oe Brenna | FOR PLATFORM | COOPERATIVES IN’ THE MONDRAGOI ECOSYSTEM
——_—
Associate Professor, Innovation Management, Mondragon University
About the Institute for Digital Cooperative Economy
The Institute for the Cooperative Digital Economy (ICDE) is the research division of the Platform Cooperativism Consortium. Established in 2019, its research covers the emerging cooperative digital economy, which is a relatively unexplored domain in fields like anthropology, political science, sociology, history, law, and economics. The cooperative digital economy is rapidly expanding and is closely linked to labor and cooperative studies. The ICDE’s work also focuses on finance, entrepreneurship, and organizational studies in business schools, as well as governance and corporate structure, which are critical subjects in law schools.
At the ICDE, we recognize that scholars, technologists, artists, community organizers, and cooperators equally contribute valuable insights to the development of a more just and equitable digital economy. Therefore,
the Institute’s mission is to provide applied and theoretical knowledge, education, and policy analysis to bridge the research gaps in the emerging cooperative digital economy. Learn more at https://platform.coop
1. INTRODUCTIO
The Mondragon Valley in the Basque Country! is a small, and resilient community located in the region of Debagoiena with a surface? area of 342 km? and a density of 180 inhabitants/km?, made up of several adjoin- ing towns in the Deba river valley. The union ties binding this region are deeply intertwined creating a solid amalgam that goes beyond political, commercial or institutional relations. This Valley, especially the town of Mondragon, is especially known for being the cradle of the Mondragon Cooperative Movement with the Mondragon Corporation? at its head.
What you find in Mondragon is not a large conglomerate of companies—a society characterized by a deep-rooted culture of work and effort, social cohesion and homogeneity in lifestyles and socio-economic conditions, avery marked cultural and linguistic identity, a clear link to the territory,
a strongly industrialized rural-urban community, that does not forget its rural origins and a people satisfied with their achievements, accustomed to fighting in hostile conditions and suspicious of what is foreign or novel until it proves to be trustworthy.
This story may seem insignificant, but given the current situation of dis- appointment? with the prevailing capitalist economic system, a renewed emphasis has been placed on this small town of Mondragon, which has proven to be a fairer, more responsible, balanced, and sustainable system. There are many people and institutions that come? to Mondragon to get to know its experience up close and unravel its keys to success.°®
Mondragon is the world’s largest worker cooperative network and has contributed significantly to social equality in its geographical area of op- eration, the province of Gipuzkoa. According to Bloomberg, “Gipuzkoa had a lower Gini coefficient — a measure of inequality — than Finland and Norway. The lower the figure, the smaller the differences in income distri- bution.”’”
In this report, we explore how such a traditional cooperative movement, with a long history and solid foundation, can embrace the new paradigm of digital cooperatives. As a result of the new digital and shared economy trends, we need to rethink the value that cooperatives are discovering and how a context like Mondragon’s can be supported in its future growth strategy.
This report is structured into three sections, starting with a description of the Mondragon cooperative model and its innovative ecosystem, which has survived and grown for almost 70 years in spite of adverse business
conditions, which is at the forefront of defending democratic ownership and equality while competing under the same rules of the game. It is creating jobs, advancing its workers’ human and professional develop- ment, and developing its social environment. The second section analyzes the new paradigm of cooperative platforms, their definition, typology, current and future challenges, and their relevance to Mondragon and the Basque Country. Examining the main actions taken in this regard and in collaboration with some tractor agents and new digital entrepreneurs. The third section involves the incubation, growth, and consolidation of Basque platform cooperatives, born in Mondragon and incubated within the Mondragon Team Academy (MTA)’ ecosystem, a ‘team-entrepreneurship’ unit at Mondragon Unibertsitatea and also an international community
of more than 2,500 ‘team-entrepreneurs’ worldwide. With this incubation process, cooperative values are promoted and limitations of digital collab- orative economies are avoided.
Overview:
A. The Mondragon cooperative model and its ecosystem 1. Mondragon: characteristics, keys to success and challenges 2. Innovation and entrepreneurship Ecosystem in Mondragon 3. How does Mondragon need to re-invent itself?
B. Mondragon and cooperative platforms 4. The new paradigm of Platform Cooperatives 5. Needs and latent challenges of platform cooperatives 6. Some initiatives implemented in the regional and national context
C. Roadmap for the incubation of platform cooperatives within Mondragon
7. Strategical vectors for platform co-ops promotion
8. Learning by doing: a proposal for action
9. Conclusions and future lines
2.
MONDRAGON: ~ KEYS TO SUCCESS ND CHALLENGE
Many publications and books have been written about the Mondragon miracle’, its results'?, characteristics", keys'?, and weaknesses"®. I will sum- marize the most relevant ones below.
