Social Business is more than a simple concept or revolutionary action from a man or society, is a necessary tool, strategy and society requirement for a proper way of living.
In a world with a very notorious imbalance in quality life, human rights and humanity good ideas followed by brave actions are required, Mohammed Yunus brought to his land and the rest of the world a basic way of cooperativism, social living and community development, with his third book the Professor Yunus speaks specifically about social business, its implementation, and its maintenance.
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 “social business.” By harnessing the energy of profit-making to the objective of fulfilling human needs, social business creates self-supporting, viable commercial enterprises that generate economic growth even as they produce goods and services that make the world a better place. In this book, Yunus shows how social business has gone from being a theory to an inspiring practice, adopted by leading corporations, entrepreneurs, and social activists across Asia, South America, Europe and the US.
He demonstrates how social business transforms lives; offers practical guidance for those who want to create social businesses of their own; explains how public and corporate policies must adapt to make room for the social business model; and shows why social business holds the potential to redeem the failed promise of free-market enterprise.
Who is the Author?
Dr. Muhammad Yunus is a Bangladeshi banker and economist. He previously was a professor of economics and is famous for his successful application of microcredit–the extension of small loans given to entrepreneurs too poor to qualify for traditional bank loans. Dr. Yunus is also the founder of Grameen Bank. In 2006, Yunus and the bank were jointly awarded the Nobel Peace Prize “for their efforts to create economic and social development from below.” He has also received several other national and international honours.
Dr. Yunus is one of the founding members of Global Elders, a group of public figures noted as elder statesmen, peace activists, and human rights advocates whose goal is to solve global problems by using “almost 1,000 years of collective experience” to work on solutions for seemingly insurmountable problems like climate change, HIV/AIDS, and poverty, and “use their political independence to help resolve some of the world’s most intractable conflicts.”
Building Social Business consists of case studies, anecdotes, and solid advice from Professor Yunus himself. This ‘Social Business Manual’ is a must read for anyone who wants to use his or her creativity to make a positive impact in their neighborhood, town, country, and world
Social business is an innovative business model which promotes the idea of doing business in order to address a social problem, and not to maximize profit. As the title suggests, this complement to traditional capitalism truly can serve humanity’s most pressing needs, especially poverty. Each and every social business creates employment, good working conditions, and of course, addresses a specific social ill such as lack of education, healthcare, and good nutrition.
What is a social business?
In simple terms, a social business is a non-loss, Non-dividend Company dedicated entirely to achieve a social goal. In social business, the investor gets his investment money back over time, but never receives dividend beyond that amount. The Grameen Bank is a prime example of social business, with the Grameen borrowers themselves being its shareholders!
In the capitalist system, two extreme types of corporate bodies can be distinguished. On the one hand, companies can be seen as profit-maximizing businesses, whose purpose is to create shareholder value. On the other, non-profit organizations exist to fulfill social objectives.
How a social business borrows from both these entities?it has to cover its full costs from its operations, and its owners are entitled to recover their invested money, but it is more cause than profit-driven. Its position in the lower right quadrant shows that it has both the potential to act as a change agent for the world, and sufficient business-like characteristics to ensure it survives to do so in organizational structure, this new form of business is basically the same as profit-maximizing businesses: it is not a charity, but a business in every sense. The managerial mindset must be the same as in a business: when you are running a social business, you think and work differently than if you were running a charity, even though your objective is different from a profit-maximizing company. At the same time as trying to achieve their social objective, social businesses need to recover their full costs so they can be self-sustainable. Their owners never intend to make profits for themselves (there are no dividends), but they are entitled to get their money back if they wish. Rather than being passed on to investors, surpluses generated by the social business are reinvested
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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 “social business.” By harnessing the energy of profit-making to the objective of fulfilling human needs, social business creates self-supporting, viable commercial enterprises tha
What did this financier from a small, impoverished country do to deserve the world’s most prestigious award in 2006? He invented microcredit, the practice of lending tiny amounts of money to the poor.It was a revolutionary idea. Until then, bankers figured that such borrowers were worthy of neither credit nor trust. Along came Dr. Yunus, who demonstrated that lending to the needy could be a profitable business and transform their lives. Indeed, many of Grameen’s clients used these small sums to start small businesses and to escape the clutches of poverty.he calls for creation of an alternative economy of businesses devoted to helping the underprivileged.
