Fwd: Microcredit pioneer describes "social business" (MI/SeattleTimes)

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Howard Rheingold

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Jan 20, 2008, 9:40:21 PM1/20/08

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FYI

Howard Rheingold how...@rheingold.com

http://www.rheingold.com http://www.smartmobs.com

http://vlog.rheingold.com

what it is ---> is --->up to us

Begin forwarded message:

From: stuart silverstone <s...@graphics.org>
Date: January 20, 2008 7:34:40 PM PST
To: <social...@graphics.org>
Subject: Microcredit pioneer describes "social business" (MI/SeattleTimes)

[Muhammad Yunus spoke Wednesday at the Milken Institute here in Santa
Monica. His story is inspiring. He is achieving social change through
indirect means. The full audio of his talk is available at the first url.
See also http://en.wikipedia.org/wiki/Muhammad_Yunus ]

------------------------------------------

Creating a World Without Poverty
Muhammad Yunus

As if being awarded the Nobel Peace Prize weren’t enough, Muhammad Yunus has
set his sights on a new goal: turning the entire current cannon of business
thought on its head. As captured in his latest book, Creating a World
Without Poverty, Yunus is determined to bring about a tremendous change in
our current understanding of what it really means to turn a profit.

Speaking to a standing-room-only crowd at the Milken Institute, he outlined
his past innovations in micro-credit – which have provided the poorest
citizens of Bangladesh with previously unheard-of access to credit, breaking
the cycle of poverty for thousands of families in rural and urban areas
alike.

Building on the lessons and successes of Grameen Bank and Grameenphone (for
more on this, see Muhammad Yunus and Mike Milken: A Conversation), Yunus is
now turning his attention to the development of “social businesses” – a
revolutionary concept that measures return on investment in social outcomes
rather than financial gain. Such outcomes might include the number of
children with improved health, the gallons of potable water delivered to
regions with unsafe water supplies, or the kilowatts of energy powering a
village that previously had no electricity.

According to Yunus, current economic and financial philosophy misses the
entirety and the potential of human beings.

“Economics has discarded everything that makes humans interesting,” he said,
noting that “Human beings are much bigger than money machines,” he said.

While the profit motive is part of the picture, the fundamental desire to do
good has been overlooked by academics and practitioners alike. Yunus insists
that this impulse has a place in economics—and he characterizes the missing
piece of the puzzle as “non-loss, non-dividend companies.”

Funding a social business is not like donating to charity. Yunus believes
that social business investors can and should expect to recover their
initial outlay. The return on that investment, however, will not be a
financial dividend, but a tangible social benefit. The business still has
the imperative to be successful in order to repay its initial investors and
to grow the operation, but its ultimate success will be measured by how well
it achieves its stated social objective. As an additional benefit, the
recouped initial investment can be recycled into new social businesses over
and over.

Yunus pointed to a successful social business that is already up and
running: a venture established by Grameen Bank and Dannone. The company
produces an affordable yogurt enriched with nutrients that are desperately
needed by impoverished children in Bangladesh. Grameen Bank and Dannone will
be able to recover their investment in the enterprise, but both seek a rate
of return measured in healthier children, not as a percentage of profits.
While there is no direct profit from this endeavor, Yunus commented on the
incredible public relations boost for Dannone since the project’s inception.

Additional markets ripe for the social business model include clean water,
housing, vaccines and energy. Yunus noted that there is a tremendous energy
shortage in rural Bangladesh; 70 percent of the population has no access to
electricity. At the Milken Institute Forum, he challenged his audience to
develop a solar panel that could be sell for $1.50, as opposed to the
current price of $3.00. Unlike many other technologies, solar panels have
not seen a price drop. “This technology is stuck,” observed Yunus.

Nevertheless, solar panels represent a tremendous opportunity for launching
a social business. Yunus promises that if a company out there can figure out
how to provide the product at the lower price, he will put solar panels in
every home in Bangladesh. This would not only improve the lives of 70
percent of the Bangladeshi population—but do it with a clean, renewable
energy source.