A single origin, a cohesive leader, and clear values
In 1941, the Catholic priest J.M. Arizmendiarrieta arrived in Mondragon, in the midst of the Spanish post-war with revolutionary ideas_about solidarity and mutual work, linking concepts such as social justice and retributive balance. He was particularly focused on the well-being of the individual and the community, and their well-being. His ideas inspired courage in
a group of young pioneers, who founded the first cooperative company
in Mondragon. It was not just a matter of surviving the crisis, but also of coming up with a self-governed model that would create strong, resilient companies ready to be passed on to the next generation.
“One of our characteristics has been the practical sense of knowing how to act in a field of possibilities without renouncing our ideals. It has been possible to unite and take advantage of the opportunities that are in the common interest”. J.M. Arizmendiarrieta '4
Values and principles in practice
Mondragon cooperatives follow a series of corporate principles and values aligned with the International Cooperative Alliance. ICA's seven coopera- tive principles unite, represent, and serve cooperatives worldwide. What
is interesting is not that these principles are defined and put in writing, but that there is a genuine will '° to put them into practice, in an authentic way. “Speak little and do a lot” is the unspoken motto at Mondragon that is part of its business culture.
“Cooperatives are based on the values of self-help, self-responsi- bility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others” '°
Meaningful figures, ambition, and perseverance”
Organizationally, MONDRAGON is a network of over 240 businesses, 83 of which are cooperatives, with a total of 68,743 employees. The workforce is divided into Industry, Retail, Finance, and Knowledge, with 44.1% based in the Basque Country, 40.9% elsewhere in Spain, and 15% abroad.It op- erates throughout the world, with 141 production plants in 37 countries, commercial business in 53, and sales in more than 150 countries. The combined turnover in 2021 was €9,617 million, with a third of sales made
abroad. Mondragon invested €309 million in 2021 and has 370 patent fam- ilies, and 12 R&D centers. In the same year, they invested €165 million in R&D."'®
Future challenges
However, not everything is easy in the cooperative paradise.'? The current environment and its evolution require cooperatives to adapt quickly and make decisions that are not always consistent with their principles and val- ues. Questions such as: how can we continue to live with cooperative val- ues and transmit them to the new generations influenced by an egotistical and capitalist worldview? How can we continue generating quality employ- ment? How can we grow internationally in non-cooperative environments? How can we survive in an economic environment that changes, is hostile and speaks a capitalist language? 2° How can we adapt to new ways of do- ing business in the digital age? How can we change without ceasing to be coherent with cooperative principles, and pragmatic?
“The co-op needs to be rebuilt and reviewed every day.” J.M. Arizmendiarrieta 2'
3.
INNOVATION AND ENTREPRENEURSHIP ECOSYSTEM AT MONDRAGON
From a Local Network to a Regional and International Ecosystem Solidarity through inter-cooperation, and social responsibility through mu- tual support were the seeds of the first network of companies that were created in Mondragon.
Currently, Mondragon has created an ecosystem around itself that nour- ishes its base cooperatives. This innovation ecosystem includes: these elements: companies, research centers, universities, and financial support entities. It, therefore, constitutes what is called ‘M4Future,’ the corporate innovation system, where the agents making up the group interact with the necessary outside-agents to generate innovations within the Mon- dragon Corporation. The model encourages participation and relation- ships between the agents involved in different areas, applying three sides of the Mondragon ‘triangle of knowledge:’ Business, Research & Technolo- gy, and Higher Education 2.
Business internal agents
Mondragon incorporates within its organization cooperatives and com- panies with a presence in the financial, retail, and industrial areas, with commercial and production offices around the world. As supportive struc- tures, Mondragon has a ‘Finance’ area made of a credit union Caja Laboral (Laboral Kutxa) 73, and a ‘Social Welfare Body’ Lagun Aro”. The ‘Retail Area consists of the Eroski?? distribution group and the Erkop Group, which fo- cuses on livestock farming, horticulture, and group catering. The ‘Industry Area’ includes products and services in the consumer goods, equipment, industrial parts, construction, and business services sectors. It consists
of a group of cooperatives that is organized into 11 divisions: Industrial Automation, CHP Automotive, CM Automotive, Components, Construction, Vertical Transport, Equipment, Engineering and Services, Machine Tools, Industrial Systems, and Tooling & Systems. Also, Mondragon has estab- lished two industrial parks overseas, located in China (Kunshan) and India (Pune) respectively. The aim is to promote, strengthen and support the strategic implementation of Mondragon cooperatives in both these coun- tries.
t
Higher education internal agents
Mondragon has its own university”, a ‘Management and Corporate Devel- opment Center,’ and 3 cooperative schools. They are characterized by the formal and continuous training they offer, which are adapted to compa- nies and institutions within an international context.