The way he envisions it, these companies would be run as efficiently as the for-profit variety. Unlike charities, they would make enough money to be self-sustaining. However, they would invest leftover money in expanding their humanitarian efforts rather than paying dividends to shareholders.
People “will be delighted to create businesses for selfless purposes,” Dr. Yunus predicts. “The only thing we’ll have to do is to free them from the mind-set that puts profit-making at the heart of every business, an idea that we imposed on them through our flawed economic theory.”
He even foresees the day when social businesses will be public companies whose shares are traded on their own stock market. This, he believes, will help pave the way for the elimination of poverty in our lifetimes.
“Over the years, Dr. Yunus has been embraced by rock stars like Bono and Peter Gabriel, and last year was recipient of the Presidential Medal of Freedom from President Obama. He has also been honored by major corporations eager to have their brands associated with the anti-poverty work of Grameen, which shared the Nobel with its charismatic founder”.2
In many ways, “Building Social Business” is best appreciated as a sequel to Dr. Yunus’s 2007 book, “Creating a World Without Poverty: Social Business and the Future of Capitalism,” in which he first presented his theory of a new economy. The difference is that the author now declares that social business is no longer a dream. Three years later, Grameen has created social business ventures with corporations including Intel, Adidas, BASF and Danone, maker of Dannon yogurt.
Review by Library Journal Review
Yunus (Creating a World Without Poverty) uses the selfish/selfless dichotomy of human nature to explain the fundamental difference between his concept of for-profit business vs. the social business. While the former seeks to maximize profit for the benefit of the owners, the latter aims to pursue social objectives for the benefit of poor customers and employees. Likewise, the social business differs from a traditional nonprofit because, like a for-profit business, it is self-sustaining through its sale of goods and services. Yunus developed the social business concept during the crushing 1974 Bangladesh famine. Local villagers, seeking aid for their entrepreneurial endeavors, found themselves virtually enslaved to moneylenders. By repaying the loans owed by these 42 enterprising souls, Yunus stumbled on the concept of microcredit. VERDICT Yunus engagingly profiles international social businesses, whether launched by multinational corporations or conceived by ordinary people with a vision to solve social problems. He offers practical advice for starting your own social businesses: from idea generation to the nuts and bolts of launching and running the concern. His impassioned dream of a different version of capitalistic endeavor is as inspirational as it is practical.-Carol J. Elsen, Univ. of Wisconsin-Whitewater (1).
(1) Copyright Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
“In just a few short years, social business has developed from a mere idea to a living, rapidly growing, reality,” Dr. Yunus says. “It is already bringing improvements into the lives of many people and is now on the verge of exploding into one of the world’s most important social and economic trends.”2
That’s easy for a Nobel laureate to say. He has so many big corporations calling him about creating social businesses that he can name the terms. It’s hard to imagine any neophyte social entrepreneur being so lucky.
It’s hard to fault Dr. Yunus’ intentions and his optimism. Those things have already taken him awfully far. But it’s a bit premature for him to assert that his social business movement is on the verge of reshaping the world economy.
He has a lot more work to do first. Then again, he probably encountered a bit of skepticism when he first floated the idea for microcredit, too.(2)
(2) A version of this article appears in print on May 2, 2010, on page BU7 of the New York edition with the headline: Microcredit? To Him, It’s Only a Start.
“In a disaster situation, most of us without hesitation take up the social roles demanded by human compassion (Yunus, 2010, p.vii). In 1974 the famine that hit Bangladesh created poverty all around and was the catalyst that pushed Muhammad Yunus out of the academic world and into social activist. A social business is outside the profit-seeking world. Its goal is to solve a social problem by using business methods, including the creation and sale of products or services (Yunus, 2010, p1).
Now a days in the Middle east..
