There are some corporations that have been successful in re-organizing for the knowledge-based Economy 3.0.

In my previous post, I defined the term Economy 3.0, and described how it represents the “hardware” needed to run Jurgen Appelo’s Management 3.0 on Daniel Pink’s Motivation 3.0.

Google has worked together with organizational consultants and researchers like Harvard Business School’s Amy Edmondson. In the study, Edmondson discovered that the most critical component in developing high-performing teams was “psychological safety“.

Safe teams are teams which exhibit trust and mutual respect, where team members are free to be themselves. Unfortunately most workspaces operating under a Management 2.0 operating system are filled with fear instead of safety. Hierarchies and power distance aggravate the problem, creating an environment of Yes men (and women) who know that if they speak up they will lose their livelihood.

Learning organizations are safe places. And unsafe places cannot learn. Nonetheless, while Google is not an employee owned co-operative, it is a model for serious attempts at Management 3.0 transformations within an Economy 2.0 structured organization.

Zappos is a more ambitious example. The company has done away with bosses, and has organized itself around a concept called holacracy. A holacratically run enterprise “removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss”.

A major tomato ingredient processor, Morning Star Farms, stands out as another example.

“At Morning Star Farms there are no managers. Employees don’t report to a boss they report to each other and their work is based on CLOU’s (colleague letters of understanding) that they themselves create.”

The company organization chart reflects a neural network or an airline route map rather than a hierarchical military command chart.

Several options exist, but one such organization stands out for its phenomenal success in desperate circumstances. The Mondragon Corporation was founded in 1956 shortly after the end of Spanish Civil War in the then economically depressed Basque region.

Today the Mondragon Corporation is a 100,000 person sized international worker cooperative, with 85,0000 workers (shareholders). They operate 147 production subsidiaries and corporate offices in 41 countries with total assets of 35.8 billion euros and total revenues of 14 billion euros. They operate manufacturing operations, R&D, engineering, a bank, and even a university. They have a subsidiary in several Rust Belt states, including Cincinnati, and even a subsidiary in Washington D.C.

In 2012 MSNBC reported on how this Spanish co-op may point the way forward for American workers.

The illustration above features the 10 Basic Cooperative Principles currently in force at Mondragon. The depiction illustrates the inter-relation between each of them:

Education occupies the core as the basic mainstream principle, along with the Sovereignty of Labour.

Education: Sufficient human and economic resources are dedicated to education.

• Co-operative, for all members appointed to management bodies.
• Professional, especially for members appointed to management bodies.
• Young people, in general, to promote the emergence of men and women co-operators, capable of consolidating and developing the experience.

Sovereignty of Labour is the principal force in the transformation of nature, of society and of human beings themselves; and therefore:

• Renounces the systematic contracting of salaried employees.
• Grants labour full sovereignty in the organization of the cooperative enterprise.
• Considers that labour deserves to be the first and foremost recipient of the wealth produced by the enterprise.
• Manifests its willingness to extend job opportunities to all members of society.

The five other principles shield and circumnavigate the core: Instrumental and Subordinated Nature of Capital, Democratic Organization, Open Admission, Participation in Management and Wage Solidarity.

Instrumental and Subordinated Nature of Capital: Theco-operative experience considers capital to be
an instrument subordinated to labour, which is necessary for business development, and therefore merits:

A remuneration that is:

• Fair, in relation to the effort involved in its accumulation.
• Adequate, to permit the assignment of the necessary resources.
• Limited in amount, through the corresponding regulations.
• An assurance of equilibrium in the allocation to labour and to capital with respect to the earnings generated.

An availability subordinated to the continuity and development of the cooperative, and hence does not impede the effective application of the principle of open admission.

Democratic Organization: The co-operative experience declares all its worker members to be equal in their rights to knowledge, property and self-development; an equality that implies a democratic enterprise structure based on:

• The sovereignty of the General Meeting, composed of all the members, in which this sovereignty is exercised on the basis of “one person, one vote”.
• The democratic election of governing bodies, and in particular, the Board of Directors, which is accountable for its actions to the General Meeting.
• Collaboration with the management bodies designated to operate the company, by delegation of the membership as a whole. These bodies shall be endowed with sufficient powers to be able to carry out their tasks effectively for the common good.