10
Research and technology internal agents
Mondragon also has a network of 4 Technological centers (the oldest ones are Ideko?’ and Ikerlan?’) and 10 Business R&D units that focus on re- search in fields that are strategic to the business sector.
Support agents
Based on a collaborative innovation model, Mondragon has a structure of corporate support agents who work together to create a critical research mass and leverage financial resources and infrastructures that will boost collaboration between research centers, education centers, and compa- nies. Some of these agents are corporate offices abroad, innovation parks, business incubators, and a Center for the Promotion” of new activities, whose main objective is to foster and stimulate an open and collaborative entrepreneurial ecosystem, that boosts and displays entrepreneurial activ- ity at all levels of Mondragon. This goal is achieved through the generation of new business opportunities, which are closely promoted and acceler- ated. Mondragon also has 8 social foundations, including Mundukide*,
a cooperative cooperation project involving communities in developing countries, sharing experiences, resources, and cooperative know-how in order to boost their self-management and integral development.
Innovation financing
The cooperatives contribute 10 percent of their gross profit to an Educa- tion, Training and Promotion Fund. Part of this Fund is earmarked for the Education and Inter-Cooperative Promotion Fund (FEPI in Spanish). Sixty percent of the FEPI is allocated to training (Mondragon University and oth- er schools) while the remaining 40 percent is used to fund Research and Development projects. Finally, the Central Inter-Cooperation Fund is used for funding new business initiatives and activities.
In addition to these Funds, Mondragon*' has a financial network that backs new business initiatives and innovative undertakings. Apart from its bank, Laboral Kutxa, Mondragon has three venture capital compa- nies—Mondragon Investments, Mondragon Foundation, and Mondragon Promotion. Both the bank and the venture capital companies have the backing of the Basque Government, which holds an interest in their share capital.
External agents Mondragon also collaborates with public institutions, investors, and regu- lating bodies to obtain the resources necessary to develop its innovation
11
strategy. Mondragon is a member of associations, technological alliances, foundations, agencies, technology platforms, research agents, and clus- ters in the areas of research and innovation, and this helps to create a work network and enhance the concept of ‘open innovation.’
The Corporation also participates in the bodies of the Chambers of Com- merce, in the sectoral associations of the Basque Country and Spain, in the sectoral clusters, and in most of the professional associations in force. It also participates in the governing bodies of the Federation of Cooperatives of the Basque Country and Spain, as well as in other sectoral federations and different bodies of the social economy. Mondragon is active in sec- toral and general forums organized by the different public administrations at all levels, helping to define cooperative Basque legislation to promote new cooperatives.
Mondragon works also to promote cooperative principles at an interna- tional level, as in the case of the union co-op model*? co-designed for the United Steelworkers to create worker cooperatives in the United States. In the UK, Mondragon has been supporting the Preston model's cooperative mission®? to develop a cooperative ecosystem, and providing a roadmap to put this learning into action.
12
A.
HOW CAN ONDRAGON _ REINVENT
- (ITSELF UN THE DIGITAL ECONOMY?
Mondragon’s Current Challenges and Threats
Mature business models
Despite significant efforts, most Mondragon companies are engaged in in- dustrial businesses that date back to the 1970s. Competences must still be acquired in new technologies and new markets, and new forward-looking companies must be developed.
Exploring new geographical areas for purchasing, selling, and manufac- turing
The markets are becoming saturated, making it necessary to seek new ways to expand. Along with its ‘Corporate Promotion Center,’ Mondragon has also initiated a search for new products, activities, and businesses.
Globalization and multi-localization
With the rise of new economies and the threats and opportunities posed by changes in the rules of international trade, Mondragon has, since the 1990s, been pursuing a clear internationalization strategy involving the acquisition and incorporation of subsidiaries abroad. In 2021 Mondrag- on had 132 production plants in 37 countries, commercial business in
53 countries, and sales in more than 150 countries. Moreover, 43.1% of Mondragon workers are based in the Basque Country, 38.4% in the rest of Spain, and 18.5% abroad.
This means that today, Mondragon comprises an amalgam of cooperative and non-cooperative companies taking a variety of legal forms, a situation that poses two main questions: (1) How can Mondragon maintain a coop- erative philosophy of member involvement and participation in the new companies which, due to local legislation, cannot become cooperatives?; and (2) How can Mondragon remain consistent with the cooperative prin- ciples that call for equality and social responsibility in local development and job creation abroad, without thereby hindering the Basque coopera- tives associated with these new companies?
