Building Social Business

• Book: Muhammad Yunus. Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs.

Review

"Awarded the 2006 Nobel Peace Prize for economics for his work micro-credit to end poverty in Bangladesh, Yusuf tackles head-on the question, “Why can’t an organisation do well financially and also do good socially?” This book outlines the important contribution ‘social businesses’ (which Yusuf defines as a ‘for profit, zero dividend’ company) can make in addressing many of social challenges often unsolvable via traditional means. For example, Grameen Bank (Grameen means “rural” or “village” in Bangla language) provides finance to the world’s poorest people in Bangladesh a banks responsible to ‘shareholders’ deem the risk too great. Similarly, Graamen Danone (a joint venture with Danone in France) provides nutritious yogurt to families in Bangladesh at risk of significant health issues due to poor diet. Finally, Graamen Adidas provides low-cost shoes (a pair of Adidas shoes for just 1-euro!) to people of Bangladesh to address illnesses caused through parasitic disease attack from inadequate footwear.

And this is where the concept of ‘social business’ gets interesting. A social business is not a not-for-profit entity. Nor does it simply provide the product or service either free of charge or subsidised to a person in need. Yusuf argues that the ‘not-for-profit’ model of business is limited in addressing the concerns of the world poorest people because it fails to break the cycle of ‘dependency’; whereby, the recipient of the product/service is dependent on the not-for-profit entity to survive just as the not-for-profit of the product/service is dependent upon a good-will of others for its survival too. And as the GFC demonstrated, this dynamic is untenable during more volatile market conditions.

Conversely, a social business operates within a competitive ‘capitalist’ market (with other ‘for profit’ organisations) and must therefore provide a competitive product or service that is at least comparable to its competitors. It must also compete for staff and other resources within this same competitive market, which means that a ‘social business’ pays market rates for its resources (i.e., staff, etc). In this way, an individual can get paid well whilst also knowing that they are also doing good for those who need it most.

Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs is a ‘how to’ book that covers how to launch a social business, legal and financial frameworks underpinning a social business, creating the infrastructure for successful growth within a social business, and some of the ‘growing pains’ of establishing and scaling a social business. Yusuf also outlines how easy it is to commence a social business anywhere in the world (i.e., the concept has relevance beyond simply addressing the needs of the world’s poorest people). Yusuf argues that the best time to start a social business is now, the best place to start is where you are, and the best focus for your social business is what you are passionate about." (http://tsii.com.au/2011/05/27/book-review-building-social-business-by-muhammad-yusuf/)