There is another way of doing business- a better one?

[My background in business and then in social sector has convinced me that business principles, systems & processes can be most effectively applied to social sector in creating & sustaining innovative & impactful solutions. I have been an avid follower of Social Entrepreneurship discourses, a practitioner of the same in my social sector engagements and also instrumental in designing an elective course on the subject at IIM, Kolkata. My belief has been vindicated by three occasions of hearing & meeting Nobel Laureate & “Banker of the Poor” Prof. Md. Yunus - one in Oslo, one in Dhaka and one in Manila. This post is inspired by those interactions]

There is a contrarian view to the notion that the only business of business is to make money. By fueling consumption. Or by multiplying investment. And that is the most efficient way of “creating” and “circulating” wealth.  But this simplistic & dogmatic view needs to be challenged now. Noted economist & Nobel laureate Prof. Yunus says: “The global capitalist system today is driven by the notion that people are selfish and are solely motivated by the need for profit maximization. It makes the assumption that if each individual person pursues that goal, then the world overall will be a better place. We have seen that is not true. Neither are people all happier through maximizing profits, nor are the problems of the world solved. Many would argue that the problems of the world are in some cases made more acute by the single minded pursuit of profits.” According to a study by Oxfam International, the 85 richest people in the world have a combined net worth of $1.7 trillion, which is equal to the total combined wealth of the world’s poorest 3.5 billion residents, or half the global population. 85=3.5 billion! This surely is not an effective and efficient system.

While the movement of stocks in the capital markets are watched & cheered across the globe, there’s a real world out there whose report card is not so impressive. In the words of UN Secretary General Ban Ki Mun, “We are now less than 1,000 days to the 2015 target date for achieving the MDGs. This year’s report looks at the areas where action is needed most. For example, one in eight people worldwide remain hungry. Too many women die in childbirth when we have the means to save them. More than 2.5 billion people lack improved sanitation facilities. Our resource base is in serious decline, with continuing losses of forests, species and fish stocks, in a world already experiencing the impacts of climate change.” An Oxfam report notes Women Perform 66% of the work, Produce 50% of the food, Earn 10% of the Income, Own 1% of property. ILO estimates show that, in addition to the workers that are extremely poor, 19.6 per cent of workers and their families are ‘moderately poor’—living on $1.25 to $2 a day—and 26.2 per cent of workers are ‘near poor’, living on $2 to $4 a day. Altogether, 60.9 per cent of the developing world’s workforce remained poor or ‘near poor’ in 2011, living on less than $4 a day. This again is not an indicator of creating wealth- at least not for the majority. But who is concerned? What we are seeing in reality is: development aids are declining over the years- not to worry: stock markets are rising high. So is inflation!

It is not to say that Business is responsible for these. But business is a significant social force. With its single minded pursuit of profit it has created unnecessary & disproportionate consumptions. While “creating wealth” it has championed a strange ecosystem that upholds selfish interests & self-aggrandizement and ignores the worthy considerations of equity, opportunity, sustainability etc. It’s time we revisit the basics: What is a business? Business is essentially the enterprise of responding to the needs of people-, offering products, services, technologies, structures. Business is creating solutions not making money (money is the measure and a tool for its growth). And in the process bring prosperity to both- who offers the services and who need it. But as we saw above, the current paradigm of business is creating wealth in a skewed way, increasing gaps & deprivations among people and causing irreparable damage to the planet. There are issues of poverty, hunger, malnutrition, child mortality, illiteracy, health services, housing, sanitation, clean water, clean energy, sustainable farming, forestry, natural resources, employment, productivity, finance, economic security and so many more. All these challenges are actually business opportunities- social business opportunities, if we want to look at it from a different perspective. Not from the perspective of money & greed. For example as per a recent report the large private (read corporate) hospitals are giving targets & incentives to its doctors- to make more money. And the result is unnecessary tests, hospitalization, medication and expenses. This means hospital business is thriving (at the cost of insurance business- and we don’t know how insurance business is thriving at whose cost?), doctors and managers are earning more but the patient is suffering. This surely is not an enterprise of health service. It is a business of greed. But we also have opposite examples of Narayana Hospitals & Arvind Eye care in India or Grameen Eye care of Bangladesh, who could make it possible to offer world class treatment at affordable costs- yet keep it sustainable and growing (and its doctors are no paupers, neither its employees are starving). That is business- Social business.

There are abundant opportunities to creating innovative solutions and lasting impacts while being sustainable. Social Business is just that. A common definition of a social business is a company that follows business principles, but it is dedicated to working toward solving a social issue. All profits are put back into the company in order to create a sustainable business. Social business and social entrepreneurship are often used interchangeably.

Prof. Yunus’ asked “with the world's population crossing 7 billion people, it is more crucial than ever that we re-evaluate the concept of capitalism. Will we continue to sacrifice the environment, our health and our children's future in the relentless pursuit of money and power, or will be take the destiny of the planet into our hands by re-imagining a world where we put the needs of all people at the center, and that our creativity, money and profits become a means to achieve those needs?”

To this concern, social business, could be a feasible answer- a new paradigm. Its distinctive features are:

·         Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization

·         Financial and economic sustainability

·         Investors get back their investment amount only. No dividend is given beyond investment money

·         When investment amount is paid back, company profit stays with the company for expansion and improvement

·         Environmentally conscious

·         Workforce gets market wage with better working conditions

·         ...do it with joy

Social business is win-win-win. For the business itself, for the people it serves, and also for the planet. Good news is it has caught the imagination of many. Social entrepreneurship is gaining momentum. Brilliant and discerning youngsters from ivy-league colleges are setting up their social entrepreneurship and many of those have become roaring successes. There are demonstrated global business models like “Fair Trade”. There is a shift in investment paradigm also- impact investment, patient capital, responsible financing and so on. Even conventional businesses are being measured by its triple bottom-line: economic, social & environmental- not profit alone.  

Spiritually it is enriching too. It doesn’t create useless consumption-production cycle, it doesn’t fuel greed, doesn’t need any unscrupulous means, not mindless exploitation of nature’s resources. Yet it gives fulfillment-as it paves the way for solving peoples’ & planets problems in an efficient and effective way and brings in sustainability & contentment. It serves important purposes which might be source of happiness as opposed to selfishness. As Prof. Yunus believes: “I have always said that human beings are multidimensional beings. Their happiness comes from many sources, not as our current economic framework assumes, just from making money.”  Perhaps the assumptions and framework of this most important economic activity called ‘business’ is reinventing itself. Perhaps we are on a pathway to happiness……...

'if you find yourself  away from God, ask who moved?'