Regenerating the spirit of cooperation, participation, and collaboration Recent years have seen a crisis in the adoption and maintenance of the cooperative's foundational values. Society’s new values based on individ- ual gain are causing the pursuit of the common good and social equality to fall by the wayside. Mondragon must therefore address the question of how to create modern cooperatives that meet the criteria of economic efficiency without losing their essential characteristics based on people's well-being and social development.
14
Mondragon, however, has many latent capabilities that can enable it to undertake innovative projects in the future. These include:
Two-in-One: Comparing Large and Small
Large national or multinational companies are of increasing importance in our globalized economy. At the same time, however, because of struc- tural traits such as the ability to adapt, small and medium-sized firms are showing that they are better able to undertake innovation and modern- ization processes. This raises a number of questions. Can the advantages of both sizes of companies be combined? Are corporations or local groups bringing SMEs (small and medium-sized enterprises) and large companies together under central management as a way of responding to this con- tradiction? Within Mondragon, both diversity and homogeneity live side by side, which can enable the corporation to take the best advantage of being both large and small at the same time.
Shared knowledge base and complementarity
In spite of the difficulty of integrating interests, needs, and actions, Mon- dragon strives to establish transparent relations among its cooperatives that facilitate the exchange or transfer of knowledge, technology, experi- ence, and people - in short, competencies that will foster the corporation's homogeneous growth. As an example, Mondragon can identify individuals with technical competencies in various technological areas within a group, so that it can compile a very comprehensive technological database that can be used by any co-op seeking to strengthen its technological capa- bilities. The constant, direct relations between Mondragon’s companies, universities, engineering firms, and technological research centers also encourage knowledge sharing. Such liaising is an important source of in- novation for the Mondragon industrial cooperatives.
Synergies and inter-cooperation
The origins of Mondragon are grounded in the interrelations and inter-co- operation of its members. Initiatives such as the creation of supra-struc- ture entities, the unification of internal commitments and cultures through shared management models, converging autonomies, and compatible planning systems and management tools help to ensure this integration.
Worker participation and social commitment of Mondragon
Workers in a cooperative are encouraged to contribute value to the com-
pany since they are owner members who can make decisions about their
jobs. The new trend towards knowledge workers and its direct application in the organizational structure of the Mondragon cooperatives is one of
the most highly esteemed work practices within the group. A clear exam- ple of this is the distribution group Eroski, which consists of 1,800 super- markets operating under 3 different legal formulas: cooperatives with approximately 8,000 members, companies under the legal form GESPA where about 3,000 workers have the same rights and attributions as ina conventional cooperative, and capital companies (limited companies) with about 20,000 employees. Today this group is undertaking an ambitious expansion that involves converting all its associated companies into coop- eratives, and all or most of its employees into members with all the rights and obligations that entails.
Organizational innovation at Mondragon
The structure and way of operating at Mondragon constitute in them- selves an organizational innovation. An example of how the corporation operates in an effective network is the fact that Mondragon coordinates over 200 independent, autonomous entities within a single body that acts as the facilitator, respecting the decision power of the members of each cooperative. In recent years, Mondragon companies have become increas- ingly aware of the potential inherent in organizational innovations linked to technological innovations, and for example have undertaken numerous initiatives in which the organizational structure is comprised of self-man- aged groups, each free to set goals, acquire resources and evaluate re- sults.
Cooperative culture
This distinctive trait of Mondragon is of special importance to entrepre- neurship and innovation since people constitute the core of management. and are the raison d’étre and driving force behind the company. Such motivation means that the cooperatives have people who are aware and committed to the common good.
In summary, Mondragon needs to take a different look at the creation of value in its businesses, and the way it interacts with its cooperative mem- bers, and all its stakeholders. It has a great asset—a living ecosystem that would allow it to carry out multiple experiments; experiences that would refresh its current local and global impact, and its adaptation to current global and social trends that lead to greater sustainability and social, busi- ness, and environmental responsibility. It cannot limit future actions with what it has done up to now.
In this section, I start with discussing the digital economy, as it is a reality
16
5
THE NEW PARADIGM IF PLATFORM COOPERATIVES
that has quickly emerged and has changed the rules of the global busi- ness ecosystem. According to Nick Srnicek in his book Platform Capitalism, “the digital economy refers to those businesses that increasingly rely upon information technology, data, and the internet for their business models. This is an area that cuts across traditional sectors - including manufactur- ing, services, transportation, mining, and telecommunications - and is in fact becoming essential to much of the economy today.”
