Story:
A Great Case, a Great Company
Migros is the largest retailer in Switzerland. The company has been always intimately involved in the country's social, communal and economic affairs. Migros supports activities ranging from testing laboratories and public service foundations to cultural endeavors and facilities for the handicapped and senior citizens. Its sociopolitical concerns denote conviction. As long as it is considered that businesses must have societal obligations, such as the voluntary assumption of economic, cultural and social duties in everyone's interest.
Its principle of "Focus on people and not on capital" allows Migros to lead researches and debates issues relating to the fields of consumption, trade and society, and current topics of relevance to business and society. The way the company creates superior interaction between its sales activity, the customers and the rest of the community is through something they called “The Migros Culture Percentage”, which is a voluntary commitment in the fields of culture, society, education, leisure and the economy. Through its institutions, projects and activities, it creates access to cultural and social activities for a broad spectrum of the population.
Migros' executives and its cooperative membership view funds, spent for such activities as investments. The cooperative idea of members having a voice in deciding company policies could become a factor or good example over the fact that it is actually possible to allocate profits to social projects and still be successful.
Migros-Genossenschafts-Bund, also known, as Federation of Migros Cooperatives, is a privately held Swiss retailer cooperative group and one of the top retailing concerns in Europe. Founded in Zurich in 1925, Migros operates through 12 cooperative groups with nearly 580 supermarkets located throughout Switzerland. Migros’ supermarket offering is distinguished by a heavy reliance on private-label goods. More than 95% of the items on the company’s shelves come from its own brands, many of which are manufactured by the company itself. This company employs over 80,000 people. According to its corporate philosophy, Migros contributes to social and cultural causes within and outside Europe.
The Swiss have one of the highest living standards worldwide. Its consumers are quality conscious, focused on friendly staff and broad product ranges and their spending has remained strong. According to this, the main strategy of Migros consist in create a social commitment feeling of help the society, starting from inside the company (employees, supervisors, executives, directives, etc.), to the outside (the customers of Migros). They try to support good cultural projects from individuals or groups that are interesting, not just with money but also with networking, helping with infrastructure or giving them a platform to develop their ideas and talent.
The idea of giving access to culture to all Swiss people, launched by Switzerland's largest retailer, is this year 55 years old and still going strong. The scheme is so named because Migros puts about one per cent of its annual retail turnover into cultural activities, in good economic times and bad. It goes back to an idea of the founder Gottlieb Duttweiler a shrewd businessman as well as a social benefactor, who anchored the “culture per cent” in Migros statutes in 1957. Not enough is done in this rich country to open the doors to cultural services and goods to the less well-off. The "culture per cent" has now grown into a comprehensive financial commitment by Migros in the areas of culture, society, education, leisure and the economy.
The Sloan Management Review in 2007, showed to the world the "New Principles of Swarm", topic that actually
applies to Migros case as long as its main 3 principles fit with many of the strategies that our comapany has
implemented througth all its history. Here we can find the specific relations:
1. Gain Power by giving it away
This principle may sound counterintuitive and even nonsensical, bit consider haw Migros became one of the most successful retailer company by allowing the Swiss citizens to be part or owners of this company. Besides, relinquishing power also means listening to the community. This freedom is a large part of why Migros has become a bench mark for other companies in Europe.
Migros was initially owned by shareholders but was soon converted into a cooperative, with shares offered for free to any customer. A fundamental distinction between Migros and other large industrial cooperatives is that it is owned not only by its employees but also by its customers. In effect, founder Gottlieb Duttweiler gave his customers the power to vote him out if they were ever unhappy with his performance. As it turned out, the Migros cooperative kept him in office until his dead in 1962. In this way, Duttweiler had assumed the tremendous collective authority of the Migros community by empowering its members to decide who should lead the cooperative. Today, the 1.9 million Swiss who are Migros owners must annually approve the cooperative´s budget, and those who want to be more active can apply to join the assembly of delegates.
