Co-operative innovation: lessons from the Basque country

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Diarmuid, Hugh and Morag from the Co-operative Education Trust Scotland, as well as three students from the Scottish Agricultural College, visited the Basque country in Northern Spain to research co-operative models of enterprise. For the next week, we will publish a series of blogs on our experiences. In this post, Diarmuid outlines some of the ways in which the Basque co-operatives have developed innovative solutions to meet member needs.

A trip to visit the co-operatives of the Basque country, in particular the Mondragón Co-operative Corporation, is quite a popular excursion for global co-operators; Mondragón itself facilitated over 5000 visitors in 2010. Rather than recount the details of these co-operatives (much better examples exist – see the notes at the end of the article), I will share the most important insight I derived from the trip: the willingness to innovate to meet member needs.

1. Dealing with the downturn

While co-operatives have dealt with the current economic crisis better than other models of enterprise, they haven’t been immune to its effects. Mondragón has attempted to negate some of the worst effects by implementing measures aimed at protecting member interests. Some of the measures they take include withholding the 7.5% dividend paid on members’ capital accounts; reducing the working week to four days; letting non-member workers go; and relocating members from poorly performing co-ops to ones that are not in financial difficulty. These range of measures are designed to protect employment levels amongst members and to dilute the amount of risk borne by any one member or co-operative.

2. Getting capital onside

Day three of our trip took us outside of Mondragón to a potato processor, Udapa. Udapa is a secondary co-operative consisting of three member classes: a producer co-operative, a worker co-operative, and a credit union. Now, there is nothing hugely innovative about secondary co-operatives but I was intrigued by the role the credit union played; I just couldn’t figure out the need the secondary co-operative solved in terms of the credit union. It turns out that the credit union’s role is central to the financial stability of the co-operative: as well as contributing 20% of the capital requirements of the co-operative, the credit union forgoes its claim of the surplus in return for the co-operative conducting its banking with it. Udapa’s financial support might just be replicable here in the UK and could significantly increase the probability of smaller co-operatives surviving and subsequently prospering.

3. Involving multiple stakeholders

Following on from the previous innovation, the Mondragón co-operatives are particularly adept at productively managing multiple member classes. Take Eroski, the equivalent of the Co-operative Group. It successfully balances the needs of worker and consumer members to operate a multi-billion euro business. Representation on the board is equal: 6 worker-members and 6 consumer members. The co-operative bank, the Caja Laboral Popular, is no different: the needs of its co-operative members are balanced with those of the bank’s workers. In this case, representation is weighted 8:4 in favour of co-operative members but the result is the same i.e. a highly successful enterprise. And finally, Mondragón University is a secondary co-operative whose members are the different faculties, who in turn have three member classes: students, lecturers and collaborative partners (local businesses, authorities, community organisations). Co-operative practitioners and scholars will be aware of the challenges associated with operating a hybrid co-operative but the Mondragón experience, while not offering an off-the-shelf solution, could possibly offer a way of galvanising the disparate consumer and worker movements here in the UK.

Many co-operators consider the Mondragón co-operatives to be one of the best examples of a co-operative network in the world. They are not without their problems though. The key for the UK movement is to analyse its strengths (a well established consumer movement and an increasing presence in local communities) but look to the lessons from Mondragón to help address some its weaknesses (a divide between the consumer and worker movements, insufficient support structures for new and established co-ops). With the 2012 Year of the Co-operative fast approaching, now is the time for the UK movement to draw inspiration from Mondragón and instigate its own program of innovation.

Notes:

http://www.solidarityeconomy.net/2011/03/16/mondragon-as-a-bridge-to-a-new-socialism/ contains details of some of the great pieces of work that discuss Mondragón. Have a look at the work of Oakeshott, Ellerman and Whyte for further analysis also.

What I Did on my Holidays or Co-ops Really Are Everywhere (Except in the Travel Sector)

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Author :Hugh

Last year I started collecting photographs of co-ops I encountered whilst on holiday, to support my oft made claim that there is virtually no where in the world where you won’t find a co-op (or mutual or employee owned operation)  The collection now ranges from a community co-op pub in the lake district (I was on holiday!) to a plumbers merchants co-op in Sicily (yes, sadly I was on another holiday); a small community based credit union on the West coast of Ireland to an AFL-CIO (trade union) credit union just round the corner from the White House (Obama’s place, not the derelict public house in Holytown).

 I have to confess to visiting Corleone, of Godfather fame, whilst in Sicily but I didn’t manage to get any photographs of the Libera Terra agricultural co-ops, created by handing over former Mafia owned land to community co-ops.  A colleague has come across their produce being sold in Palermo markets (olive oil, fruit and veg).

 Conversely, there was little glorification of the Godfather connection.  The Museum was an Anti-Mafia one and we parked in the Piazza to the Victims of The Mafia.  The Italians seem to be better than most in using co-ops for social cohesion.  In Genoa they brought warring factions from Sampdoria and Genoa football clubs together in a Type B co-op to provide the cleaning service in the communally owned stadium used by both teams.

 Whilst I continue to ramble (I did get a lot of sun on my hols), I have been reminded by some recent reviews that there are co-operative champagne houses out there and that the Co-operative Food and Waitrose do stock them.  I suspect that much of the other supermarket own label wines still come from “caves co-operatives” in France, Italy and Spain and I was delighted that several of the reds I enjoyed on holiday were from co-operatives.  There really is nothing I won’t do to support co-ops.

