An introduction to Cooperative Entrepreneurship analyzing MONDRAGON entrepreneurial journey since 1956 until today. This presentation is a lecture at "Platform Co-ops Now!" program organized by NEWSCHOOL and MTA MONDRAGON Unibertsitatea in the mist of COVID19.

1. A Team-entrepreneurship online course to create platform cooperatives.
Part 1 - Session 2
Cooperative
Entrepreneurship: The
case of MONDRAGON
(1956-2016)

2. A Team-entrepreneurship online course to create platform cooperatives.
Platform
Co-ops now!

3. 1. Cooperatives and entrepreneurship
a. Entrepreneurship as a social response
b. Worker owned cooperatives: workers and entrepreneurs
c. World wide presence, urgency and opportunity
2. The Mondragon cooperative Experience
a. Keys in history
b. Particularities and Cooperative Principles
c. Mondragon, main numbers as of 2018
3. Entrepreneurship in Mondragon
a. PHASE 1: The creation pot the cooperative movement (1956 - 1992)
b. PHASE 2: International multi-location (1992 - 2008)
c. PHASE 3: Confusion, regeneration and reinvention (2008 - today)
4. Success keys
Guide

4. Cooperatives and
entrepreneurship

5. • Humanity at a CROSSROAD - The COVID-19 crisis only accelerates, radicalizes and visibilices existing realities
• The Cooperative response promotes
SOCIAL IMPERATIVE vs. Economic imperative
COOPERATION vs. Competition
LONG TERM vs. Short term
ROOTED in the LOCAL COMMUNITY vs. International opportunity seeker
• What is exactly a cooperative? According to ICA definition: is an “autonomous association of persons united
voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and
democratically-controlled enterprise.”
• PARTICIPATIVE Economy (Vanek). The real understanding of participation: Information, Decision making,
Ownership, Participation in results
Cooperatives as social response

6. • Multiple kinds of cooperatives. Worker Owned Cooperatives - the backbone of society
• What makes us human? Execution, creation? - ENGAGEMENT. Learning and creating and doing it in cooperation.
TEAM LEARNING by CREATING
• The future of work: The problem is not for machines to do things like humans but for human to make things like
machines.
• Cooperate “capacity of work” vs. “our capacity of creating, learning and cooperating”
• “Decent wages.” Value generation (the evolution of technology). Decision making.
Worker owned cooperatives: work and
entrepreneurship

7. • Cooperatives a relevant movement around the world:
• In WORK: cooperatives represent 10% of the jobs worldwide
• There are more than 3 Million cooperatives with over 1,000 Million members
• Cooperatives represent 10% of the world’s GDP and together they are the 5th largest economy
• The quality of cooperative work is more RESILIENT, SUSTAINABLE and fosters WELLBEING (CICOPA Report
2017)
• The cooperative movement is a socio-economic movement that ANSWERS CHALLENGES OF HUMANITY SDGs
and COVID-19 Crises
• A model facing challenges: funding, business excellence, legal frame…
World wide presence, urgency and
opportunity

8. • Cooperatives in the USA; an opportunity (CLUSA Obrien)
• 2 million jobs, more than 74 thousand million dollars in salaries, profit of 650 thousand millions
• The food cooperatives invest in local communities 14% more than regular companies
• Around 1 million local farmers are cooperative members, and 55% of overall USA sells come from cooperatives
• The Electric Cooperatives provide around 18 Million homes in the USA
• European Cooperative movement
• Asian Cooperative movement
• Latin American Cooperative movement
• African Cooperative movement
Cooperatives Around the World and
Cooperative Opportunity

9. The Mondragon
Cooperative Experience

10. • The cooperative experience was started in 1956 with father Arizmendiarrieta in the town of Mondragon - 30.000
inhabitants - in Basque Country
• Subject of intense research, it has been pointed as one of the best examples of democracy in work and regional
development (Macleod, Vanek, Williamson, Malone…)
• Mission: “a company focused socioeconomic reality deeply rooted in the Basque culture. Created for the people and
by the people. Inspired by the Basic Principles of our Cooperative Experience, committed to the environment,
competitive improvement and customer satisfaction, to generate social wealth through company development and
job creation.”
• Values
• Cooperation: owners and protagonists
• Participation: fair wealth distribution
• Social Responsibility: commitment to management
• Innovation: continuous evolution
Keys in history

