Follow mikethementor on Twitter
Subscribe to Mike the Mentor's free newsletter - and get 2 bonus articles "The Future of Leadership Coaching" and "Mentoring" available only to new subscribers.

* required



Social and Email Marketing by VerticalResponse
These 6 pieces form a connected narrative:
- Sustainability - Why it's Important
- A Call for Leadership
- Ray Anderson's Story
- Creating Sustainable Value
- Developing Leadership Capacity
- Personal Leadership

Creating Shared Value
The 5 Stances of Sustainability
The 7 Levels of Corporate Sustainability
Business Sustainability
The Changing Context of Business
Ecopsychology and "Green and Away"
Reinventing Organisations
Social Business
Sustainability Coaching
Sustainable Business
Which Mentor?
Social Business

Creating a World Without Poverty: How Social Business Can Transform Our Lives: Social Business and the Future of Capitalism by Nobel Peace Prize winner Muhammad Yunus promotes the idea of Social Business.

A Social Business (SB) is a company that focuses on providing a social benefit rather than maximizing profit for its owners; is owned by investors who seek social benefits such as poverty reduction, health care for the poor, social justice and global sustainability; and pays no dividends. In all other respects it is the same as a PMB (Profit Maximising Business) and must be able to compete directly with traditional PMBs. "It must provide customers with high-quality goods and services, provide excellent value for the prices it charges, and offer the same level of service and ease of use as any other company - if not more so. A SB can't expect to win business just because it's run by nice people with good intentions. It must attract consumers and retain their loyalty by being the best. Only in this way will it thrive financially and be able to provide the social benefit for which it was created" (p141/2).

So, why would people invest in Social Businesses? Clearly not for the financial return since the only return is the capital invested. Yunus is clear "One of the deep-rooted characteristics of human beings is the desire to do good for other people. It is an aspect of human nature that is totally ignored in the existing business world. [...] People want meaning in their lives - the kind of meaning that comes only from knowing that you are doing your part to make our world a better place. Social Business provides this meaning. That's why people respond." (p162)

He points to some ready sources of investment: the billions of dollars people already contribute to charity; the charitable endowment funds and foundations seeking worthwhile investments; and international aid programs. But the possibilities are much wider. Commercial lending institutions will be sources of capital (since SBs are self-sustaining and profitable businesses just like PMBs), as will new kinds of financial institutions which will emerge to cater to the financing needs of SBs: social venture capital funds, social mutual funds and, eventually, a social stock market.

And, finally, PMBs will also create SBs - indeed, they have already done so. Grameen Danone, a joint venture between Grameen and the multinational Danone, exists to reduce poverty by bringing daily healthy nutrition to the poor. It does this by providing affordable yoghurt-based foods to the poor of Bangladesh. Grameen Business

The most well known SB is the Grameen Bank and its micro-credit business which lends small amounts of money to the poor of Bangladesh. The Bank has made loans of the equivalent of $6 billion, has a 98.6% repayment record, makes a profit, has lifted millions out of poverty and is now the largest tax-generating business in Bangladesh. Not bad for an organisation that started when Yunus loaned a group of 42 people $27 to enable them to escape the grip of the village moneylender.

The idea of running a business for social benefit is not a new one - its goes back at least a couple of hundred years to Robert Owen and the cooperative movement and has many modern forms. But what Yunus has done with his Grameen businesses and crystallised in this book is to create a brand and identity for Social Business, and so make it mainstream. Because of this, I believe that we will come to look on Creating a World Without Poverty as being one of the seminal business books.

Social Business won't appeal to everyone - whether investors or employees. But if you seek the payback of having your capital make a difference in the world, or you would rather work for an organisation whose primary goal is social benefit rather profit maximization, then you may well be involved in a social business before long.

Copyright © 2013. Dr M H Munro Turner. All rights reserved