Social, not conventional business

Today’s crisis is a man-made crisis, not a natural disaster like a tsunami. How did it come about? We’ve converted the financial market into a gambling casino. This market is now driven by greed and speculation, rather than by real production. This is what happens when you move away from a real economy to a speculative economy. (-- continues)

We need to rethink the conceptual framework. When all we do is go after money and maximize profit, it becomes a passion and then a habit. This absorbs all our attention and we become money making robots. We need to remember that we are human beings, and that a human being is a much bigger entity than a money making entity. We forget our purpose. Making money cannot solve everything and it narrows us down. It compresses us into money making machines.

When I see a problem, I want to create a business that will solve this problem. Charity money will do the job only once. In social business the profit does not go to the investor, but to society. A social business can have an endless life and be fully sustainable. It becomes independent and can stand on its feet. A social business is a non-dividend sustainable company designed to solve human problems. Social business has to be efficient not to make money, but to get things done. In conventional business, profit is the objective. In social business, accomplishing the project for the benefit of the community is the object. Business is just a vehicle that can be driven to places where it helps others.

To give an example, there are 160 million people living in Bangladesh. 70% had no electricity. I thought that this was a good opportunity for us to do something useful. So we founded Grameen Energy to bring renewable, solar energy to the villages. In the beginning, we hardly sold a dozen panels a day keeping the price slightly above cost, simply to keep our operation going. Sixteen years later, we sell 1,000 solar panels a day, and, in November 2012, we achieved the mark of 1 million homes equipped with a solar system.

As a consequence, the cost of making solar panels went down. Since in the meantime the price of kerosene flared up, it has become all the more attractive for poor people to use renewable energy. It took us 16 years to reach one million homes, but it will take less than three years to reach a second million. We did not do all this to make money, but to achieve a social goal. Using kerosene to cook and provide light inside homes creates lot of health problems and is a fire hazard. Renewable energy is good for the environment, good for people’s health, and good for people’s livelihood.

To take another example, in Bangladesh, Danon Yogurt was persuaded to contribute to solving the problem of malnutrition. As 48% of children are malnourished, we put all the nutrients that are indispensable in the yogurt, and made sure the yogurt was delicious and cheap. All this was done because Danone agreed to do it as social business, not to make profit.

-- Muhammad Yunus, Université de la Terre, UNESCO, 27 April 2013

Photo from Wikipedia, edited