Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs

  • ISBN13: 9781586488246
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Muhammad Yunus, the practical visionary who pioneered microcredit and, with his Grameen Bank, won the 2006 Nobel Peace Prize, has developed a visionary new dimension for capitalism which he calls

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5 Responses to “Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs”

  • This is a superb book on all counts. The author, Mohammed Yunus, is the 2006 Nobel Peace Prize winning economist for his work in micro-credit to end poverty in Bangladesh. Over the years he realized that his micro-lending work resulted in the creation of a very different kind of business, one whose focus is social good rather than profit. He calls it “Social Business”. It addresses some of the fundamental shortcomings of capitalism which we are all too familiar with when profits come before people and when the success of the world’s economy is predicated on unsustainable growth (e.g. environmental damage, labor abuses). Capitalism also provides no answers for poverty – there is not enough profit there. Indeed, it is part of the cause. Capitalism misrepresents human nature as being mono-dimensional, seeking only to maximize profits.

    Yunus takes great pains to explain the concept, addressing many questions he frequently gets. It is different from a regular business in that all profits are rolled back into the business to create more social benefit, rather than paid out as dividends to investors or owners. He compares Social Business to many other efforts and kinds of organizations devoted to creating social good. For example, unlike a charity, Social Business is financially self-sustaining, not having to devote major resources to getting donations. It is attractive for people who wish to support social causes because the money they invest in a social business comes back to them, and can be re-invested to get further social returns. He also discusses NGOs, Social Marketing, Social Entrepreneurism Corporate Social Responsibility and various new kinds of organizations that are popping up.

    After expanding on the definition given in is last book, Creating a World Without Poverty: Social Business and the Future of Capitalism, Yunus goes on to give a comprehensive update of what has been going on in the past three years — which is quite a lot! For example:

    * An update on the Grameen-Danon joint venture to produce affordable nutritious yogurt was given. Mistakes were made, lessons were learned, and the future now looks good.

    * A new venture between Grameen and Veolia has gotten started to provide safe arsenic-free water in Bangladesh

    * A few health care related Social Businesses are described along with the creation of a nursing school to train locals who then work in the villages or overseas.

    * Other separate organizations that are cooperating with Grameen are popping up to disseminate knowledge and expertise in Social Business — e.g. in Germany, Scotland and California.

    * Universities are creating programs. There is a Social Business Chair at HEC, a presigious business school in Paris. This is a step closer to Yunus’s dream of having a MBA program focused on Social Business entrepreneurship.

    * The first annual Social Business Summit was held in November 2009

    Yunus also gives a lot of ideas in many different sectors for how you might start your own social business, along with a lot of

    nuts and bolts practical advice. One interesting pattern that is emerging in various social businesses is what he calls the “cross subsidisation” business model. The prices are kept very low in the villages where people cannot afford them, and the full market rate is being charged in the cities where people are better off. This is working for health care, yogurt and water.

    Overall this is a great book, telling of what might evolve into a massive shift in how capitalist economies operate. Social Business fills an important gap left by capitalism and can also sit comfortable alongside it.

    Yunus has spent his whole adult life thinking about these things, and it shows. He even talks about a separate stock market for social businesses.

    Oh, the book is also well organized, clear and easy to read.

    Rating: 5 / 5

  • This book on social business draws a lot from Yunis’ other two booksBanker To The Poor: Micro-Lending and the Battle Against World PovertyCreating a World Without Poverty: Social Business and the Future of Capitalism with the exception that it goes a little farther in-depth on the Dannon project and other corporations that are taking notice of the social business phenomenon and producing new ventures. The book also goes further into encouraging people to start their own social business If you’ve read his other two books, this one has a small amount of new information, but if you’ve read the other two, you’ll most likely notice a lot of repeat information/familiar bits from his previous work. For the person new to social business read his other work before this one.

    Rating: 3 / 5

  • This book by the 2006 Nobel Peace Prize winner shows that lending to the needy could make business profitable and transform their lives. It advocates an alternative economy of business devoted exclusively to helping needy people in society.