The digital economy is an area with exponential growth, dynamic, and in constant search for innovation that is guiding commercial transactions, business relationships, and even social and community ties. It is based on the management of huge amounts of information, key data in the devel- opment of the economic activity, as Srnicek points out: “they educate and give competitive advantage to algorithms; they enable the coordination and outsourcing of workers; they allow for the optimization and flexibil- ity of productive processes; they make possible the transformation of low-margin goods into high-margin services; and data analysis is itself generative of data, in a virtuous cycle.”> Data has become the currency of exchange, the key resource to control the basic raw material of a new economy.
This is the origin of the platforms—as a new more efficient business mod- el to handle data, extract it, analyze it, use it quickly, as well as to monop- olize it. Now we can see numerous examples of companies incorporating platforms, such as technology companies (Google, Facebook, and Ama- zon), dynamic start-ups (Uber, Airbnb), industrial leaders (GE, Siemens), and agricultural powerhouses (John Deere, Monsanto). Srnicek states that Uber, as the platform for taxis, draws on traffic data and the activities of drivers and riders, besides shifting the taxi industry into a digital form. Facebook, as the platform for social networking, brings in a variety of intimate social interactions that can then be recorded. And, as more and more industries move their interactions online more and more businesses will be subject to platform development. The platforms are therefore not only internet-based digital companies, they can operate anywhere, at any time, and among all the economic agents that interact digitally.
“Platforms are therefore digital infrastructures that enable two or more groups to interact. They are intermediaries that bring togeth- er different users: customers, advertisers, service providers, pro- ducers, suppliers, and even physical objects. They provide the basic infrastructure to mediate between different groups” Nick Srnicek*°
18
Platform Features
The rapid growth of platforms is due to several features that have pushed the boundaries of the traditional economy. They are intermediary agents, hence the investment in infrastructure, resources, marginal costs, and personnel are reduced. This leads to greater flexibility in both their cost structure and their strategy for attracting new users. Its growth and con- solidation are due to the “network effects,” produced by the volume of users using the platform. The more users there are, the more recognized, valuable, and useful the platform will be, as can be observed on platforms like Facebook, Uber, or Linkedin.
The nature of the platforms also leads to the display of other less flatter- ing characteristics, such as monopoly tendencies, unfair or advantageous competition at the price level with other traditional businesses, and the design of an architecture that governs the interactions between users
and the rules of development of new products and services linked to the platform. For example, Uber, despite presenting itself as an empty vessel for market forces, shapes the appearance of a market. It predicts where the demand for drivers will be and raises surge prices in advance of actual demand, while also creating phantom cabs to give an illusion of greater
supply °”.
The platforms have received multiple criticisms, and generated fears and social_alarm in recent years, due to the inequalities that some of these platforms have generated, such as the lack of secure jobs, minimum wage, Safety, health insurance, and pension funds °°.
At the Platform Cooperativism conference, John Duda stated that:
“The ownership of the institutions that we depend on to live, to eat, to work is increasingly concentrated. Without democratizing our economy, we will just not have the kind of society that we want to have, or that we claim to have, we are just not going to be a democ- racy. The Internet is certainly not helping! It is fueled by short-term thinking, corporate profits; it is directed by venture capital and it’s contributing to the concentration of wealth in fewer and fewer hands... We need to reverse that trend” °
Besides this social awareness, the global crisis recently experienced as a result of the COVID-19 pandemic has brought deeper challenges and inequalities, lacking an offering of decent and responsible jobs, triggered by the need for greater flexibility to service delivery, operations execution,
19
personnel hiring, and labor productivity. 4° As Scholz_stated, “none of these issues can be addressed effectively until we reinvigorate solidarity, change ownership, and introduce democratic governance”.
Platform Cooperatives: A New Paradigm
Platform cooperatives have emerged as an alternative to digital labor plat- forms, introducing cooperative principles such as solidarity, ownership, and shared governance in this context. According to the Platform Cooper- atives Consortium PCC, platform cooperatives are:
“Businesses that use a website, mobile app, or protocol to sell goods or services. They rely on democratic decision-making and shared ownership of the platform by workers and users. Today, this move- ment strengthens the backbone for workers to sustain themselves during difficult times while also keeping the idea of participatory democracy alive” *
Among the differences between platform co-ops and traditional business- es, Scholz points out: “first, they’re democratically owned and controlled by their members. Second, they're focused on providing social and envi- ronmental benefits as well as profits. And third, they use technology, often open source, to connect customers and producers directly, cutting out the middleman’’?.
The concept of platform cooperatives focuses on changing the technolog- ical approach of current platforms, together with a different ownership model, where people are more important than technology or concentrat- ed power. The second axis of change is solidarity and placing the focus on the people who make up the workforce, which until now has been anony- mous. Platforms can be owned and operated by inventive unions, cities, and various other forms of cooperatives, everything from multi-stakehold- er and worker-owned co-ops to producer-owned platform cooperatives. Finally, platform cooperatives are changing the focus on cost reduction, efficiency, and innovation as a search for economic benefits to seek the good of all, the well-being of the many instead of the benefit of the few.