Yunus does not see social businesses as a concept that is limited to
Bangladesh or the developing world. He believes it can work right here in
the United States—and he noted that if he were to develop a new U.S. social
business, he would concentrate on providing health insurance to the
uninsured. The social business model might be the perfect solution, since
the current profit model has not been able to provide the service.

"Profit maximizers will never get here, because you don't make money," Yunus
said on the subject.

January 18, 2008
©2008 Milken Institute
http://www.milkeninstitute.org/events/events.taf?function=detail&ID=219&cat=
Forums

------------------------------------------

By Kristi Heim , Seattle Times business reporter

Muhammad Yunus, who won the Nobel Peace Prize in 2006 for his work
pioneering microcredit, is traveling around the U.S. to talk about his new
book, "Creating a World Without Poverty."

Q: Have you talked with any companies here about starting the kind of social
business you describe?

A: Not in the U.S., but we are in contact with several European companies
and some of them are in the process of setting up social business. One is a
water company, Veolia, [which plans]) to supply safe drinking water in
Bangladesh.

Q: In your book, you write that corporate social responsibility is basically
a failure.

A: I won't say conclusively it doesn't work at all, but in most cases the
idea is used more for public relations. Even if it works, it's still done in
a charity way. It doesn't lead to meaningful results.

Q: How is social business different?

A: In social business you have established an institution. It has its own
life and it's self-sustainable. It continues to strive to reach the social
goal you set and does not depend on outside funding. It can expand.

Q: But isn't human nature basically selfish?

A: No. Human beings are multidimensional. They want to make money at the
same time they want to be helpful to other people. They have grand goals and
these are not reflected in the business world. Creating another business
format would allow some of these features to be accommodated. Human beings
are not all devils. They are not all angels. They have many facets to them.

Q: How do you reach young people bombarded with consumer messages to
sacrifice the latest Xbox or the lucrative stock options to help someone
else?

A: If you leave the whole world in the hands of profit maximizers, that's
what they will do. They push people to buy things they don't need, to adopt
a lifestyle that is not sustainable, to be wasteful. The profit maximizers
make us believe we are the last generation on the planet and we can plunder
it.

Q: What changes are needed for social business to take off?

A: Things like having a social stock market where investors and companies
can come together to explain what they're doing. Then you'll be needing
social-rating agencies so somebody will be watching out and telling
investors the ratings of companies. You'll be needing a regulatory framework
so people don't deceive other people. And you need new laws that make it
pretty clear what needs to be done to call yourself a social business, and
tax laws if you want to give tax incentives.

Q: How has your life changed since the Nobel Prize?

A: Well, it's a great thing to happen in anybody's life. Suddenly you are
put into orbit for the whole world to notice you, celebrate the work that
you do. You are at that center of attention, which is a dramatic change for
any human being. At the same time we can take advantage of the attention to
promote certain ideas. This gives me a lot of leverage to say what I feel
since I have the microphone to the world. I hope I can use this opportunity
in a responsible manner because this attention might not last long.

Q: As a banker, what do you make of our own financial system, now plagued
with a credit crisis from risky subprime loans?

A: This is very regrettable. This is no fault of the people who are losing
out. It is the fault of the banks who didn't know how to do the business, so
greed took over before they could build the system properly and created a
mess for themselves and for other people.

At Grameen Bank, we work with people so risky no one came around to do
business with them. Their repayment has been 100 percent.

[However,] if my mission is to maximize profit, everything is now
subservient to that mission. I may use other words to soothe you, but I
don't care how many people I have stepped on or good things I have ignored.
I'm totally one-sided.

If you are very generous, sometimes you feel guilty about it, but you cannot
step away from it because that's what the business is supposed to be.

Kristi Heim: 206-464-2718 or kh...@seattletimes.com
January 18, 2008
Copyright © 2008 The Seattle Times Company
http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/displ
ay?slug=yunusqaweb18&date=20080118&query=grameen+bank+yunus

Weaver

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Jan 21, 2008, 12:51:04 AM1/21/08

to CooperationCommons

Nice way of thinking, isn't it?