Open Admission: The co-operative experience is open to all men and women who accept these Basic Principles and prove themselves professionally suitable for the jobs that may be available. There shall, therefore, be no discrimination whatsoever on religious, political, racial or gender grounds in the attainment of membership status. The only requirement shall be respect for the postulates of the Cooperative Experience’s internal constitution. Open admission shall be the principle governing all actions and interpersonal relations related to cooperative development.

Participation in Management: The co-operative experience believes that the democratic nature of a co-operative is not limited to the membership side, but also involves the progressive development of self-management and, therefore, the participation of members in business management, which, in turn, requires:

• The development of suitable mechanisms and channels for participation.
• Transparent information concerning the performance of the basic management variables of the Co-operative.
• The use of methods of consultation and negotiation with worker-members and their social representatives in those economic, organizational and labour decisions that concern or affect them.
• The systematic application of social and professional training plans for members.
• The establishment of internal promotion as the basic means for covering jobs involving greater professional responsibility.

Wage Solidarity: The Co-operative Experience declares sufficient payment based on solidarity, (a.k.a. mutual support within a group), to be a basic principle of its management, based on a permanent vocation for collective social promotion, expressed in the following terms:

a) Sufficient, in accordance with the real possibilities of the co-operative.

b) Solidarity, brought to fruition:

• Internally, through the creation of a remuneration framework based on solidarity.
• Externally, based on the criterion that internal remuneration should be in line with that of salaried employees in the same sector and, where appropriate, in the same geographical area that the co-operative operates in, unless it is manifestly insufficient.
• At the Corporation level, with the existence of a labour framework based on solidarity in terms of both payment and annual work hours for all the co-operatives in the corporation.

The outer ring features the three principles that are related to the Cooperatives external projection: Inter-cooperation, Social Transformation and Universal Nature.

Inter-Co-operation: The Co-operative Experience considers that, as a specific application of solidarity and a requirement for business efficiency, the principle of co-operation among co-operatives should be apparent:

• Among co-operatives on an individual basis, through the setting up of Groupings aimed at creating an homogeneous system of work rules and regulations, including the pooling of profits, the regulation of transfers of worker-members and the search for potential synergies deriving from their combined size.
• Among Groupings, by means of the setting up and democratic management, for the common good, of suprastructure entities and bodies.
• Between the Co-operative Experience and other local co-operative organizations, in order to promote the local Co-operative Movement.
• With other co-operative movements in the nation, the continent and the rest of the world, by reaching agreements and establishing joint bodies aimed at promoting joint development.

Social Transformation: The Co-operative Experience declares its commitment to social transformation in solidarity with that of other countries, through its activities in the local region in a process of expansion in order to collaborate in its economic and social reconstruction and the building of a freer, fairer and more supportive local society, by means of:

• The reinvestment of the majority of the net surplus obtained, with a significant proportion earmarked for funds of a community nature, in order to create new co-operative jobs.
• Support for community development initiatives, by means of the application of the Education and Co-operative Promotion Fund.
• A social security policy in keeping with the co-operative system, based on solidarity and responsibility.
• Co-operation with other local institutions of an economic and social nature, especially those promoted by the local working class.
• Collaboration to revitalize the local culture.

Universal Nature: The Co-operative Experience, as an expression of its universal vocation, declares its solidarity with all those who work for economic democracy in the sphere of the “Social Economy”, echoing the objectives of Peace, Justice and Development of the International Co-operative Movement.

These Basic Principles complement Motivation 3.0 and provide the foundation for an Economy 3.0 enterprise. They are based on our drive to learn, to be creative, and to build a better world. They encourage and support the intrinsic drive to do or be more. They are self-sustaining.

They also provide the preconditions for building not only high-performing teams, but also high-performing enterprises. The principles of Participation in Management and Democratic Organization, in particular, increase the possibility that organizations guided under such principles will yield safe environments for all workers. Such workplaces will exhibit trust and mutual respect, where all members, regardless of rank, specialization, or talent, are free to be themselves.

For an exploration as to whether agile, learning organizations require democratic processes, refer to my prior post.

About Dan & Agile and Beyond:

Dan Feldman is the creator and host of the Agile and Beyond podcast. With Agile practitioners, design thinkers, team builders, organization designers, entrepreneurs, and visionaries, he explores the future of work, education, and society. With the digital age demanding greater collaboration, enhanced creativity, and heightened agility, he examines avant-garde, responsive, collaborative team and organization designs as well as the shifts in our individual and collective perception of experience and purpose. Tune in!

Listen and Subscribe in iTunes, Google Play, Stitcher, or RSS.