In a discussion paper, the International Co-operative Alliance ICA, an independent association that unites, represents, and serves cooperatives worldwide, concluded that key characteristics of emerging platform co- Operatives appear to be that they combine the participatory features of network interaction with the democratic rule bases of collective control.
20
ICA draws a working definition proposal for platform cooperatives, stating that they:
* Are participative,
* Are networked,
* Have a clear end-use,
* Provide tangible member benefit, * Are democratically controlled, and * Create or exchange value.
In November 2017, a resolution calling on cooperatives to explore the potential of platform co-ops was passed at the General Assembly of the In- ternational Co-operative Alliance in Malaysia. The resolution indicated that
“a new generation of businesses are emerging online, and we are concerned that the extraordinary potential for cooperative models rooted in participation and equality is not being realised because of a narrow focus in these markets on investor-led models of business. We applaud pioneers of democratic business in digital markets, including emerging models of platform co-operatives operating in line with core international values and principles. We encourage and welcome efforts by cooperatives actively to support the risk-taking of this new generation of co-operative entrepreneurs, through in- formation sharing, promotion and appropriate finance and business partnerships.” *
Therefore, platform cooperatives stand as a new paradigm that promises to be a sustainable alternative to current digital platforms under capital principles and that is recently receiving multiple supports from various social and institutional actors of cooperatives worldwide.
Case Studies
In recent years, platform cooperatives have also experienced rapid growth. Different types of business models and governance structures have been adopted by companies across a wide range of industries. There is a whole field of research rich in real experiences, growth catalysts, good and bad practices, social and community results, and the impact created. Platform co-ops that have gained market share include the following:
21
Fairmondo
Creation date: 2012
Origin: Germany
Sector: E-commerce, global online marketplace - owned by its local users Website: https://www.fairmondo.de/
Alternative to: eBay, Amazon, Google.
Results: It offers over 2 million products, including a largely complete range in the section of German-language books and a wide variety of high-quality, fair-trade, and sustainably produced products throughout most categories. It has funded itself through a series of successful crowd- funding campaigns. Over 2000 members have invested about € 600,000 in Shares. To scale globally, the Fairmondo team plans to create an interna- tional network of country-based co-ops feeding into the Fairmondo plat- form.
Up&Go
Creation date: 2017
Origin: USA
Sector: on-demand cleaning services booking platform, Up & Go is coop- eratively owned by professional home cleaners. many of whom are immi- grant women from Latin America
Website: https://www.upandgo.coop/
Alternative to: TaskRabbit, Amazon Mechanical Turk (AMT)
Results: 5 percent of revenue from the cooperatives go back into the main- tenance of the Up&Go booking platform with the other 95 percent going to worker-owners.
Stocksy United
Creation date: 2013
Origin: Canada
Sector: art-forward, royalty-free stock photo + video agency where contrib- uting photographers are also owners.
Website:
Alternative to: Shutterstock, iStock, Getty.
Results: Contributing Stocksy photographers receive 50% of a
Standard License Purchase and 75% of an Extended License Pur-
chase. Every Stocksy contributor receives a share of the company.
22
Stocksy has paid out over $20 million to their nearly 1,000 artists during the period from 2013 to 2017.
CoopCycle
Creation date: 2017
Origin: France
Sector: Bike delivery riders.
Website: https://coopcycle.org/en/
Alternative to: Justeat, Deliveroo.
Results: CoopCycle is a federation of bike delivery co-ops. Governed dem- ocratically by coops, it enables them to stand united and reduce their costs thanks to resource pooling. It creates a strong bargaining power to protect the biker's rights. Decisions are made democratically by the lo- cal cooperatives. Coopclyce has expanded to more than 60 collectives in 12 European countries. CoopCycle has an economic model of federated growth and progressively decentralized governance. Each local coop- erative around the world may mutualize according to its income (2% of its added value) and, with that, can benefit from CoopCycle’s resources: brand, platform software, smartphone app, management models, interna- tional support networks, etc.
The Drivers Cooperative
Creation date: 2020
Origin: USA
Sector: Driver-owned ride-hailing cooperative in New York City. Drivers make more on each trip, all profits go back to drivers, and drivers have democratic control over the decisions that affect their lives.
Website: https://drivers.coop/
Alternative to: Uber, Lyft
Results: Drivers earn more on each trip—8 to 10% more than other plat- forms because it takes a smaller commission—and all profits go back to the drivers in the form of annual dividends, based on how much labor they contribute. The Drivers Cooperative takes a 15% commission for operat- ing costs, which go toward driver onboarding, licensing, customer service, engineering, etc.