2. Share with the customers
Companies that continually take form their customers without giving anything back will have trouble building a business. It´s not that those contributors are mainly motivated by money or recognition, in fact they are typically driven by a common purpose and not necessarily by any material rewards. Even so, Migros must to be careful that aren´t viewed as passive freeloaders, but as active contributors.
To spread its wealth, Migros spends 1% of its annual revenues on projects that benefit Swiss society as a whole. In a mountainous country where geography limits land use, the company has established golf courses that are open to everyone, in sharp contrast to the elitist facilities only the wealthy can afford. Migros also funds a system of vocational schools that have been built across the country, becoming Switzerland´s largest non-state-owned educational institution.
3. Concentrate on the community , not on making money
It is common to say that companies may not make money where they think they will. Instead, revenues may likely come from unexpected places in surprising ways. Thus, when first building a helping community business, firms should not concern themselves with how they´ll profit from the venture. They should keep in heck any preconceived ideas about their business models and instead focus on the rest of people. Of course, that´s easier said than done, and the topical manager minding the bottom line can hardly be faulted for shinning any proposal that has no foreseeable return on investment. But the simple truth is that companies need to build value for the community first. Only after they accomplish this will they uncover the business model that will lead to profits.
This characteristic of the companies which are again the wild capitalism, might seem like sheer heresy; and skeptics may claim that only small private firms that don’t have to answer to impatiens shareholders can afford to put the community wellbeing above the profits. But the truth is that even large public corporations, like Migros can apply this new mindset.
When Migros its own product line, it wasn´t necessarily looking to expand its profits. Rather, the primary goal was to grow the Migros community by including those with low incomes and large families. This move eventually paid off: in 2005, the 350 products of the Migro´s product line contributed almost $400 million to the company´s annual revenues of $16 billion. Those impesive munbres aside, Migros will not put profits above the welfare of its community.
1. Challenge: 1% of retailer Migros’ annual turnover is directed towards their cultural and social projects. Campaign the 55th birthday of the Migros Culture Percentage and the difference it makes to the people.
Solution: demonstrate the improvement Migros makes in the social and cultural life of Switzerland with an incredible campaign that includes all the Swiss community, and encouraged them and the Migro´s shareholders as well to continue whit the social investment as it is one of the main purpose of the company.
2. Challenge: keep the enthusiasm between the workforce of Migros in order to believe in one of the main principles of the company, which is, not work just for the money but for the commitment of serve to the rest of people.
Solution: contrary to general trends in the Swiss labor market, Migros is setting a course in employment in favor of its employees, for instance, as regards the compatibility of family and work or the ratio of full-time and part-time employment. As Migros is a Swiss company, it also regards its cultural diversity, not just between different nationalities, but also for women and men, young and old people. A typical Swiss factor of success is the successfully lived diversity of employees with different cultural backgrounds.
3. Challenge: continue with the social commitment implemented by the Migros Culture Percentage, despite the hard economic situation of the European region.
Solution: the cultural and social projects of Migros Culture Percentage appeal to many social groups. A central aim is to grant people in the area of tension between tradition and innovation access to the current artistic forms of expression and to enable them to participate in the social, economic and cultural changes in society. The activities of Migros Culture Percentage are designed and implemented both at national level (by the FMC) and regionally (by the cooperatives). This federal structure of Migros Culture Percentage, guarantees a broad regional and cultural foundation with a strong national presence. In addition to the implementation of its own projects, Migros Culture Percentage supports cultural and social projects; it takes targeted promotion measures for the direct benefit of the public and is committed to young artists.
4. Challenge: adapt, transform and maintain its responsible actions into a priority item as long as Migros is committed to a sustainable development and has made this concept the foundation of its structures.
