Sunday, September 26, 2010

There ain’t a trickle-down

Muhammad Yunus needs no introduction. Winner of Nobel peace prize in 2006 and author of classics such as Banker To The Poor and Creating A World Without Poverty, Yunus is widely known for his successful microfinance initiative, Grameen Bank, in Bangladesh. So when the stalwart speaks, you listen.

Building Social Business:
Capitalism That Can Serve
Humanity’s Most Pressing
Muhammad Yunus
Rs 750; Pp 256
Grameen Bank’s success prompted Yunus to work on areas such as healthcare, drinking water, medicine, telecom and energy. And some of these initiatives have been modelled as social businesses. For Yunus, social business is about applying a business model to solve a social issue, without a profit motive. The author says we cannot expect free market to address social problems. All the talk about the trickle-down effect reducing poverty is also unreliable. Applying a business model to solve a social problem would work better. Expecting a for-profit company to pursue both social and profit goals also does not work; CEOs will unconsciously lean in favour of profits.

Grameen Bank associated with French food giant Danone to set up a ‘social’ business in Bangladesh. The unit produces Shokti Doi yogurt, which was fortified with nutrients children in Bangladesh need badly. The challenges in setting and scaling up this business make for fascinating reading. The scale of the factory, the correct price point, employing local women as salespersons are some of the key decisions covered, and their impact analysed in detail. A chapter on launching a social business has useful advice such as identifying a cause one has passion for, defining goals and testing the model before launching. Yunus says one does not need to know how to do business; rather more important is the desire to solve a social problem.

Full review here Businessworld

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