23
Categories of Digital Cooperative Projects
To understand how a platform can be cooperative and to distinguish the level of cooperative principles engagement of these new business initia- tives, ICA has developed a categorization, based on the work of the Inter- net of Ownership and Platform Cooperativism Consortium.* This serves the need to differentiate cooperatives and other organizations active in this sphere. Categories are defined as:
* Platform co-ops - primarily online platforms and digital businesses that deliver their goods and services through the internet. Examples include Stocksy United, CoopCycle, and Fairmondo.
* Co-op run platform - where the platform isn’t the primary mode of organization of a cooperative (for example, through which owner- ship and governance flow) but where value is added to the coop- erative. Examples include The CoMetrics, Digicoop, Loomio, Co-op Cabs, The Drivers Cooperative, Up & Go, and Bank of the Commons.
* Shared platform - A platform is used collaboratively, often in adher- ence to principles of open source software, but where ownership and control are not democratic. Examples include Open Collective, ScholarlyHub, GNU Social.
* Supporter - Organisations that work to develop and/or promote platform cooperatives. Examples include National Co-operative Business Association, Co-operatives UK, Co-ooperatives and Mutu- als Canada, Cooperative Educators Network, Domains.coop, and the National Centre for Employee Ownership
The prospect of platform cooperatives within Mondragon
Mondragon cooperatives, like the rest of the companies competing in current markets, have business models that are not adapted to the new collaborative economy, to the use and extraction of data and information as raw material for their operations. They are still focused on producing goods in a factory where much of the data is lost (even despite new trends like Industry 4.0), selling them, and learning little or nothing about the final consumer and how the product is being used. Although the glob-
al logistics network has contributed a lot to information tracking, it still needs to be integrated with the rest of the business and strategic decision processes.
The collaborative economy is a rapidly growing phenomenon that requires a response, a position, and a joint effort to lay the foundations for some-
24
thing truly cooperative. As early as 2012, a report by Co-operatives UK argued that:
“The informal information economy is open and global. It is driv- en by interest and enthusiasm rather than money. The bulk of its traffic is free. It is taking time to digest the implications of these changes, and for those involved to work out what rules are neces- sary to govern behaviour. Some have seen it as a new form of the commons, and looked at codes of behaviour that have been de- veloped by those using common land or fishing grounds. But this informal economy is more than sharing a common resource, for with the web the resource is unlimited. It is a site for relationships, and where joint projects are involved, it requires the kind of quali- ties found in those pioneer communities where everyone worked together to raise the roof of a home. It is growing with the speed and diversity of a tropical forest. It is informal and astonishingly inventive. It shares many of the same values and practices of formal co-operatives, and opens up numerous possibilities for a meshing between them” *’
The cooperatives in Mondragon have a lot to contribute to this global movement of cooperativization of online platforms and have a lot to learn from new technologies and their boosting of new business models adapt- ed to the current economic-social context.
Aside from all these issues, a current social trend involves the search for a new meaning to work by the next generation. Phenomena such as the great resignation show that there is a value foundational problem, that distance young people from inherited economic and business structures. 48 The cooperative movement in its traditional form is often seen as irrele- vant or old-fashioned for these younger generations, but those of us who are involved in a cooperative know that it is a valid response to the dis- content and disconnection of the younger generation. The platform co-op movement is a novel model that can make the cooperative model more attractive and relevant to young people. So it is possible to start our own tech co-op that aligns with our values, through a platform co-op.
Some of Mondragon’s capabilities as already presented in this report, that
enable it to get involved in the platform cooperative movement are the following:
* Experience in managing a large network of companies, and in-
25
dependent organizations, enabling a decentralized structure and self-managed units.
* Presence in a wide variety of sectors, complementary businesses, accumulating a lot of knowledge of the market and industrial tech- nology.
* Inter-cooperation mechanisms tested and validated over many years.
* A powerful innovation ecosystem, with many players and capabili- ties in a relatively small territory, but also globally.
* Asocial commitment to change and transformation of the environ- ment and the communities where it is located.
* A cooperative culture forged over many years, which knows the basic foundations of real collaboration and the coming together of people under a common goal.
Platform cooperatives are an example of how Mondragon’'s almost 70-year history can combine the benefits of a well-established cooperative mod-
el with the possibilities that digital labor platforms present today. As an example of this, in February 2023 the first digital cooperative was created in Mondragon called Bihar, a platform that allows home care services for dependent elderly people to be contracted, matching caregivers offer and families with the need.
