Revitalising the Spirit of Enterprise

Sunday, July 24th, 2011

Social Business can help members of a society work for each other.


Enayetullah Khan


If any final, irrefutable, proof was needed of the collapse of the narrow, and since the fall of the Berlin Wall, complacent system that has underpinned the global economy for the vast several decades, a conference at Kyushu University in Fukuoka, Japan provided it this week.


Styled the first Asian Social Business Forum, it aimed to facilitate self-sustainable projects for survivors of the earthquake and tsunami that ravaged East Japan earlier in the year, to help them “recover, rebuild and reconnect” their lives through the practice of social business.


Not too long ago, those two words- social business- would have been taken as a contradiction in terms, inherently opposed to each other’s aims and objectives. Business, the lifeblood of capitalism, was always seen as the vanguard of a system that encouraged cutthroat competition, and worshipped only the one line at the bottom- profit. Indeed, one of the 20th century’s most renowned economists, Milton Friedman, said as much, that businesses have no obligation other than to increase profits in such a way as to help shareholders realise the greatest return on their investment. His contention was that businesses have no business pondering the welfare of the social, political or cultural environment within which they operate. Any consideration they do choose to devote to such issues, could generally, and somewhat simplistically in a system built to reinforce this tunnel vision, be put under philanthropy.


Which is fair enough, except that over the course of the last two decades, the system within which this mode of thinking manifests itself has shown itself up to be plainly unsustainable, in a number of ways. It hurts the planet, it helps only the few, and perhaps most importantly, its restrictive aims and objectives (the plural is really unnecessary, since profit was the only one) tied businesses into rigid patterns out of tune with the times, so clearly out of sync with the dynamism of the modern world, that atrophy loomed as the ultimate fate of the company. Clearly, it wasn’t doing much for society. And how much economic utility they were garnering for themselves was on a perpetually diminishing curve.


Against the tide


As things came to a head with the onset of the 2008 financial crisis, some over-enthusiastic observers on the Left began seeing it as the final nail in the coffin of capitalism, or at least of the allegiance to a society ordered according to a somewhat sophisticated form of the law of the jungle, where only the richest thrive, and the rest get trampled underfoot. These expectations were always going to be unfounded. Civilisation by now has evolved to such a stage where prescribing to any one set of values, embodied in any one ideology such as Marxism, is the surest way of falling short of potential. It is the ferment of all the ideas that man has tried and tested, and continues to foment in all corners of a world soon to have 7 billion heads, where we must seek the answers if we are to build the Good Society.


The most seductive amalgamation of all these ideas for the future, drawing upon our resources as well as our humanity (which is what really sets it apart) is the advent of social business. And as Bangladeshis, we can take special pride in the fact that one of our own, the venerable Dr Muhammad Yunus, has emerged as the most resourceful force behind this relatively new concept. By now, the superlatives have run dry for the Grameen Bank founder, who has already helped tens of millions in rural Bangladesh break out of the cycle of poverty by removing the permanent disadvantage they found themselves in- in a world increasingly dictated by financial differences, they were denied the right to finance, in the form of credit. Despite the government’s campaign of hate earlier in the year, and the unfortunate suicides relating to loan repayment that took place in some states in neighbouring India, I will assume one need not go into the success of the Grameen microfinance model. Its greatest testament is how the model is being replicated now in many parts of the world struggling with the scourge of poverty.


Social business is Dr Yunus’s new passion, or rather his latest, given that he himself has been doing the rounds in influential circles for a number of years now, slowly winning people and organisations (such as Danone, Intel, BASF and Adidas, who are all already in) over to the argument that explaining human beings through the selfishness of the profit motive is a fundamental flaw in the “whole structure of economic theories” that maintains business is only about making profits.


“We have misinterpreted humans. People are selfish, but at the same time, they are selfless too,” Dr Yunus said recently, at a lunch meeting in Dhaka organised by the America Chamber of Commerce on July 12 that I attended. I couldn’t help thinking how we Bangladeshis had misinterpreted the man’s work, to the extent that he is no longer part of the organisation he founded.


Be that as it may though. We do still have the Yunus Centre in Mirpur, and through its affiliations with various organisations and institutes around the world making use of Dr Yunus’s vast and far-reaching network, it is growing in prominence. Then of course there is the Grameen Creative Lab working out of Germany, and together, these two inheritors of the Grameen ethos- which can be summed up as a commitment to eradicating poverty- helped to organise the Social Business Forum in Japan this week.


Certainly, there is no other figure on the world stage working to infuse the needed momentum for the idea to really take off with same amount of vigour as Dr Yunus. Institutes dedicated to social business have recently opened in France and Scotland, and for all the believers being won over by the globetrotting slayer of poverty, a central tenet of the faith is his 2007 book, “Creating a World without Poverty”, where his ideas on social business are formally articulated for the first time.


In it, Dr Yunus makes his call for a new kind of capitalism, one that may ultimately turn out to be its saviour. He categorically dismisses the old modes of thinking not only in poverty eradication, but also by businesses hell-bent on serving the profit motive, while paying lip-service to the “triple bottom line” by taking up some initiatives under separate CSR projects that are divorced from the strategic core of the businesses.


No room for profit


In social business however, as outlined by Dr Yunus in his book, the very success of the venture is measured by “the impact of the business on people or environment, rather than the amount of profit made in a given period”. So we find a relegation of the profit motive, although he does ensure to add that social businesses are allowed to make profits, “with the condition that profit stays within the company”, that is reinvested to scale up the project I’d imagine, which is what proves difficult in the case of so many development initiatives. He also doesn’t disparage what he calls “conventional business”, rather he says that one can choose to do both, and run the two models separately.


More recently, Dr Yunus penned another book more specifically targeted towards expounding upon the concept of social business. In it, he has made the point of how conflating the two, that is, profit-making and contributing to society, often leads to thinking processes getting clouded, to the detriment of decision-making, and by extension, the enterprise itself. He demands a certain clarity of purpose on the part of the social entrepreneur, the sort of clarity that can only ever help an organisation in terms of realising its full potential. The following is an excerpt where the importance of making this distinction is made particularly forcefully:


“Unless this total delinking from personal financial gain can be established you’ll never discover the power of real social business. Some times you can set up a technically correct social business with the purpose of making profit through your other companies by selling products or services to this social business company. This will be a clear sabotage of the concept. There may be many other subtle ways by which one can weaken the concept and practice of social business. A genuine social business investor must make all efforts so that he does not walk into this trap unwittingly.”


Many of the more recent activities organisations like Grameen and Brac have gotten themselves engaged in can be said to fall under the remit of social business. In fact, Aarong is cited by experts as the very first, or at least first prominent example of a social business in Bangladesh. The Bangladesh Enterprise Institute, a think tank committed to private sector development, has had a social enterprise project running side-by-side, yet distinctly separate, from its work in the field of corporate social responsibility for the last three years. Through this project, it advises those interested in this field on how to get started, developing their ideas, and even how to generate funds for their project.


As a businessman myself, I find that I can indeed relate to many of the things Dr Yunus proposes as part of his vision to revitalise the entrepreneurial spirit. Particularly in a country such as ours, the pursuit of wealth beyond a certain point really does become rather prosaic. And when you find how pervasive the entire wave of poverty is in our society, truly, helping to ease even a bit of that (or doing anything else really, that you perceive to have, within the bounds of reason, a social benefit) can provide a form of fulfilment that the diminishing utility of profits cannot, beyond a point. As Dr Yunus says in the introduction to his book, it may only serve to make one who takes this route “a happier person”.

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