Muhammad Yunus on Social Businesses
Submitted by ben on 4 March 2010 - 12:12pm.
Are humans single dimensional beings, driven only by selfish impulses? Nobel Peace Prize winning economist Muhammad Yunus warns us that is what the corporate world wants us accept. At his recent talk in Foellinger Hall he encouraged us to think about other, equally powerful, dimensions to our nature. He outlined an alternative business model based on the human capacity for selflessness. He calls these businesses social enterprises.
Yunus outlined several social businesses that he has helped to setup in his native Bangladesh. For example in 2002 he facilitated a joint venture with Danon to produce an inexpensive yoghurt that contains essential micronutrients to combat malnourishment among children. Danon contributed production engineering expertise and invested capital in the enterprise. The terms of the joint venture forbid them from ever being paid any dividends on this investment. Any profits made by the business are plowed back to increase the number of children saved from malnutrition.
He points out that typical profit-seeking shareholders look for a 25% profit on their investments. This money has to come from the customers, the employees and the suppliers. On the other hand, businesses owned by investors who are looking for social returns on their investments have much more ability to solve the big problems that are currently out of reach: hunger, access to healthcare, access to clean drinking water.
He is not talking about charity. The money that investors put into a social enterprise is used to create a sustainable business that cycles the money over and over through the community. The employees and managers receive salaries so they can do their work and share their experience for their working lifetime.
Closer to home, our Co-op has been a very successful 35 year experiment in social business. The board, as representatives of the owners, routinely review the performance of the business. We ask the General Manager to report on how the co-op has built community, strengthened the local food chain or educated people on making healthy food choices. One question we don’t ask is how much profit we have made. That is not why we exist. Of course we perform regular monitoring to insure the co-op is being run according to sound business practices. It is important to protect our owners’ investment so we can continue to fulfill our mission.
Yunus challenged the audience to spawn a generation of social entrepreneurs. Why are so many capable people unemployed when there is so much that needs to be done?
Do you have questions about how social enterprises work? Better yet, are you inspired to start one up? Contact me or any other board member to find out more. Governing the co-op through its expansion has given us great practical experience on important business model.
Yunus outlined several social businesses that he has helped to setup in his native Bangladesh. For example in 2002 he facilitated a joint venture with Danon to produce an inexpensive yoghurt that contains essential micronutrients to combat malnourishment among children. Danon contributed production engineering expertise and invested capital in the enterprise. The terms of the joint venture forbid them from ever being paid any dividends on this investment. Any profits made by the business are plowed back to increase the number of children saved from malnutrition.
He points out that typical profit-seeking shareholders look for a 25% profit on their investments. This money has to come from the customers, the employees and the suppliers. On the other hand, businesses owned by investors who are looking for social returns on their investments have much more ability to solve the big problems that are currently out of reach: hunger, access to healthcare, access to clean drinking water.
He is not talking about charity. The money that investors put into a social enterprise is used to create a sustainable business that cycles the money over and over through the community. The employees and managers receive salaries so they can do their work and share their experience for their working lifetime.
Closer to home, our Co-op has been a very successful 35 year experiment in social business. The board, as representatives of the owners, routinely review the performance of the business. We ask the General Manager to report on how the co-op has built community, strengthened the local food chain or educated people on making healthy food choices. One question we don’t ask is how much profit we have made. That is not why we exist. Of course we perform regular monitoring to insure the co-op is being run according to sound business practices. It is important to protect our owners’ investment so we can continue to fulfill our mission.
Yunus challenged the audience to spawn a generation of social entrepreneurs. Why are so many capable people unemployed when there is so much that needs to be done?
Do you have questions about how social enterprises work? Better yet, are you inspired to start one up? Contact me or any other board member to find out more. Governing the co-op through its expansion has given us great practical experience on important business model.