As has been established, cooperative platforms are a new type of cooper- ative enterprise that combines the capabilities of an online platform with the strengths of a cooperative organization. This duality brings benefits and challenges to solve, both for being an online platform and for being a cooperative. To establish the latent needs and challenges in the incubation and creation of new cooperative platforms, we start with certain research questions that will help us understand and focus on the phenomenon:
* How can digital platforms help worker co-ops create more value and generate future growth vectors?
* What are the benefits of being a platform cooperative?
* Which sectors/industries are most suitable for platform coopera- tives?
* What business support is available for platform co-ops?
* What changes to Mondragon policy and funding ecosystems would help scale platform cooperatives?
* In what ways can earlier cooperative movements be compared and contrasted with the nascent platform cooperative movement?
26
6.
NEEDS AN LATENT CHALLENGES OF PLATFORM COOPERATIVES
In a first exploration and based on the work carried out by Scholz *° and ICA °° the following needs and challenges have been identified that we must resolve in order to find sustainable and lasting cooperative plat- forms:
A cooperative supportive ecosystem
Platform cooperatives are not isolated and need a local, but also a global ecosystem to grow and develop. Providing market knowledge, technology support, financing, legal and organizational assets, and supportive policy environments, just as Mondragon has in its own innovation ecosystem. At a higher level, these cooperatives also need to test business models, learn from customers, adapt to changes, be flexible and replicate good practices to start more, stronger and more lasting platform cooperatives.
Values-based platforms
Cooperatives’ identity can be viewed through their norms rather than through their business structures. Digital platforms are neutral in charac- ter, but co-operatives are values-driven. So, the question is: how important are ethical, values-based frameworks in defining and differentiating coop- eratives in the digital economy?
“The potential of co-operative values and principles is twofold. Values may shape the need to which a platform co-op responds, so threats to privacy for example could encourage user control of data. After all, it is possible to map the international co-operative values and principles (almost) directly onto the main ethical arguments and concerns around digital platforms: transparency, ownership, digital inclusion, data portability, privacy, fairness, online behaviour, safeguarding. Or values may form an effective way of gathering and binding together users online or offline - this is what values do.” >!
Technological resources and structures
Platform co-operatives may be limited in adopting the technologies that underpin the sharing economy, for both practical and principled reasons. For existing co-ops, including some platform co-ops, the technology is not always released on an open-source basis, limiting the potential for wider collaboration. Furthermore, building a robust, attractive, and useful plat- form is not easy or cheap. Many platform cooperatives are born without this basic knowledge and need to acquire it as soon as possible to survive in avery competitive market, with rivals whose software development budget is much higher.
28
Truly democratic governance
Good governance in terms of design and practice is important to all coop- eratives. Cooperative structures need collective decision-making, conflict resolution, consensus building, and the managing of shares and funds in a transparent manner. Besides the overall management of workers. One central question is how the power can be truly distributed and decisions are made taking into account all opinions. How could the platform govern itself in a distributed, truly democratic way? How to maintain democratic governance across platform co-ops without a geographically-rooted com- munity is another issue.
Cooperative-friendly funding & capital
Start-up costs may be small, but scaling up, both in terms of customer ac- quisition and in terms of spreading operations across legal and regulatory jurisdictions, is resource-intensive. Platform cooperatives will struggle to access the capital they need to grow given the financing landscape in the Start-up tech sector relied on speculation, short-term returns, and jump- ing ship through initial public offerings. This is not the right funding model for cooperatives, which grow slowly and are designed for sustainability. Some examples of changing funding schemes are Slow Money in USA, a national nonprofit organization that catalyzes investment in sustainable food and farms in particular. Goteo, a Spanish crowdfunding that allows projects to seek funding that follows a commons-oriented set of values, and Crowdcoop, a collective financing platform specialized in cooperatives and their particular needs. Also, Fairmondo with a series of crowdfunding campaigns is creating an international network of country-based co-ops feeding into the Fairmondo platform.
Alliances and networking
Co-ops rely on other cooperatives, they need to collaborate for new fund- ing schemes, operating solutions tailored to co-ops, and legal and orga- nizational resources, in addition to representing co-ops in institutions. Alliances between co-ops are essential. They need to be based on stan- dards, a commitment to the open commons, shared strategies, goals, and values. Global coordination and community building among platform and worker co-ops are also essential. Coopcycle is an example of that, they are creating a federation of cooperatives to foster solidarity between co-ops, to reduce their costs thanks to services pooling, and to create a common force to advocate couriers’ rights.
29
Scaling and growth
Platform co-operatives are unlikely to follow the established growth strate- gies of incumbents and so will find it difficult to build the natural “network effects” that fuel market penetration and consolidation. Cooperatives