 Co-ops not only feature in the real world but pop up regularly in fiction.  Inspired (?) by my visit to Sicily, I have started re-reading one of the first novels to tackle the Mafia concept – “The Day of the Owl: Leonardo Sciascia (1961).  The opening scene is a young man being gunned down as he tries to board a bus to Palermo.  It soon becomes apparent that he is targeted because he is a member of the Santa Fara Building Co-operative Society and has not been showing due respect to the men of honour i.e. refusing to get involved in bungs relating to public contracts.  So even in fiction, co-ops are held up as the ethical alternative.

 In the Stieg Larsson novels (The Girl with the Dragon Tattoo etc) there are repeated references to Konsum (the Swedish food retail co-operative) and several characters are members of housing co-ops, reflecting the role of co-ops in Swedish culture.

Which does beg the question, if co-ops started in Fenwick and they are ubiquitous socially, culturally and literally speaking, then why don’t we have more of them in Scotland?

Education?

 However, the big breakthrough for my photo album will come in October, when I am taking some students over to Mondragon.  There should be co-op photo opportunities galore.

 Whilst on the topic of photo opportunities, I was on my travels again at the weekend (business, not a holiday) and was snapped, at half time in An Camanachd’s Sutherland Cup Final, with the First Minister.  The Co-op connection was the Co-operative Group Membership were sponsoring a shinty taster event for school kids; we were providing shinty starter packs for Aberdeen schools and Aberdeen University Camanachd were celebrating their 150th, which puts constituted co-ops a hundred years ahead of constituted shinty clubs.  Not to worry, we did manage to get some interest from An Camanachd in looking at co-op structures for their member clubs, so yet another possibility of co-ops springing up in new areas.

 It would seem remiss to talk about travel and not mention the future of Co-op Travel.  It would appear that the deal with Thomas Cook is back on after consideration by the Competition Commission.  There has been some disquiet about the co-op brand being used when the Group and Midlands Society only retain a minority stake.  If the alternative was simply to exit from the travel market, making lots of people redundant then I would have to say the deal with Thomas Cook not only secures employment (maybe not for all as there will be some rationalisation) and offers the co-op partners the chance to maximise the value they realise for what was a failing business.  Personally, I would have liked to have seen the Co-op Travel employees given the chance to take the business over as a worker co-operative but I’m not sure that option has permeated the senior ranks of decision makers in the movement.

 Any engagement I have had with Co-op Travel staff in Scotland has been very positive and they always struck me as get up and go types.  The Webbs still have a lot to answer for.

 Anyway, this should be the last instalment of our Summer Special, as the schools return and the CETS nose is returned to the grindstone.  At least that is what the Resident “Hiedie” tells me.

First Enterprise Practitioners Association Meeting 27th August

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CETS are delighted to be the first organisation to support this newly formed network of Enterprising Practitioners in Scotland.

As Determined to Succeed funding comes to an end this session, the groups which were supported by this funding, are now also having to consider whether or not they can continue. Neil Mclennan,  Enterprise  LTS and Leigh Brown Enterprise, Scotland’s Colleges, decided that it was really important to make sure there was an opportunity for these individuals to have a regular opportunity to meet and share ideas, experiences and expertise.  To this end they have set up a group called the Enterprise Practitioners Network, click here for details

CETS became involved through a discussion with Neil, to try and find premises and a theme for the first meeting. After a couple of phone calls and emails, we were able to offer Scotmid as a venue and co-op themed workshops for the afternoon.  We also managed to secure Stonelaw’s award winning pupils (UK’s Young Social Entrepreneurs of the year) to run a workshop on setting up and running a Young Co-op in your school!

 Sign up and attend – only £5 for members and £10 for Non members!  See details of the day, below:

  Event Title 27 aug 2011[1]

Co-operation without co-operatives: recent examples

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Author: Diarmuid

Recent events and initiatives in the media, governmental and educational spheres have highlighted a growing trend of co-operation without co-operatives i.e. people coming together to achieve something they couldn’t indivdually.

Groupon
Touted as one of the fastest growing companies in history, Groupon is a online discount merchant that secures deals with local businesses to enable consumers to bulk purchase goods and services. Groupon has revolutionised how local communities purchase goods and services on a daily basis.

Mydata
Ed Davey, the consumer minister, has recently announced the government’s intention to release data on consumers, companies and prices online to “encourage collective purchasing, and increase support for vulnerable customers.”

Moodle
Moodle is a learning managament system/virtual learning environment/course management system; whatever it’s called, it has a co-operative pedagogy at its core. Moodle is used to deliver courses online and is based on social constructionism theory. In essence, this theory believes that people learn best by working in groups and teaching each other in a social setting.

What do these examples highlight and what is their relevance to co-operatives?

Well it is clear from each initiative that co-operation is and will be a key feature in the success of each initiative. We can clearly see that the government is keen for people to have (as close to as possible) perfect information, a key concept in economics, to empower consumers to solve their own energy, telecoms and food issues. A quick look at the government’s ‘community partners‘, the people who will assist in the delivery of this initiative, one doesn’t find any mention of co-operatives. Consumers coming together to improve their lives through collective and bulk purchasing of goods and services: if it looks like a co-op, feels like a co-op….

We might be biased but surely the issue here is education.  Why do people use Groupon to secure bulk orders if they can just as easily and more profitably achieve the same outcome through a co-operative enterprise? Why would Moodle adopt a social constructionist pedagogy if the concept of co-operative learning already exists? And why would the government seek to empower vulnerable consumers to collectively purchase key services through any other form of enterpise but a co-operative, especially in light of their Big Society agenda?

Each of the three examples discussed here are successful, idealogically sound and important initiatives. However, one cannot help but feel that each initiative has reinvented the wheel so to speak. Rather than look at these examples as missed opportunities, the co-operative movement should realise the fountain of co-operation unfolding before our eyes and both support and nurture it to achieve so much more through the structure of a co-operative enterprise.

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