How Mondragon is helping Preston to develop a co-operative ecosystem

The Mondragon Corporation has been supporting the Preston Model’s co-operative mission around four key challenges

Preston has been on a transformative journey over the past decade. Its community wealth building strategy, often referred to as the Preston Model, has garnered widespread attention in recent years, and in 2018, Preston won the title of ‘Most Improved City’ in the UK’s Good Growth for Cities Index.

So far the project has seen its city council and key “anchor institutions” (such as the local university, housing association and police force) working to collectively redirect millions of procurement pounds to local businesses, improving their labour practices and channeling investment funds to the local economy.

The city has also been working to encourage greater diversity of ownership in the local economy through the support of co-ops in Preston. The volunteer-led Preston Co-operative Development Network has been running for the past couple of years to help develop and support new co-ops and to raise awareness about the co-operative model. Earlier this year, Preston City Council highlighted the development of local co-ops as a key part of its Community Wealth Building 2.0 strategy.

To support this aim, Preston has enlisted the help of Basque Spain’s Mondragon Corporation, the world’s largest network of worker co-operatives, which employs around 80,000 people. Mondragon has been working with a project committee since September last year to find out what Preston can learn from Mondragon’s experience in order to help the city develop a co-operative entrepreneurial ecosystem.

The support from Mondragon has involved a series of meetings and research interviews with representatives from Mondragon and Preston, resulting in the the co-production of two reports – one which analyses four key Basque entrepreneurial initiatives, and another which provides a roadmap for Preston to put this learning into action.

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Through this work, Mondragon’s consultants have identified four main challenges for Preston around the themes of interco-operation, social value, co-operative culture and shared leadership, for the city to take into their roadmap. Four working groups are being established for local stakeholders to work on these challenges together.

The work of this project was shared at a public event earlier this month, hosted by the University of Central Lancashire (UCLan). The event saw presentations from consultants Marta Boixados and Ibon Zugasti, head of business banking at Mondragon’s community bank Oscar Muguerza, Mondragon University educator Aitor Lizartza, and Mondragon’s global head of public affairs Iñigo Albizuri Landazabal.

At the event, Mr Albizuri explained that, while Mondragon is acting as a consultant in this process, its role is largely about sharing examples, saying ”we need real things, real positive experiences. And this is what we think we can add to the project of Preston”. 

The Basque initiatives shared with Preston are Mondragon’s business incubator Saiolan, entrepreneurial education centre Bilbao Innovation Factory (BBF) and the non-profit foundation Gaztenpresa based within Mondragon’s bank, as well as a publicly funded initiative which is not run by Mondragon – Elkar-Lan, which works to support the creation of new co-operatives. 

During their presentation at UCLan, Marta Boixados and Ibon Zugasti from Mondragon’s Management Consulting Division of LKS Cooperative said the main goal of their work was to “inspire a co-operative ecosystem,” as opposed to offering any one model that could be replicated, in Preston.

This ecosystem approach relies on the encouragement of inter-co-operation between Preston’s stakeholders, through activities such as networking and collaborative projects. LKS states in its report: “The interconnections between stakeholders can enable the development of shared projects with higher impact, and democratic and shared leadership.”

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The report cites the “creation of an aligned network of co-operatives” operating under shared values and principles as a way that Mondragon have ensured competitiveness and created new employment opportunities.

Mr Albizuri also highlighted the way that the federation’s different elements work together to show the strength of the co-operative model: “Mondragon is known around the world, first of all, because of its size, but also because it’s diversified. So what is important is that the co-operative way of doing business can be used in industry, knowledge – in schools, universities, and research and development centres, and in banking.

Representatives from Mondragon and Preston at UCLan (Photo: Julian Manley)

“So we can do everything in a co-operative way. This is very important, because sometimes depending on the country and its culture, they say, ‘Well, you know, co-operativism is good, but not for real business.’ And this is not true.”

The next key challenge put to Preston by LKS is to deepen its social value business approach, by fostering the creation of competitive businesses that contribute impact in the areas of employment, living standards and democratic ownership.

Mr. Albizuri stressed to Co-operative News that with this approach, “capital is only a tool – it’s not the final goal. It looks very simple, but it’s so important.”

Echoing this sentiment, head of business banking at Mondragon’s co-operative bank Laboral Kutxa, Oscar Muguerza, shared the work of Laboral Kutxa and its social value initiative Gaztenpresa, which provides technical and financial assistance to underemployed groups to become self-employed. Since its inception in 1994, Gaztenpresa has supported almost 6000 companies, including 256 last year, creating 504 jobs.

Preston’s council leader Matthew Brown has previously highlighted the “importance of supportive community finance” in community wealth building, including the development and networking of local and regional public banks, credit unions and co-ops, and is currently working with stakeholders to establish a mutual bank for the North West.

In its report to Preston’s co-operative development project committee, LKS recommends that “the North-West Mutual Bank creation should provide and facilitate funding to develop entrepreneurship co-operative projects or social companies.“ 

Another challenge that has been highlighted for Preston is to create a more collaborative and co-operative culture, primarily through local educational initiatives.

Mondragon’s origins lie in education and training, with the establishment of an educational centre in 1943 that is today known as Mondragon University, set up for the purposes of providing vocational training to young people whilst instilling in them “a humanistic, participatory vision based on values of equity and justice”.

Today, Mondragon University is fulfilling that need through its LEINN Programme, a bachelor’s degree which encourages real-world entrepreneurial innovation through participatory educational methods. Aitor Lizartza, who works at the university,  explained during his talk in Preston that the course is inspired by the Finnish Tiimiakatemia – a model based on learning by doing and working in teams. From these principles the Mondragon Team Academy was created, a global network of “social innovation ecosystem labs,” where students are given tools and opportunities to set up their own ventures.  There are now 13 of these labs across Europe, Asia and Latin America.

The Preston Cooperative Education Centre was established this year “to support the creation of worker-owned cooperatives for Preston and the region.” The centre’s stated aim is to become “a significant and inclusive community resource, helping to reach, support and connect diverse groups, workers and unemployed, people of all ages and community activists,” using a “ fully democratic, imaginative and creative” approach.

The final challenge set out for Preston to tackle is one of leadership. LKS have recommended that Preston “create an ecosystem where the different Prestonian stakeholders (including Preston City Council) can develop some complementary leadership” beyond the council, including the development of new projects, participation in strategic planning and defining policy.

Preston City Council continues to play a leading role in the city’s community wealth building strategy. During his visit, Mr Albizuri said: “It’s amazing how many things can be done if there is a real commitment from governments. In fact, I have told [Preston Council] that I would like them to be in the Spanish government.”

Despite adopting the role of “place leader” in the Preston Model’s initial phase, the city council says it is keen to promote the model to other institutions in the area, not least because many of the city’s anchor institutions have significantly greater spending power.

In its report, LKS identified a need for the council to clarify its role in the development of the Preston Model, offering up two options – for Preston City Council to either have “an active role and hold the leadership,” or to act as “an instigator to make things happen among the rest of the stakeholders”. The report goes on to say that the first option more closely resembles new municipalism, whereas the second is closer to the Mondragon study case.  

LKS point to the potential for a neutral and non-party political organisation such as the Preston Co-operative Development Network or other similar body to “play a central role” and “connect the different elements of the ecosystem to support coops and social value companies to generate a social and economic impact in the local communities”.