11. • Worker owned cooperatives: the workers as main characters in the cooperative project
•
• Commitment to local environment: experimentation/adapting to social needs (Alecop, MU, Eroski…)
•
• Executing leadership from a cooperative perspective and committing to maximum competitiveness
•
• Mondragon Cooperative Principles (Aproved in 1987) (Connected with ICA Cooperattive Principles):
1. Open admission (ICA1 - Voluntary and Open Membership)
2. Democratic Organization (ICA 2 - Democratic Member Control)
3. Sovereignty of labour (ICA 4 - Autonomy and Independence)
4. Instrumental and subordinate nature of capital
5. Participatory management (ICA 3 - Member Economic Participation)
6. Payment Solidarity
7. Inter-cooperation (ICA 6 - Cooperation among Cooperatives)
8. Social transformation (ICA 7 - Concern for Community)
9. Universality
10. Education (ICA 5 - Education, Training, and Information)
Particularities and Cooperative Principles

12. MONDRAGON today ( 2017 Report) Link
Companies Cooperatives Investments
266 98 80.818
Jobs
73.8% members in
industry
42.3% members
women
13,672 jobs abroad
11.280 M
Total sells
57% sells
internationally in
industry
451 M
Spain Europe
7. 32. 212.
Fortune 500
Business rankings
If listedIf listed

13. MONDRAGON Production
presence worldwide
13.672
Jobs
143
Production
Facilities
70%
International
sales (Industry
Division)

14. Financial
Division
Knowledge División: Mondragon University,
12 Technological centers and Innovation Site of Garaia
Bodywork
Components
Construction
Elevation
Home
Engineering and Services
Tool Machinery
Industrial Division
Mondragon Presidency / General Council
Source: MCC 2006
Industrial Systems
Tools and Systems
Industrial automation
Automotive
Equipment
Mondragon Congress / Standing Committee
Distribution
Division
MONDRAGON Cooperative Group
(See Mondragon video: Link)

15. Entrepreneurship in Mondragon

16. Entrepreneurship in MONDRAGON:
3 main historical phases
Confusion,
regeneration and
reinvention
(2008 - today)
The creation of the
cooperative
movement
(1956 - 1992)
International
multi-location
(1992 - 2008)

17. The creation of the
cooperative
movement
(1956 - 1992)
Phase 1

18. Massive unemployment and social crisis: Spain right after finishing a
civil war and under a dictatorship
Non-existing training: no technical, nor business oriented
Somewhat of an industrial metal-mechanic tradition, small
workshops
Closed and protective market
No technology
The only way out was…
Training and entrepreneurship for survival
and social transformation
Starting point (1940 - 1956)

19. The structure that enabled
entrepreneurship
A bet on training and
social leadership
(1942 - 1956)
It’s own structure of
new worker owned
cooperatives
(1956 - 1960)
Legal
support/adaptation
and governmental
promotion
1. 2. 3.
Generation of a
structure or
cooperative group
(1956 - 1960)
4.
Solid, formalized and
strategic
inter-cooperation
5.

20. The structure that enabled
entrepreneurship
A bet on training
and social
leadership
(1942 - 1956) ● Investment on youth (ULGOR)
● School for training: technical, professional and value oriented
● Integration university-company
● Enabling training and work (Alecop S.Coop)
● Continuous evolution: apprenticeship - school - university
● Social leadership: challenges and excites civil society
1.

21. The structure that enabled
entrepreneurship
It’s own structure of
new worker owned
cooperatives (1956 -
1960)
● Work over capital
● Democracy on management: 1 person = 1 vote
● Solidarity in retribution (1 - 3)
● Profit capitalization/reinvestment
● Competitiveness and business leadership
● Opening and international partners
2.

22. The structure that enabled
entrepreneurship
Generation of a
structure or
cooperative group
(1956 - 1960)
● Technical, professional and value oriented training school (university)
● Creation of industrial cooperatives in diversified sectors
● Creation of the bank: Caja Laboral
● Research centers: Ikerlan
● Regional/sectorial groups
UNIVERSITY - INDUSTRY - BANK - RESEARCH
3.