    The companies envisioned by Dr. Yunus would invest leftover money in expanding their charitable efforts rather than paying dividends to shareholders.

    The author shows how social business transforms lives and offers practical guidance to those wanting to create social business on their own. Further explanation is made as to how public and corporate policies need to be adapted to make room for his suggested business model, and illustrates why social business holds the key to redeeming the failed promise of free-market enterprise. Dr. Yunus has developed numerous case studies of successful businesses for caring treatments for rare cancers and blood diseases in children throughout the world.

    Giving poor people the resources to help themselves, Dr. Yunus has offered these individuals something more valuable than a plate of food, namely security in its basic form. Dr. Yunus believes that social business has just made improvements in the lives of many people and has expanded into the most important social and economic barometer of social trends.

    Running a successful social business requires obtaining financing, which is viewed by Dr. Yunus as a basic hindrance to change in the business environment.

    For the benefit of the readers, it should be pointed out that Dr. Yunus has invoked a new basis for capitalism whereby social business has the potential to change the failed promise of free market enterprise. His theory has been adopted by many corporations, social activists and the like throughout Asia, South America, Europe, and America.

    Reviewed by: Claude Ury
    Rating: 4 / 5

  • Building Social Business by Dr. Muhammad Yunus 2010

    Reviewed by: Dr. Joseph S. Maresca

    This book is an excellent rendition on how to invest in

    poor countries while getting a modest return and doing

    much good at the same time. The classic profit maximization

    model does not produce optimum results because many

    working poor simply cannot afford the higher prices.

    To some extent, this phenomenom is happening in the

    USA. Hence, there are Grameen branches in Brooklyn

    and Queens, New York.

    Yunus guarantees loans to the poor ; thereby acting as

    an intermediary. This is not much different from the

    USA government guaranteeing certain loans to

    borrowers. The result is that bankers are much more

    willing to lend money due to the guaranteed payment.

    Borrowers repay in small weekly amounts. Women

    have great drive to overcome poverty. The Grameen

    Bank lends $100 million dollars a month in

    collateral free loans averaging $200 apiece .

    The repayment rate is an astounding 98%.

    Grameen lends money to beggars to sell toys,

    households and foodstuffs door-to-door.

    There are 100,000 beggars in the program.

    Since implementation of the program, over

    18,000 beggars have quit begging.

    Grameen offers children of borrowers money to go

    to school. And so, 50,000 students are pursuing

    medicine and engineering coursework. This program

    is microcredit or microfinance at its best. In some

    cases, a mother may be illiterate and her children

    go on to become physicians and engineers

    due to the Grameen Bank.

    Grameen Violia Water sells pure water at a price

    that the poor can afford. In the future, the

    “Artificial Sun” coupled with desalination

    may be able to accomplish a similar feat.

    The objective of the Grameen program is to

    overcome poverty, have a sustainable economy

    and have a modest return on the investment.

    When loans are paid back, profits are plowed

    back into the company not unlike the function

    of retained earnings in a for-profit company.

    Fabio Rosa has brought solar energy to nearly

    750,000 Brazilian homes with no electricity

    previously. There is a similar opportunity to do

    so for the Palestinians, if the various strategic

    constituencies can agree on a workable

    settlement.

    Currently, Grameen Telecom, Grameen Energy

    and Grameen Well Being serve the poor.

    Grameen and Pfizer have a joint cooperative

    venture to bring affordable health care to

    village clinics through Grameen Healthcare.

    A similar cooperative arrangement could be

    brought to the Medicaid program here in the

    United States in places like Appalachia and

    other rural communities where professionals

    are hardly ever seen practicing their craft.

    The first major attempt to outline Appalachia as a

    distinctive cultural region came in the 1890s through

    the tireless efforts of the Berea College President .

    William Goodell Frost coined the phrase

    “Appalachian America” which encompassed 194

    counties in 8 states.

