Channelling creativity through social business

By: Joe Havely
Wednesday, 14 March 2012 17:20 | Comments (0)

Nobel laureate Muhammad Yunus says his mission is to "put poverty in a museum" Nobel laureate Muhammad Yunus says his mission is to "put poverty in a museum"
A native of one of the world's poorest and most-densely populated countries, Bangladeshi-born Nobel peace laureate Muhammad Yunus is a firm believer in the power of human ingenuity to solve the world's problems.

Human beings have unlimited capacity for creativity, he says. The real challenge is raising awareness of that capacity; then understanding how and where to channel it.

yunus280Yunus: Human capacity increases when you bring more optionsIn an interview with NUS Business School, the pioneer of microfinance dubbed 'the banker to the poor' said an overwhelming majority of human creativity is used only for the pursuit of self-interest or is wasted entirely.

"The world has become made up of money chasers and that's wrong – we are not just money-making robots, we are human beings with enormous capacity," he says. "All the problems in the world are nothing in front of human creativity."

Capitalism, Yunus argues, has made humanity self-centric: money-making has become an obsession and a purpose in itself.

"We can change the world any way we want. We have much more capacity to solve the world's problems," Yunus told Professor Dennis Cheek, of NUS Business School's Asia Centre for Social Entrepreneurship and Philanthropy.

"I'm not denying the money-making part, but that's a small part. We are keeping ourselves focused on tiny little things and forgetting everything else."

ThinkAloud7What tends to be overlooked he says is the broader range of possible business solutions available to solving the world's problems. While many tend to focus on the dichotomy of either the profit-maximisation or totally non-profit models, there is a whole spectrum of business options in between that is largely neglected.

Business, he says, is an excellent tool for solving problems, but at present the creativity and technology we have at our disposal is almost all devoted to making money.

Solution-seeking

By applying that creativity and technology to solving problems in a business framework, all the world's problems would be solved, he says.

"Human capacity increases when you bring more options, it all depends on your feelings, what you want to do," Yunus told NUS.

All the problems in the world are nothing in front of human creativity

Muhammad Yunus

For that reason Yunus, who was at NUS for a week-long development forum, has become a leading advocate of the social business model. Whereas profit-making businesses are driven by personal gain, he says, social businesses are solution-seeking in their motivation.

Essentially, he says, a social business is "a non-dividend company for finding a solution to a problem". And they have a virtually unlimited scope.

"In what area are they applicable? Any problem. You think of a problem: create a business to solve that problem."

Rather than the charity model, Yunus argues, under a well-run social business with the right business model, the same money can be put to work again and again, recycling earnings to deliver on-going and sustainable benefit.

Social businesses, he says, don't come in ready-made, off-the-shelf formulas. But he believes creative minds once put to work can come up with appropriate solutions.

"That's the beauty of social business, it makes you think, makes you bring creative ideas."

Job creation

Muhammad Yunus factfile
  • Studied economics in the US receiving a PhD after being awarded a Fulbright scholarship before returning to teach in his native Bangladesh
  • Developed microfinance concept after loaning $27 of his own money to a group of basket weavers
  • Launched Grameen Bank in 1983, now has brances in almost every village in Bangladesh
  • Awarded Nobel Peace Prize jointly with Grameen Bank in 2006
  • Founder of several social business joint ventures aimed at alleviating problems faced by the poor and creating job opportunities
With that in mind Yunus has set up some pioneering social businesses in his native Bangladesh, working with leading multinationals.

In one example, begun in 2006, Yunus led a joint venture between Grameen, the microfinance conglomerate he established, and European food giant Danone, to produce high nutrition yoghurt. The yoghurt, known as "Shakti Doi", meaning "power yoghurt" in Bengali, aims to reduce malnutrition in Bangladeshi children while also creating a manufacturing and distribution network that provides income and job opportunities for the local community.

Another more recent joint venture with Adidas is aimed at producing shoes costing just one euro per pair. The project is designed to alleviate the problem of parasites infecting poor people forced to walk barefoot because they can't afford shoes, while again also creating jobs and opportunities in the process.

These, he says, are high profile examples that show the social business model in action and in a way that is self-sustaining. But social businesses can also be successful at the grass roots level, and don't need the backing of a major multinational in order to deliver the solutions they seek.

Yunus, who was awarded the Nobel Peace Prize in 2006, says he has made it his mission to "put poverty in a museum" and in Bangladesh he is promoting the target of 2030 for eradicating poverty from the country.

It's an ambitious target: with its booming garment export trade Bangladesh has enjoyed some of the fastest economic growth in Asia in recent years, but it remains at a very low base.

'Mission drift'

Estimates of the proportion of the population living below the poverty line vary between about 30 and well above 40 per cent, making it still officially one of the poorest countries in the world – although figures also show poverty levels have steadily fallen since the 1990s.

For that, undoubtedly, Yunus and his pioneering work in microfinance must take a large chunk of credit, although he concedes there has been "mission drift" in how the term has been used, as highlighted by recent controversy over the effectiveness and apparent abuses of the microfinance model.

He says it is important to draw the line on what microfinance is and what it isn't. Microfinance, Yunus says, was created to help poor people, especially poor women, get out of the poverty trap and improve their lives – with no intention of making personal gain.

But he acknowledges that some businesses have taken the microfinance name and pushed it back towards the exploitative loan shark model. Yunus says that is something that cannot be easily stopped, but it's important to distinguish between that and the true concept of microfinance and microcredit.

"Those words bring a lot of respectability and credibility," he says, whereas operations aimed at making personal gain from loaning to the poor are "different businesses entirely".

For that reason, and despite the recent controversy, Yunus remains committed to microcredit as a central pillar in his goal of lifting millions of Bangladeshis out of poverty in less than two decades.

It's a short time frame, but he says the impact of globalisation, economic integration and the development of new technologies is making the rate of change faster than ever before.

Look at all the rich countries in the world today, Yunus says. "You go back 50 or 100 years, they were poor, there was starvation, people were leaving because of famines etcetera. But today they are rich countries.

"What once took centuries will take a decade today."


Key Points

  • Microfinance pioneer tells NUS that harnessing our own infinite human creativity is the start of the solution to global poverty.
  • Yunus says social entrepreneurs have a broad range of options open to them in creating a business to solve a social problem.
  • Yunus is promoting a target of 2030 to eradicate poverty in his native Bangladesh.
  • He says there has been "mission drift" by some people using the microfinance concept for personal gain.

Video

Microfinance pioneer Muhammad Yunus speaks to NUS Business School


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