A few weeks ago I read a book (courtesy: Abhinav) by Prof. Muhammad Yunus, winner of the Nobel Peace Prize in 2006 for his work on the Grameen Bank. The book, “A World of Three Zeroes”, opened my eyes to a lot of things and deeply resonated with me. So when Abhinav suggested I take a session at Niswey, about my takeaways from it, I was more than willing to do it.
The Session on Social BusinessExpecting half the team at Niswey to skip it, I was amazed to find that even Boris, the hard-to-drag-away-from-work person was there. An achievement!
I started the session with the question, “How many of you know about Grameen Bank?”
Many raised hands, so far so good!
While Dhiraj had it right that the bank focused on empowering poor women by giving micro-credit, I emphasized that its entire functioning was based on trust. No collateral, no documentation, and very low interest rates. Before the cynic in you takes over, let me tell you that the bank sees a repayment rate of 99%. Impossible? That’s the power of trust!
As we progressed through the session, I explained what a social business meant, and how it was important to consider the existence of the “Real Man” in all of us rather than the “Capitalist Man”. The success of the Grameen Bank means that “Real Men” are not just driven by personal interests, they have a selfless side to their personality as well. And social businesses can enable the selfless side of someone’s personality to be expressed.
A social business is
- a business created to solve a social problem
- self-sustaining
While there are several non profitable organizations trying to solve the social problems at their scale, the presence of social businesses can magnify the impact.
Taking this in mind, the book highlights the three long unsolved problems of the world, Poverty, Unemployment and Net Carbon Emissions, and how they can be solved (or brought to zero) with the creation of a new socio-economic system.
Zero Poverty, Zero Unemployment, Zero Net Carbon
Social businesses like Grameen Bank can provide equal opportunities to poor people, and make them part of the economic system. Enabling them with resources, technologies and facilities would boost their creative side and they would be able to find solutions to their own problems. They would no longer remain oppressed or dependent on others, but become active creators of value, thus enabling better distribution of money across social classes.
Similarly, social businesses can help eliminate unemployment by providing the platform and opportunities to young people to create their own businesses. They no longer have to depend on jobs to be created in order to earn. The world needs more creative people to solve its problems.
Grameen Shakti, a social business in Bangladesh helped install 150,000 solar systems in villages. If similar social businesses exist to solve environmental problems, and international stakeholders agree to play a role in it, the third major problem of environmental destruction faced by the world can also be solved.
Three Mega Powers
According to Prof. Yunus, while businesses with a social agenda are a means to solve the existing problems in the society, they may not succeed without the help of:
- Young people
- Technology
- Good governance and human rights
Young people have the potential required for such a change. They have dreams, capability and are not under the burden of a legacy. But, they lack in experience and knowledge. The old need to guide the young, and together they can figure out the way.
As for technology, it has largely benefitted the society in terms of health, artificial intelligence and latest developments. But the lives of poor people are still the same. Social businesses can remove this barrier and bring technology to the bottom of the pyramid as well.
For all of this to succeed, however, we need a corruption free mechanism. There should be respect for the law and individual rights. The concept of social business should exist under the purview of the government, and encouraged because it exists for a social cause, and benefits everyone in the long run.
Coexistence with the government
While citizen initiatives in the form of social business is a big step, one must understand that it is not a competition with the government. In places where the government falls short, citizen initiatives can play a major role. And government should ensure that social businesses abide by the laws and sustain the purpose they chose to exist for.
The Why’s, How’s and But’s
Well, a big concept like this requires a deeper understanding and is incomplete without further discussions. So the session was followed by a lively discussion along the lines of:
- Examples of social businesses in India
- What’s the difference between a social business and a co-operative society like Amul?
- What is different about these selfless people that drives them to setup social businesses?
- How would the people starting a social business earn their living if they are not generating personal profits?
Here’s what came out:
Social Business Examples
Yunus Social Business, an organization dedicated to end poverty in different parts of the world, also exists in India. It provides financing to several businesses wanting to enter the market with a social agenda. It has big investors providing funds to aspiring social business ideas, who once successful, return the invested amount without any interest. This amount is then invested in other businesses. This works as a recurring process and till now has funded social businesses like Cashpor Microcredit, Waste Ventures India and Ignis Careers.
Difference between a co-operative society and social business
While starting a co-operative society like Amul is undoubtedly beneficial for the society, they are not with a social motive. The primary objective of a co-operative society is the benefit of their community. And this may be in form of improving their living standards or generating profits to their advantage.
The model of a co-operative is different from businesses in general. Social business, on the other hand, operates exactly like a business, the only difference being the “social” motive, not the “profit” motive.
How are selfless people so different
They are not. Each of us has a selfish as well as a selfless side to our personality; only the magnitude of it differs. Consider these: Arun adopts a street dog because it was being ill treated, Vyaas works at an NGO every weekend, and Rahul donates part of his salary to poor people every month. All of these are selfless acts, but by real people who are also selfish for certain other reasons.
The concept of “Real Man” says that each of us have both these sides to our personality.
While we want to earn personal gains, we also want to contribute in some way. So selfless people are like all of us, with a slightly different perspective towards giving.
Sustainability of founders of social business
Do founders of social businesses have to starve? Can they earn a decent living? These questions came up quite a bit during the discussion. It’s a valid point! But, when we say that social business exists for a social motive, in no way do we mean that it won’t generate profits. Sustainability of the business and its owners is of prime importance if you want to sustain the social good you are doing. The model is of a business which exists for a purpose, and the aim is long term existence.
But unlike conventional businesses who would go ahead with activities that would generate wealth, particularly for the founders, social business founders take a salary that meets all their needs.
But who decides what is enough for their needs?
Well, a social business founder who has started a business with a social objective will keep the achievement of that goal as his primary objective. He will have to sustain himself and his employees, for which he will keep aside the amount as per the market rates, and invest the rest in the business.
It is possible here that he deviates from his objective and starts using the profits for his personal wealth generation, just like conventional businesses. In such a case, the social business ceases to exist.
Ending Note
It was a delight to address this session at Niswey. We believe in sharing our knowledge and growing together. And numerous such life changing sessions happen every once in a while.
To learn more about life at Niswey, visit our blog page.
For a summary of the session, you could also look in here:
