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Extraordinary Leaders Series: The Mondragon Story

Andrew Pena has chosen to write about Father José María Arizmendiarrieta Madariaga of Mondragon, in the first of our Extraordinary Leaders profiles series. He explains below why this leader was so inspirational for him.

I first came across the Mondragon Corporation, the 10th largest group of companies in Spain, in 2002 when one of its members asked me to help with their UK expansion. It was to become the beginning of a wonderful and inspiring adventure that led to me signing a collaboration agreement with the LKS Abogados, the law firm that managed the legal affairs of many of the members of the co-operative. Over the next few years, and during my many trips to Mondragon, I learnt more and more about the Corporation and the values that has built it into a Euros 12 billion international organisation. In many ways, the Mondragon story has inspired the growth of my own firm and the building of Cubism Law’s community of lawyers and businesses each looking to work together in creative and collaborative ways. At the heart of Mondragon is the idea that, from hardship and humble beginnings, something extra-ordinary can be achieved if is anchored on a great idea and a set of values built on humanism, respect for others and working co-operatively for the benefit of the wider community.

It is 1941. Mondragon, a small town in the Basque region, is (like much of Spain) suffering from extreme poverty and a loss of faith in its future; struggling to come to terms with the tragedy and loss of a savage and divisive civil war.   Father Arizmendi arrives as the new Catholic priest. He does not initially impress. One parishioner described him as speaking "in a monotone with intricate and repetitive phraseology difficult to understand. He hardly ever [read] with grace." They ask for him to be replaced. So, not a very auspicious start for the man that was to inspire his community and give them the skills and confidence to transform their lives.   He felt the answer lay in finding a way to alleviate the poverty through economic development of the town. But, where and how to start? He was determined to find a way.

It is said that children smile 20 times more often than adults; that they bring far more laughter and joy to the world before they mature into a more cynical approach to life. He decided to begin there. In the town, few children over the age of 12 received any formal education unless they were children of the existing workforce of Union Cerrajera, a large company that dominated the area. When Arizmendi’s request to open their doors to more children was turned down in 1943, he decided to start an alternative apprenticeship school for 20 local children. In addition to workplace skills, the priest taught his core principles – solidarity, charity, and concern for others. The school ultimately became an entire ecosystem of educational initiatives, formal and informal, for children and adults, on a wide variety of topics; technical, religious, cultural and recreational.

In the meantime, five of the graduates of the school, started to work in the Unión Cerrajera. After seeking, and failing, to introduce humanist reforms in the company, they decided, with the Arizmendi’s encouragement, to start their own business. In 1956, they set up “ULGOR”, a name formed from the initials of the surnames of the founders, as an employee-owned cooperative. This became the seed and nucleus for far greater change. Other graduates of the school, and acquaintances of the founders, began to be inspired to set up new co-operative enterprises in the area, and these soon became loosely affiliated with each other. What started in 1956 with a handful of workers making simple paraffin cookers and heaters, now consists of over 74,000 people in an integrated group of some 258 co-operatively owned businesses, subsidiaries, and affiliated organisations, with a total asset value in 2015 of almost Euros 25 billion.

 The Corporation is run for the benefit of the members and every member buys into this core belief – that by putting others first, and working together for mutual benefit, they are in fact best protecting their own interests. In essence, that it is through their collaborative efforts, and the sense of being part of a genuine business community, that the success of the business will ultimately depend.   In an ever changing world, there has be an anchor, a set of values or ethics that bind people together. For Mondragon, the spirit of humanism, and the culture and core principles originally articulated by Arizmendi, survive and remain the foundations and driving force of an international business empire.

Can we emulate the vision and drive of Father Arizmendi? A journalist once remarked that the Priest had created a progressive economic movement anchored in an educational institution. He replied “No, it is just the reverse. We are creating an educational movement for social change, but with anchors in economic institutions”.   In an increasingly commercial world, where greed and ego can sometimes dominate, Arizmendi challenges us to look at business and education differently and together. First, to see them as feeding each other. Secondly, to build a culture of togetherness based on long term loyalty and reward. Thirdly, to create a community that values humility and humanity and respect for and towards the individual and the collective journey. If the last 60 years are anything to go by, the spirit and ideals of Mondragon offer a perspective in how to do things far more collaboratively and for the benefit of the many rather than the few.