    The Grameen organizations seek to promote social

    business under the umbrella of charitable

    organizations and non-profit groups. Universities

    and think tanks are another great resource for

    Grameen and its people. A successful program

    has been underway to cross-fertilize the poor

    and the wealthy to deliver affordable bone marrow

    transplants for everyone. The assignment algorithms

    in linear programming and operations research may

    be utilized to bring together donors and patients

    alike.

    Overall, the book is well written by a popular

    Nobelist- Dr. Muhammad Yunus. The ideas contained

    in this book could be applicable to both

    poor and rich countries since virtually every

    country on this earth has poor people in

    every walk of life .

    Rating: 5 / 5

  • Mohammed Yunus is popularly known as the Father of Microfinance. However microfinance is only one example within the framework of Social Business that he passionately advocates and practices.

    This is his third book. The first book: `Banker to the Poor” was a path breaking classic that narrated the powerful concept of microfinance. Jobra, the little known village in Bangladesh, found its rightful place under the sun, thanks to the first $27 from the Professor of Chittagong University, with his commitment to fight poverty. The Grameen movement was born. Most of Grameen’s beneficiaries are illiterate, but as human beings, they do not lack creativity, ingenuity and above all integrity to put the smallest amounts of credit to good use. This book turned the concept of banking upside down. Conventional banks refuse to lend money to the poor since they lack “collateral”. When giant global banks run by the most qualified and highly paid bankers collapsed during the recent global financial meltdown, Grameen was making good progress, earning profits and helping the poorest of the poor to earn a decent living. “Bankers, go back to school” was the title of my review for this book.

    The second book “Creating a World without Poverty” introduced the concept of Social Business. Social business executes the laudable social objectives with the missionary zeal of a charity, with the efficiency and speed of a profit maximizing business. Hence, we had a unique business model to solve substantial social problems, as demonstrated by Grameen Danone in maximizing nutrition and health in poor children through affordable yoghurt.

    This third book is the logical extension of the first two books in a passionate mission to “send poverty to the museums in our lifetime”.

    It is time that we pay serious attention to the concept of Social Business through public and private sector cooperation, MBA programs and necessary legislation to define this form of business so as to ensure that the governance structures, business processes and accounting standards emerge to establish the new form of organization that can play a major role in solving global problems, especially in relation to elimination of poverty from the face of this earth.

    There is an excellent definition of the concept of Social business in the introduction. A further classification of social business as Type I where the investors do not get anything other their initial investment and Type ii where the investors are the poor themselves and profits are reinvested to expand the business.

    Contrary to popular belief, social business aims at providing market wages and better than average working conditions to its employees.

    There are excellent case studies of diverse ventures, mostly joint ventures. Danone for yogurt, Veolia for clean drinking water in arsenic contaminated regions, Adidas for affordable footwear, BASF for treated mosquito nets. In all these cases, it is important to note that the price points of the offerings are that which is affordable by the poor. There is substantial effort on innovative design, frugal engineering and creative business models. It is a tough journey, but worth every bit. The multinationals involved in these ventures are global technological giants. This also proves the point that low cost products are not low technology or low quality products. In fact it is harder to design a solution working backwards to reach a cost target and offer a value proposition that solves the problems of the poor. This is business with soul and products with a brain.

    Classical economics deals with incomes,consumption and choices based on rational decisions. Under this, there is no place for social business on our planet. However, a new school of thought termed “Behavioral Economics” challenges the rational aspect of conventional wisdom. Humans have emotions. We all feel the joys and sorrows of life. Economics is an aspect of human life, and cannot be studied in isolation from human emotions, norms and behavior.

    Amongst the 7 principles of social business listed in the book, the seventh principle says “Do it with joy”. We have plenty of financial experts for calculating return on investments and shareholder value. None till date can measure the value of inner joy in making this planet a better place for all mankind. What we need is not just economic growth, but growth with a human face.

    Once again, I salute this Banker to the Poor for his outstanding work and leadership.

    Rating: 5 / 5

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