During my living time in the Middle East I realized that majority of the companies are based on social business structure and the benefits of the profits are going equally and directly to the local or native people, specifically in UAE, Since I arrived to this land I can see societies and cooperatives everywhere, and actually is the way the Emirates governors are working: United in Pro of their people and providing jobs and opportunities for all kind of emigrants. From the Indian and Philippine community there a popular saying:“sharing is caring” and that’s what they do in a minor scale..…well, for a person like me the concept and the picture wasn’t clear, even I have studied in a University stablished with this kind of concepts, is just that…im now aware that most of the concepts I have learned are being applied to their own society and with Islamic rules that maintain the equality, right and honesty in all levels…sadly in my home land it doesn’t work like this…
I remember the bank of the poor in my country and the projects to support the small business and social development programs that I had part in since 2013, but, majority of them failed to continue and to maintain due to the politics interest and bureaucracy.
Any way here’s some of the most common frameworks that are successful in social business in our modern world:
- Cross-Compensation – One group of customers pays for the service. Profits from this group are used to subsidize the service for another, underserved group.
- Fee for Service – Beneficiaries pay directly for the good or services provided by the social enterprise.
- Employment and skills training – The core purpose is to provide living wages, skills development, and job training to the beneficiaries: the employees.
- Market Intermediary – The social enterprise acts as an intermediary, or distributor, to an expanded market. The beneficiaries are the suppliers of the product and/or service that is being distributed to an international market.
- Market Connector – The social enterprise facilitates trade relationships between beneficiaries and new markets.
- Independent Support – The social enterprise delivers a product or service to an external market that is separate from the beneficiary and social impact generated. Funds are used to support social programs to the beneficiary.
- Cooperative – A for profit or nonprofit business that is owned by its members who also use its services, providing virtually any type of goods or services.
And from the Grameen Bank Experience:
Seven principles of social business.
1) The business objective is to overcome poverty, or one or more problems (such as education, health, technology access, and environment) that threaten people and society- not to maximize profit.
2) The company will attain financial and economic sustainability.
3) Investors get back only their investment amount. No dividend is given beyond the return of the original investment.
4) When the investment amount is paid back, profit stays with the company for expansion and improvement.
5) The company will be environmentally conscious.
6) The workforce gets market wage with better-than-standard working conditions.
7) Do it with joy (Yunus 2010, p.3). These seven principles are the core of social business, but the most profound principle is principle number seven, do it with joy. Often time’s business is not associated with joy, but social business is all about joy. Yunus (2010) states, once you get involved with it you continue to discover the unlimited joy in doing it.
Like Yunus, O’Hara-Devereaux had a set of eight principles for a social entrepreneur;
1) Scan, Scout, Steer.
2) Act with integrity.
3) Seek collision.
4) Learn Rapidly.
5) Engage cultures.
6) Innovate radically.
7) Make decisions fast.
8) Execute with discipline. Yunus (2010) says a social business must be at least as well managed as any for profit-maximizing business.
856 taka approximately 27 U.S. dollars, Muhammad Yunus repaid this amount to the moneylenders for the poor people of Jorba. After seeing the excitement that came over the village for his small gesture of repaying the loans touch him deeply. This was the beginning of Grameen Bank.
Dr. Yunus (2010) states that we can create a poverty free world if we redesign our system to take out its gross flaws, which create poverty. All it takes to get the poor people out of poverty is for us to create an enabling environment for them. Once the poor can unleash their energy and creativity, poverty will disappear very quickly (Yunus, 2010, p.xiv Social entrepreneurs solve problems selflessly without regard to profit. In comparison to Bornstein book Danone had a social impact and created jobs for the poor teaching them to become self-reliant. If profit was made from the sale of their products they put the money back into the organization. Bornstein (2004) states that the hallmark of social entrepreneurs is that they are realistic about human behavior. They spend a great deal of time thinking about how to get their clients actually to use their products. key concepts described by O’Hara-Devereaux in “Navigating the Badlands” would be useful for someone starting a social business.
Muhammad Yunus, Bertrand Moingeon andLaurence Lehmann-Ortega 2010, Building Social BusinessModels: Lessons from theGrameen Experience
More Details…Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs, Published May 11th 2010 by PublicAffairs (first published 2008)
David Bornstein; How to Change the World, 2007
O’Hara-Devereaux, Navigating the Badlands, 2004
Muhammad Yunus, Building Social Business, 2010