Because poverty denies people any semblance of control over their destiny, it is the ultimate denial of human rights.
Forty-two People, Twenty-Seven Dollars
Muhammad Yunus was not a banker, but an economics professor, who felt the emptiness of the economics theories and “wanted to do something immediate to help” the poor. He talked to many poor people and found out, to his shocking surprise, that they needed just a little credit to escape the exploitation of the moneylenders and start their own small businesses. In sum, 42 people needed a total of $27.
Driven by this discovery, Yunus founded the Grameen Bank, designed to help the poor, especially women, to become self-sufficient through self-employment. Millions of people raised themselves from poverty. Consequently, Yunus and the Grameen Bank won the Nobel Peace Prize in 2006 “for their efforts to create economic and social development from below”. Yunus wrote about his experience in his autobiography “Banker to the Poor”.
Problems with the Current Business Framework
We’ve designed concepts that are too narrow. Firstly, business makes profit the only viable human motive; Secondly, credit-worthiness automatically eliminates the poor; Thirdly, entrepreneurship ignores the creativity of the majority of the people; Fourthly, employment relegates humans to passive receptacles rather than active creators.
“My work with Grameen Bank has brought me into close touch with the poorest of the poor. This experience has given me an unshakable faith in the creativity of human beings. None of them is born to suffer the misery of hunger and poverty. Each one of those who suffer this misery has the potential to be as successful a human being as anybody else in this world.”
Social Business
Yunus expands the horizon of his readers and introduces them to the world of social business, a type of business that sets social good as its primary goal while maintaining profitability.
Yunus, Franck Riboud, the chairman and CEO of Group Danone, and a dedicated group of people from Danone and Grameen Bank, started Grameen Danone, to provide fortified yogurt to the poor children in Bangladesh.
The business was purposely designed to serve the local people. The production plant was small, so as to “bring food production, retailing, and consumption as close to one another as possible”. They purchased milk produced by local farmers, employed local people and delivered the products to the local markets. Consequently, the plant was perfectly integrated into the lives of the local people. Yunus and Riboud intuitively seized the opportunity without rigorous analysis. Moreover, the Danone team conducted extensive market research to determine the necessary ingredients and the preferred taste of the yogurt. They also invited the international soccer star Zidane to Bangladesh to promote the product.
Essential Features of a Social Business
- None-dividend
Profits are reinvested for business expansion and growth, or given to those who are most disadvantaged. This distinguishes social business from profit-maximizing business, whose bottom line is to generate profits for the shareholders.
- Self-sustaining
This is the difference between a social business and a charity or a non-profit organization. A social business creates value whereas a charity simply redistributes it.
- Achieve social benefits
Some questions remain about how social businesses should be evaluated, regulated and/or audited. How can the social businesses compete with the profit-maximizing businesses? Should the government subsidize or provide tax incentives to social businesses?