The Mondragón experience

“Nothing differentiates people as much as their respective attitudes to the circumstances in which they live. Those who opt to make history and change the course of events themselves have an advantage over those who decide to wait passively for the results of the change.”

So states the late José María Arizmendi, the driving force behind the Mondragón Co-operative Corporation (MCC) in the Basque region of northern Spain. From a single manufacturer of petrol-based heaters and cookers with 24 workers started in 1956, MCC has grown to over 68,000 people working in 218 companies located throughout the world.

During its start-up and expansion, MCC only had one business failure (a fishing cooperative); an amazing feat when you consider that about 80 percent of businesses will fail in the United States within the first five years. What makes the Mondragón “Experience”—as members like to call it—so fascinating is that Arizmendi was not a seasoned businessman or an MBA graduate from an ivy-league school. He was a former POW from the Spanish Civil War who later entered the church and was sent in 1941 as a new, 26-year old priest to tend to the youth of the Basque country.

The region was in a severe economic and social depression after the War and Arizmendi felt he could best help the young men by starting a technical school. He not only taught the students a trade, but also a sophisticated understanding of Catholic Social Doctrine with its emphasis on cooperation and the “primacy of labor among the factors of production”.

When five of his original students decided to start a business based on this doctrine, they created a new social invention that makes Capitalism, Socialism, Communism, and all the differences between these “isms”, irrelevant and obsolete. It is a new business paradigm that by comparison seems as if we are still communicating by pony express, and this small region in northern Spain has been successfully using the Internet and email for many years.

There are five basic lessons that business owners and the CNMI in general could learn from the success of the Mondragón Experience.

First, there is a positive atmosphere of consensus and collaboration created because MCC believes people have priority over profit. Profits are important; however, if a financial setback occurs top management does not automatically layoff people to boost earnings. MCC believes that people are the only guarantee of the success of the cooperative project, and all the members are treated with respect and their ideas are valued. This results in a higher level of worker involvement, trust, and cooperation to solve any problems that might arise.

Second, practically all of the cooperative’s earnings are retained in internal capital accounts. This has allowed the organization to be financially solid and have the capital to continue its growth. Additional profits are not spent on lavish executive perks or outrageous salaries. MCC restricts the range of the highest pay to lowest pay to an effective ratio of 4.5 to 1.

Third, there is an ongoing internal adaptation to the external changes that take place in the environment. The cooperative is continually evolving and learning from each of its members, and since every member has a say and interest in the long-term success of the organization, there is greater involvement and innovation.

Fourth, there is a high priority attached to training its members. MCC can continually evolve because the members are continually improving through their own 4,000-student university or other educational opportunities. This training translates into higher productivity and better overall performance as compared to workers in comparative industries.

Finally, Arizmendi had the grand vision and was the driving force behind the Experience. It was his leadership that inspired the ideas of the youth he trained and motivated them to succeed in their own venture. The youth are the future promise of prosperity for the CNMI. What kind of investment are we making to prepare and inspire them to be future business and government leaders who will explore better economic alternatives with and for the people of the Commonwealth?

As the circumstances in which we live in the CNMI change, will you be the kind of person who opts to make history and change the course of events, or will you decide to wait passively for the results to change. Unfortunately, many are happy to sit on the bleachers of life waiting for someone like a Jose Maria Arizmendi to make a touchdown. Whereas, Arizmendi taught and demonstrated that the people themselves have the ability to make significant, quantum improvements in their circumstances if they will only believe in themselves and take a step on the playing field of life.

(Rik is a business instructor at NMC and Janel is the owner of Positively Outrageous Results. They can be contacted at: biz_results@yahoo.com)