Solidarity economy is an alternative economic framework characterized by cooperation, collective ownership, and the pursuit of social and environmental objectives.
It seeks to build a more just and sustainable society by prioritizing the well-being of individuals and communities over profits.
Key Elements of Solidarity Economy:
Cooperation: Solidarity economy encourages cooperation among individuals, communities, and organizations to meet their economic needs collectively.
Social and Environmental Justice: It emphasizes social equity and environmental sustainability as core principles.
Ownership and Control: Solidarity economy promotes democratic ownership and control of economic enterprises, often through cooperatives and community-based organizations.
Solidarity economy holds immense significance for various reasons:
1. Social Justice:
It addresses socio-economic inequalities by creating opportunities for marginalized communities and promoting fair wages and working conditions.
2. Environmental Sustainability:
Solidarity economy practices are often aligned with eco-friendly principles, minimizing negative environmental impacts.
3. Community Empowerment:
It empowers communities to take control of their economic destinies and make decisions that benefit their members.
4. Economic Resilience:
Solidarity economy can enhance local economic resilience by reducing dependence on external, profit-driven entities.
5. Inclusive Prosperity:
It aims to create an inclusive form of prosperity that benefits all members of society, rather than a select few.
Key Principles of Solidarity Economy
Solidarity economy is guided by a set of key principles:
Equity and Inclusion:
It strives for equitable participation and inclusion of all individuals and communities, particularly those who are marginalized or disadvantaged.
Cooperation and Collaboration:
Solidarity economy encourages cooperation and collaboration among stakeholders to meet common economic and social goals.
Democratic Decision-Making:
It promotes democratic decision-making in economic enterprises, where workers and community members have a say in important matters.
Sustainability:
Solidarity economy is committed to environmental sustainability, seeking to reduce ecological footprints and promote responsible resource use.
Local and Circular Economies:
It supports local and circular economies, minimizing resource extraction and waste while fostering local self-reliance.
Practices of Solidarity Economy
Solidarity economy encompasses a range of practices and initiatives:
Cooperatives:
Worker cooperatives, consumer cooperatives, and housing cooperatives are examples of collective ownership models that align with solidarity economy principles.
Community Currency:
Some communities use alternative or local currencies to promote economic exchanges within the community, encouraging local spending.
Social Enterprises:
Social enterprises combine business principles with a commitment to social and environmental goals, reinvesting profits for social benefit.
Fair Trade:
Fair trade initiatives ensure that producers in developing countries receive fair compensation for their products, promoting equitable trade relationships.
Community Gardens:
Community gardens encourage the sustainable production of food and foster community cooperation.
Challenges Facing Solidarity Economy
While solidarity economy offers a promising alternative, it faces several challenges:
1. Limited Awareness:
Many people are unfamiliar with the concept of solidarity economy and its principles, making it difficult to gain traction.
2. Access to Capital:
Securing financing for solidarity economy initiatives can be challenging, as traditional financial institutions may be hesitant to support unconventional models.
3. Regulatory Barriers:
Existing regulations and policies may not always be conducive to the growth of solidarity economy practices.
4. Scale and Competition:
Solidarity economy initiatives often operate on a smaller scale, making it challenging to compete with larger, profit-driven enterprises.
5. Resistance to Change:
Some individuals and organizations may be resistant to adopting solidarity economy principles, as they challenge established economic norms.
Strategies for Promoting Solidarity Economy
To promote and expand solidarity economy initiatives, various strategies can be employed:
Education and Advocacy:
Raising awareness about solidarity economy and its benefits through education and advocacy efforts.
Access to Financing:
Developing alternative financing mechanisms, such as community banks or impact investment funds, to support solidarity economy initiatives.
Policy Reform:
Advocating for policy changes and regulatory reforms that create an enabling environment for solidarity economy practices.
Networking and Collaboration:
Fostering collaboration among solidarity economy initiatives and building networks to share resources and knowledge.
Community Engagement:
Encouraging community participation and engagement in solidarity economy projects and enterprises.
Real-World Examples of Solidarity Economy
1. Mondragon Corporation (Spain):
Mondragon is one of the world’s largest worker cooperatives, comprising over 250 cooperatives in various sectors, including manufacturing, finance, and education.
2. Grameen Bank (Bangladesh):
The Grameen Bank pioneered microcredit and microfinance models, providing small loans to impoverished individuals, particularly women, to start small businesses.
3. The Evergreen Cooperatives (United States):
This initiative in Cleveland, Ohio, consists of worker-owned cooperatives in sectors like laundry, energy, and agriculture, designed to create job opportunities and economic development in underserved communities.
4. Fair Trade Organizations (Global):
Fair trade organizations, such as Fair Trade USA and Fairtrade International, work to ensure that producers in developing countries receive fair wages and fair treatment.
5. Transition Towns (Global):
Transition Towns are community-led initiatives that focus on building local resilience, reducing carbon footprints, and promoting sustainability.
Conclusion
Solidarity economy offers a compelling vision of an alternative economic framework that prioritizes social justice, sustainability, and community well-being. By embracing principles of equity, cooperation, and sustainability, solidarity economy initiatives aim to create a more inclusive and prosperous world for all. While they face challenges related to awareness, financing, and policy, the potential for positive impact is substantial. As individuals, communities, and organizations increasingly recognize the limitations of traditional profit-driven models, solidarity economy practices may offer a path towards a more just and sustainable global economy.
Key Highlights:
Understanding Solidarity Economy: It’s an alternative economic framework focusing on cooperation, social and environmental justice, and democratic ownership.
Significance: It addresses socio-economic inequalities, promotes environmental sustainability, empowers communities, enhances economic resilience, and fosters inclusive prosperity.
Key Principles: Solidarity economy principles include equity and inclusion, cooperation, democratic decision-making, sustainability, and support for local and circular economies.
Practices: It encompasses practices like cooperatives, community currencies, social enterprises, fair trade, and community gardens.
Challenges: Challenges include limited awareness, access to capital, regulatory barriers, scale and competition, and resistance to change.
Strategies for Promotion: Strategies include education and advocacy, access to financing, policy reform, networking and collaboration, and community engagement.
Real-World Examples: Examples include Mondragon Corporation, Grameen Bank, The Evergreen Cooperatives, Fair Trade Organizations, and Transition Towns.
Conclusion: Solidarity economy offers a promising vision for a more just and sustainable economic system, emphasizing principles of equity, cooperation, and sustainability. Despite challenges, its potential for positive impact is substantial.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