It's actually the way w're supposed to do it, but somewhere along the
way 'Profit', Wealth' and other definitions of advancement -
individual and (therefore?) group orientated got confused. Generally
by way of the fragmented thought structures I've previously spoken on
coupled with concepts such as the protestant work ethic - so called.

That was yet another definition that wasn't accurately defined and
Calvin's maxim of 'The chosen of the Lorddo profit' was defined
strictly within the fiscal paradigm, rather than according to the
broader spectrum definition.
Regards,

Weaver.

On Jan 21, 11:40 am, Howard Rheingold <how...@rheingold.com> wrote:
> FYI
>
> Howard Rheingold how...@rheingold.comhttp://www.rheingold.com http://www.smartmobs.comhttp://vlog.rheingold.com

> what it is ---> is --->up to us
>
> Begin forwarded message:
>
> > From: stuart silverstone <s...@graphics.org>
> > Date: January 20, 2008 7:34:40 PM PST
> > To: <socialCha...@graphics.org>
> > Subject: Microcredit pioneer describes "social business" (MI/
> > SeattleTimes)
>
> > [Muhammad Yunus spoke Wednesday at the Milken Institute here in Santa
> > Monica. His story is inspiring. He is achieving social change through
> > indirect means. The full audio of his talk is available at the
> > first url.

> > See alsohttp://en.wikipedia.org/wiki/Muhammad_Yunus]

>
> > ------------------------------------------
>
> > Creating a World Without Poverty
> > Muhammad Yunus
>
> > As if being awarded the Nobel Peace Prize weren't enough, Muhammad
> > Yunus has
> > set his sights on a new goal: turning the entire current cannon of
> > business
> > thought on its head. As captured in his latest book, Creating a World
> > Without Poverty, Yunus is determined to bring about a tremendous
> > change in
> > our current understanding of what it really means to turn a profit.
>
> > Speaking to a standing-room-only crowd at the Milken Institute, he
> > outlined

> > his past innovations in micro-credit - which have provided the poorest

> > citizens of Bangladesh with previously unheard-of access to credit,
> > breaking
> > the cycle of poverty for thousands of families in rural and urban
> > areas
> > alike.
>
> > Building on the lessons and successes of Grameen Bank and
> > Grameenphone (for
> > more on this, see Muhammad Yunus and Mike Milken: A Conversation),
> > Yunus is
> > now turning his attention to the development of "social businesses"

> > - a

> > revolutionary concept that measures return on investment in social
> > outcomes
> > rather than financial gain. Such outcomes might include the number of
> > children with improved health, the gallons of potable water
> > delivered to
> > regions with unsafe water supplies, or the kilowatts of energy
> > powering a
> > village that previously had no electricity.
>
> > According to Yunus, current economic and financial philosophy
> > misses the
> > entirety and the potential of human beings.
>
> > "Economics has discarded everything that makes humans interesting,"
> > he said,
> > noting that "Human beings are much bigger than money machines," he
> > said.
>
> > While the profit motive is part of the picture, the fundamental
> > desire to do
> > good has been overlooked by academics and practitioners alike.
> > Yunus insists

> > that this impulse has a place in economics--and he characterizes the

> > percent of the Bangladeshi population--but do it with a clean,

> > renewable
> > energy source.
>
> > Yunus does not see social businesses as a concept that is limited to
> > Bangladesh or the developing world. He believes it can work right
> > here in

> > the United States--and he noted that if he were to develop a new

> > U.S. social
> > business, he would concentrate on providing health insurance to the
> > uninsured. The social business model might be the perfect solution,
> > since
> > the current profit model has not been able to provide the service.
>
> > "Profit maximizers will never get here, because you don't make
> > money," Yunus
> > said on the subject.
>
> > January 18, 2008

> > (c)2008 Milken Institute
> >http://www.milkeninstitute.org/events/events.taf?
> > function=detail&ID=219&cat=

> > Copyright (c) 2008 The Seattle Times Company
> >http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/
> > vortex/displ
> > ay?slug=yunusqaweb18&date=20080118&query=grameen+bank+yunus

Mark Elliott

unread,

Jan 21, 2008, 2:08:17 AM1/21/08

to Cooperati...@googlegroups.com

amazing stuff!