23. Promotion: Caja Laboral,
business unit
• Management of community savings for investment in the
development of businesses in the community “libreta o
maleta” (the account book or the backpack)
• Role:
• Development of new cooperatives
• Technical services and consulting
• Auditing and monitoring the cooperatives
• Estructure: departments
• Economic analysis
• Promotion of agro-industrial and food
• Urban planning
• Auditing
• Intervention
• Industrial promotion

24. Promotion: Caja Laboral,
business unit
The logic behind business promotion:
• The need of presenting a business idea
• First filtering from 30 to 10 projects
• Key people per project: CEO and godfather
• No competition among cooperatives: diversification
• The entrepreneur is integrated in one of the units to
develop the business, the salay, support and advisory is
financed
Selection criteria from project to “business plan”:
• The right CEO for the project
• The investment per job created <100,000$
• Viability: reaches break even before 4 years
The logic behind the investment in the unit promotion:
• How does the financing of the unit work: 64% payment
per service, 36% Caja Laboral fund for business
promotion
• Caja Labora promotion fund creation: 1,000$ per 1$ of
social capital (1987)
• Government support:
• Co-financing at the start of the investment in new
projects

25. The structure that enabled
entrepreneurship
Solid, formalized and
strategic
inter-cooperation
4.
● Regional/sectorial divisions
● Inside relocation of jobs/people
● Common corporate funds: promotion, education, internationalization,
research and innovation, financial services, corporate services…
● Solidarity and integration of results in the divisions

26. Source: MCC Investments
COOP RESULT
(ex ante)
COMMON FUND
DEPOSIT
(1)
TOAL WAGES
COST
RE -DISTRIBUTION
(2)
SUBSTRACTION
(2) -(1)
COOP RESULT
(ex post)
500
- 500
3,500
3,500
100
- 200
700
600
10,000
5.000
15,000
30,000
200
100
300
2%
+100
+300
- 400
-
600
- 200
3.100
3.500
A
B
C
TOTAL
COOP
Example: Re-distribution for COOP A : 600 x (10.000 / 30.000) = 200
Solid, formalized and strategic inter-cooperation
4.
Solidarity and integration of results in the MONDRAGON divisions

27. The structure that enabled
entrepreneurship
Legal
support/adaptation
and of governmental
promotion
5.
● Legal adaptation:
○ Cooperative Basque and Spanish law
○ Ex.: Eroski S.Coop, from consumer to worker owned
● No politicization of the cooperative movement
● Support:
○ Promotion and local incubators
○ Startup co-financing: promotion funds (20-40%)
○ Training and research
● Promotion:
○ Industrial re-converting. Strategic sectors, clusters, biotech…
○ Social economy secretariat in the Basque Government
○ Cooperative Confederation: locals and state level

28. • Creation of industrial companies in diversified sectors
• Prevent the closing of companies: all the cooperatives in Mondragon Group have gone
through a tough time throughout history
Results accomplished
68.260
Jobs in 2003
23.130
Jobs in 1990

29. Phase 2
International
multi-location
(1992 - 2008)

30. ● Globalization of the economy
● Impossible to compete/survive with a “local only” activity
● High productive capacity but only in the Basque Country
● Global Markets: sells, purchases, production…
●
The only way out was…
Go out and multi localize for survival and to
become competitive at the b¡global level
Starting point (1992 - 2008)

31. Source: ex novo - Adaptation from MCC - 2005
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Años 1. 2. 3. 5.
1. First factory abroad
2. Creation of the Mondragon Group structure
3. Expansion starts: Spain Eroski / 5 factories abroad
4. 26 factories abroad
5. 57 factories abroad
4.
Historical evolution of job creation

32. Source: ex novo - Adaptation from MCC - 2007
1. First factory abroad
Creation of the Mondragon Group structure
26 factories abroad
65 factories abroad
1. 2. 3. 4.
Trabajadores locales
Trabajadores extranjero
Results accomplished

33. International projection:
• 57% international sells
• 25 multinational cooperatives
• 67 factories abroad
• Job synergy locally and abroad
Technological competitiveness:
• 12 technological centers
• Garaia Innovation Site
• 3,700 students in the university
Results accomplished

34. Shared strategy inside MONDRAGON:
• Strategic frame and plan: MECI, PECI
• Internationalization of sells, purchases, production…
Inter-cooperation platforms:
• EROSKI and Intergroup (1996-2014)
• Industrial parks (the new regional groups)
• ALIDIS group (2015-)
• ATEGI platform
International inter-cooperation