Solution: in 2011 the cooperative decided to expand the standards in the environment and social areas and environmental management more consistently to all companies of the Group. Migros is a cooperative and therefore not committed to the profit of investors, but interested in socially sustainable growth for the benefit of all. Being successful means provide sustainable services for Migros, for this reason, the company has a long tradition of commitment to social and societal issues, animal welfare and environmental protection.
The top responsibility for sustainable growth is borne by the Federation of Migros Cooperatives, FMC. Specialist departments and line managers in all companies of the Group oversee the implementation of social and ecological concerns. The Issue Management & Sustainability department is the central platform for the sustainability policy and reports to the Chief Executive Officer.
Club school
- Migros taked social responsibilities seriously long before 1957. It began supporting Swiss films in 1943.
- The Migros club school, founded in 1948, now offers over 700 different courses in languages, IT, management and business, and leisure.
- There are also Eurocentres which offer foreign language training to promote understanding between people from different linguistic, cultural and social backgrounds.
- Other bodies supported by the "culture per cent" include the Gottlieb Duttweiler Institute at Rüschlikon, the four Green Meadow Parks and the Migros Museum for Contemporary Art.
Ideas and talent
- Almost 116 million ($94.19 million) came in from the "culture per cent" in 2006, an amount divided according to strict controls. According to this, if people ask Migros for money, those responsible for the assignments have clear criteria on how we give it.
- The company tries to support good cultural projects from individuals or groups that are interesting, not just with money but also with networking, helping with infrastructure or giving them a platform to develop their ideas and talent.
- Migros managers think that new ideas always came back, that is why they help those people that are working in the scheme to develop innovative notions; finally, thanks to this kind of initiatives, the employees use to said how exiting is work in Migros company.
Insider view
- The categories include dance, sound, theatre, words, art and design, film and new media.
- There are some contest promotes by Migros, in which the winners of the competition (coached by professionals), receive amazing recognitions that support them in many ways, including the economical, educational and professional.
- We want to find young people who have special talent and give them a platform to show how they work and to express themselves. On the other hand we try to give the public the possibility to have an insider view of what's happening now in society and in culture.
The company has historically aimed to sell products at prices higher than wholesale but lower than retail. Of Switzerland’s population of more than seven million, around two million are members of Migros cooperative. Migros is primarily a self-organized entity, consisting of 10 large local cooperatives that have wide autonomy. The company is government by a board as well as an assembly of delegates of the members of the operative--that is, the Swiss customers--who are democratically elected. Although there is a CEO, he has far less power than in the typical corporation.
This structure, despite its unwieldy appearance, has enabled Migros to be a continuous innovator. In fact, from its opening day, the company has been a relentless trendsetter. In 1948 introduces the first self-service stores in Switzerland, and in 1967 began to include expiration dates on all its products. More recently, Migros launched its products line in 1996, and the brand has achieved almost cultlike status, appealing not only to low-income customers to whom it was initially targeted but also to young, hip Swiss. Migros owns much if its success to its community of devote customers who have helped it expand into a wide range of markets.
In the future, we believe that the capability to leverage the power on communities will become all the more important differentiators and indicators of success. Companies will thrive in this new arena by seeking out and supporting collaborative innovation networks within their own walls as well as those that span outside their organizational boundaries.
In summary, this kind of business practices are a growing reality and companies would do well to adjust their thinking to this mew mindset. After all, when technology, innovations and ideas are being shared openly, and when competitors are increasingly giving their products away for free, how long can the old business objectives of short-term gain quick riches really last?
Thanks to Michael Pirson who help us contact Karin Frick, worker of a Migros' spin-off. Thanks to her! Karin Frick is the Research Director at Gottlieb Duttweiler Institute, a spin-off / think-tank of Migros.
http://www.swconnect.org/sites/default/files/NewPrincipleofSwarm.pdf
http://www.fundinguniverse.com/company-histories/MigrosGenossenschaftsBund-company-History.html
http://www.migros-culture-percentage.ch/default.aspx?categoryid=889
http://www.m09.migros.ch/en/migros-community/our-responsibility/awards
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