Friday, May 28, 2010

Muhammad Yunus on tour talking about social business

Muhammad Yunus is on a speaking tour to promote his new book "Building Social Business: The New Kind of Capitalism That Serves Humanity's Most Pressing Needs" (looks like my summer reading list just got altered). In his new book, Yunus describes some social businesses that he created in cooperation with Adidas, Dannon Yogurt and others. Yunus says any social problem can be helped by creating a social business to counter it, because such a business does not focus on profit but on increasing social welfare.

From the blog Next Million, writer Nilima Achwal sums up the idea of social business quite well. Achwal also gives us a couple of proposals from Yunus on fixing problems in US health care and Haiti.

Social business, as defined by Yunus, is a venture whose sole mission is to create a positive impact on society through its good or service, and is thoroughly sustainable, or covers its costs. All profits are re-invested into the company in order to expand and create a greater impact. As with any market-based approach, social businesses increase their efficiency and quality through competition, but on the basis of social impact rather than profit. Social businesses, by the nature of being businesses, can scale up quickly and solve the world's problems.

Yunus envisions a world in which social businesses and for-profit companies thrive side-by-side. Instead of donating to charities, people will have the option to invest in a social business, creating more lasting change than donating to a charity, whose work may be limited by its dependence on funding. Soon, there will emerge a "social stock market" that functions alongside the traditional stock market. Since humans are multi-dimensional beings with aspirations other than just getting rich, unlike the one-dimensional profit-seeking drones as painted by traditional economic theory, most people will invest in both stock markets and choose social businesses on the basis of the social impact they create. There will be no dividends in the social stock market, only the satisfaction of helping to change the world.

Yunus even applies his social business concept to seemingly insurmountable challenges. He suggests placing 5% of a welfare fund into a social business venture fund to encourage those on welfare to start social businesses or devising businesses that serve those who need healthcare in the US. He also champions placing 10-15% of charity to Haiti in a social business fund to encourage sustainable solutions and set a precedent for future crisis situations. He declares that solving these challenges is "all about how to use our creative mind."

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