35. Phase 3
Entrepreneurship
to face the current
challenges of
MONDRAGON

36. Starting point (2007)
• A solid group with international projection
• Valid structures for the past
• Production crisis in western Europe: threat of unemployment
• Interconnected and globalized economy
• Threat to local communities: urban concentration, internal
migration process, radical social differences among countries
• Difficulties on the creation of new businesses
• Need for change/evolution in the competitive model:
• from manufacturing/production to a
knowledge-research-innovation based model
• from local to… glocal?
The current challenge…
Innovate and multi locate cooperative
ecosystem to defend the local community and
allow global transformation

37. 2008 - 2013 Crisis. IRIZAR exit & The
closure of FAGOR Home-appliances S.Coop
• In 2008 IRIZAR S.Coop & AMPO S.Coop exit
MONDRAGON
• After some years competing in global markets in 2013
Fagor Home-appliances closes down
• The spiritual and economic impact is big
• Two weeks before the closure all the cooperative
movement had contributed 90Million to save the
company
• Puts inter-cooperation at risk. Fast forward 5 years and
all the workers have been re-located in different
cooperatives or retired
We are Vulnerable.

38. A New generation of entrepreneurs - the
creation of LEINN - MTA & MONDRAGON
FUND
• In 2008 Mondragon Team Academy www.
www.MTAworld.com is born, aiming to re-connect with
the creation and entrepreneur capacity
• LEINN is created, the first official European under
graduation program in Entrepreneurship, Leadership
and Innovation
• By the end of 2019 MTA is:
• A community of over 2000 social entrepreneurs
• With 13 Cooperative Innovation laboratories in 4
continents
• 98% of the graduates are working on their dreams
• Over 100 new companies have been created (team
companies)
• in 2017 a MONDRAGON FUND of 15 M. euros is
created to invest in new start-ups
• In 2019 the Humanity & Cooperativims Sinphony was
created. www.Humanityatmusic.com by MONDRAGON
MONDRAGON Renaissance starts with
team-entrepreneurship education

39. • Business promotion strategy: center for corporate promotion
• Corporate funds for internationalization, innovation and new business development
• Intra-preneurship: create within, “reinvent”
• Strategy to foster entrepreneurship within Mondragon University
• Business incubator: local and global businesses, a need for international networks (Saiolan)
• A bet on people and self management: Corporate Management Model
• Regional groups internationally: China, India, Poland…
• Technological vigilance and intelligence
• Open and network innovation
• Client worshipping: mass-customization and co-creation
• Experience economy: industrial services and experiences
• International multi-location (sells,, production, research, training and promotion) multicultural management
• Digital tools & Platforms: Expoential technologies & web 4.0 (blog, wiki, social networks…)
Current Initiatives to face the challenges

40. With COVID19 a New world
socio-economic crises to prove the
MONDRAGON co-op model
• MONDRAGON co-ops support Spanish government
producing 60 MIllion Masks
•
• MTA, MONDRAGON & ASHOKA laucnhed
www.CreatingForHumanity.com a challenges platform
to put youth in charge in COVID19
• MONDRAGON Alliance for the Future of WORK and
the creation of GENERADORAS de EMPLEO y
EMPRESAS (Employment Generators)
• MONDRAGON MTA-MU & NEWSCHOOL launched
PLATFORM CO-OPS NOW! a covid emergency progran
to create Platfom Co-ops
In times of crises is when Cooperative
Entreprenership is more needed and
powerful
60 M.
Masks

41. 1. A structure of the cooperative group
2. Cooperate work: people working in cooperation
3. A tracking promotion unit: Caja Laboral - Corporate promotion center
4. University - company integration: serving the companies, support unit, experimentation field and
values
5. Intra-preneuship: there are big opportunities within
6. The importance of financial autonomy of promotion units
7. Technological imperative: allows dimension, socio-economic impact and future
8. Community devotion: always cnnected with community needs locally and now Globally al around
the world
9. Government support but self sufficiency
10. Entrepreneurship and innovation networks: open innovation
Key learnings and success in
entrepreneurship

42. Jose Mari Luzarraga PhD.
M:
jmluzarraga@mondragonteamacademy.com
F: jmluzarraga
T: @empathya_MTA
Contact
“The world has not been given to
us to contemplate but to
transform it”
Arizmendiarrieta

43. Thank you
A Team- entrepreneurship online course to create platform cooperatives.