seen as part of the responsibility of the economic engine to fund the valuable social goods
• Some of the organizations generate economic resources, others generate social riches so that everyone can live decent lives

Community Based Sense Making

• Where Are We?
• Where Are We Going? / Where do we want to go
• How do we get there?
• What do we all think the problems are?

Coordinating Resources and Philanthropy

• If we have $250,000, what are we going to do with it and why?

Escaping Dependency and Paternalism

Previously the work in the community outside sustenance was dominated by rich industrialists, who provided some basic services for the workers.

Team Based Entrepreneurship

• Team based intrapreneurship vs. individual / hero entrepreneurship
• The critical path is to prepare teams of intrapreneurs for the cause
• We don't teach them, we help them learn

Worker = Member = Owner

• In the beginning: 100%
• Present: 85% Worker / Member / Owners, 15% Temp Contracts
• No unions vs. management - fully self-governing from the bottom up based on cooperating rather than internal division

Intern / Apprentice -> Temp Contract -> Member

• Train. If hard worker and good cultural fit, then award a 90 day trial.
• 90 day trial -> 2-3 year Temp Contract.
• After 2-3 years, either:
  • Membership is offered
  • Contract is terminated
• Learning - this facilitates the churn that is needed to create space for those who truly have the heart and desire to become contributing members of Society.

Commitment / Buy In / Skin In The Game

• Everyone buys in - ~ $15,000 Euros
  • Loans are available from the bank so there is no barrier to entry
  • 20% is fee
  • 80% is your Initial Capital
• Skin in the game is critical, but should not be a barrier to entry
  • Resource ladders need to be in place so that everyone has access

Profit Sharing

• We share 30% of profits among us.
  • If you are a temp worker, it is cash.
  • If you are a member, it is Capital.
• Often 3 to 6 weeks pay average profit sharing

Capital

• Capital is not available for withdraw until you finish working, so that it stays in Flow in the System.
• If you so choose, you can leave Capital in when you Retire.

Return On Capital

• General Assembly decides if they pay interest each year, and at what rate.
• Range from 0 to 7.5%.

Allocation Of Capital

• Minimum 10% for society
• 30% for Profit Sharing
• Balance ~ 60% for Capital Reserves

Use Of Capital

• Work to improve our Selves
• Work to improve our Society
• Help God finish our World

Inter-Cooperative Loans

• Keep Capital in Flow
• Low interest rates, backed by Mondragon federation

Ration of Highest to Lowest Paid

• Spanish IBEX companies ~ 1:100
• United States ~ 1:330
• Mondragon ~ 1:7
  • Each level has decimals
  • Each position has a range written in the handbook, for instance 1.9 to 2.1

Performance Management

• Review every 2 years
• Very rare to fire

Minimum Wage

• Minimum Wage is about 1.5x what the government mandates (~15,000 euros vs. ~10,000 euros)

Advance Payments, Not Guaranteed Salaries

• We are all Owner / Stewards, therefore there is no "them" to guarantee Salaries
• Salaries are an Advance Payments on final accounting
• If what we pay our Selves results in a loss, it comes out of our Capital Accounts

Performance Management

Process, Technology, and Best Practice Cross Pollination

• Processes, technology, and best practices cross-pollinated between co-ops.

Self-Governance

• 1 Member = 1 Vote
• Every Member has the Right To Elect, and the Right To Be Elected.

Self-Determination

• Effort, Work, Sacrifice - reaping the fruit of your labor

Trust But Verify

• Annual external audits

Symbols

• Easy to understand internationally and in youth
• Flags / Pins

Solving Issues

Identify problems, propose solutions, implement, learn.

Developing Countries

• Opportunity be paid to work on developing countries projects
• Long term commitments 10 years plus to facilitate true learning, relationship, and transformation
• Idea competition for interest free micro loans
• Mozambique
  • co-op idea didn't work
  • Farmers had other Needs
  • Like a roadway. Basic infrastructure.
• Everything done on the basis of Micro Finance
• Need someone on the ground to truly learn and understand
• Technical expertise help
• start small and learn

Program Management

• Program Management function required to coordinate
  • Universities
  • NGos
  • Co-ops
  • volunteers / retirees

Thinking

• Thinking
• In Scales And Probabilities not Black And White, yes or no
• Triangulating To The Wise Right Answer

Actions Not Words

• If you use the words and terms, people think it is propaganda and shut it off
• Demonstrate with action, live it out, then back it up with the principles and concepts

The Gap Between Who We Are And The Ideal

• There is ALWAYS a gap between Who We Are and the Ideal / Principles / Values we uphold.
• "But at least there is a standard, and we hope there is less of a gap than with other organizations"
• Striving to Co-Create practical Realities that conform ever more closely to the Foundational Ideal / Principles / Values
• Evolution and bottom up transformation towards the Ideal - as opposed to revolution from the top down that leaves the social fabric of humanity fundamentally unchanged
• It is not perfect. It is not a utopia. It is not a finished model.
  • It is PROCESS for RISING towards unachievable perfection
  • Aided by the Grace of God

Acting As If

• Foundations and other entities that are not technically organized as non-profits still Act As If

Experience and Continuous Improvement

• It is not heaven. It is not utopia. We are human, we are trying to figure it out, and therefore it is imperfect.
• But we are striving to make it more perfect by getting a little better every day

Local Sustainable Agriculture

• Local, organic, sustainable agriculture

Reflections On What Is Not Working

• Co-Ops Sold
  • Barcelona co-op sold out to a great offer from Cemex... everyone walked away with millions.
  • The temptation of short term local gain at the expense of the Whole
• Co-Ops Bankrupt
  • After Fagor backruptcy, 1,900 employees demonstrated against Mondragon and sued
• Culture
  • Something went wrong in the training that allowed for this.
  • Need to rethink, and reinforce with every speech that YOU are responsible first.
  • You are the first agent
• Welfare State
  • In the beginning, there was no welfare state
  • The Priest said: Ask not what Society can do for you , but what you can do for Society
  • Now, we are starting to live in an entitled welfare state
• Lack of coordinated strategy and reporting for how non-profit $ is spent
• Training must begin from youth, and be hit hard and immediately when a worker begin
  • Year zero / onboarding
  • Year one
  • Year two
  • Then ongoing maintenance
• General Assembly Meetings have become very short
  • Many people, and debate is unusual
  • When they ask if there are any issues or objections, usually silence
  • Are issues and minority vote going unseen?
• Blame
  • If the problem is ever outside the Conscious Agent, you will never improve...
  • If something goes wrong, it is us that must transform
  • If something is not hear, it is because we were not persuasive, passionate, convincing, etc.

The Legend of the Dragon and the Virgin

• the dragon was killed co-operatively

What Causes Factions, Divisions, and Disparities?

Misc

• Complete Personal Development / Formation - series
• Communications System - battle rhythm
• Letters are addressed "Esteemed Friend"
• Constant training on cleanliness, order, quality, production... stay after it!
• Wisdom Think Tank - plymaths... translating timeless wisdom, values, laws of nature into a new operating system for humanity, at all fractal levels.

Mondragon People

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