--
-----
Mark Elliott Ph.D.
collaboration ~ mass collaboration ~ stigmergy
http://mark-elliott.net/ ~ http://collabforge.net ~ http://metacollab.net/

Sam Rose

unread,

Jan 22, 2008, 7:51:13 PM1/22/08

to CooperationCommons

This idea of social business is *exactly* what i am doing right now
with my own business.

I am currently working with several not for profits, but also helping
to establish http://socialsynergyweb.org/opensourceecology/

and http://socialsynergyweb.org/educommons, an open education clearing
house in collaboration with many other individuals and organizations.
We are creating a course right now that will teach Kenyan diaspora in
Columbus, OH, USA how to send money in the form of cellphone airtime
minutes to their relatives in Africa.

One of the big stumbling blocks for health insurance alternatives is
the heavy state regulation on health insurance. This is something I
explored while researching http://coworking.pbwiki.com/DonationBasedHealthCare
with people in the coworking movement.

Another thing that I learned is that hoping for some of the reforms
that Muhammad Yunus describes in the email interview quoted by Howard
will take too long. Because, there are too many people with vested
interests who will definitely stand in the way, or who will co-opt and
twist such reforms to meet their own needs.

I have done some extensive research into this subject, and it's my
opinion that the legal frameworks already exist to pursue social
investing on different scales. For smaller/local scales, there is
http://www.sec.gov/investor/pubs/invclub.htm plus, importantly,
efficient methods of resource pooling, both money and non-money
resources. These methods need to be refined and tested in real world
problems.

On larger scales, existing frameworks allow for people to create
corporate charters that focus on social values as much as on profit,
and technologies exist and could be employed that would allow for
more oversite, and transparency. I think communities and reputation
systems can and will help solve the problems of trust, and helping to
keep people from beign scammed. The idea that I talked about earlier
in the year, of a business stewardship council could help people know
which social businesses have been vetted and rated as being
trustworthy and valuable.

The building blocks already exist, but much work needs to be done, and
people need to know that to actually make a social, or ethical economy
work in the US, that the focus cannot be totally on money and profit
alone, because the best methods for maximizing profit are often those
that are the least socially and environmentally beneficial.

There are some emerging contradictions to this, though. The
http://socialsynergyweb.org/opensourceecology/ with Marcin Jakubowski
is starting to generate technologies that cost a factor of up to ten
times less than competing technologies, even those outsourced to
countries like China. If you are interested in emerging business
markets, take note of this phenomenon. The key to securing these cost
savings is to possessing a flexible fabrication capability. And,
acquiring this capability is equally as inexpensive as materials that
are output by the technologies. And, acquiring the knowledge to use
the technologies, and to develop them, will drop dramatically with the
emergence of projects like http://socialsynergyweb.org/opensourceecology/
that gather together stakeholders and pool knowledge and resources in
ways similar to the methods used for developing open source software.

On Jan 20, 9:40 pm, Howard Rheingold <how...@rheingold.com> wrote:
> FYI
>

> Howard Rheingold how...@rheingold.comhttp://www.rheingold.com http://www.smartmobs.comhttp://vlog.rheingold.com

> > See alsohttp://en.wikipedia.org/wiki/Muhammad_Yunus]

> > his past innovations in micro-credit - which have provided the poorest

> > - a

> > that this impulse has a place in economics--and he characterizes the

> > percent of the Bangladeshi population--but do it with a clean,

> > renewable
> > energy source.
>
> > Yunus does not see social businesses as a concept that is limited to
> > Bangladesh or the developing world. He believes it can work right
> > here in

> > the United States--and he noted that if he were to develop a new

> > (c)2008 Milken Institute
> >http://www.milkeninstitute.org/events/events.taf?
> > function=detail&ID=219&cat=

> ...
>
> read more >>

Mark Elliott

unread,

Jan 24, 2008, 1:00:39 AM1/24/08

to Cooperati...@googlegroups.com

Thanks for your insights Sam and its great to hear about the projects you are involved in. I"ll keep my eye on opensourceecology via my rss reader :-)!

mark

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