Muhammad Yunus - The Social Business Model

FORA.tv

1 May 200805:34

Summary

TLDRThe transcript discusses the concept of social business as a solution to address social issues beyond profit maximization. It highlights the creation of Grameen Danone, a venture aimed at combating malnutrition in Bangladesh by selling fortified yogurt at an affordable price. The company's success is measured by the number of children it helps rather than profit. The idea extends to other social businesses tackling safe drinking water and healthcare for the uninsured, emphasizing the need for businesses that prioritize social good over financial gain.

Takeaways

🌟 The concept of 'social business' is introduced as a business model that aims to do good for people and the planet without the intention of financial gain.
💡 Two types of businesses are proposed: profit-maximizing businesses focused on personal gain, and social businesses focused on social good.
🌍 The idea of social business is to integrate it into economic theory, which could potentially transform the economic landscape.
🇧🇩 Grameen Danone, a joint venture in Bangladesh, is highlighted as a successful example of a social business addressing malnutrition in children.
🚫 The social business model operates on the principle that investors can only recoup their initial investment, with profits reinvested for social causes.
🍼 Grameen Danone's social purpose is to produce fortified yogurt affordable for poor children, aiming to combat malnutrition.
💧 Another example is a social business venture with the French water company Violia, which aims to provide safe drinking water in arsenic-affected areas of Bangladesh.
🏥 The potential for social businesses in healthcare is discussed, particularly for serving populations without health insurance.
💉 The script points out the market failure in pharmaceuticals, where vaccines for diseases prevalent among the poor are not produced due to lack of profit incentives.
🌱 The narrative challenges the notion of leaving everything to profit-maximizing entities and suggests an alternative approach that considers broader societal benefits.

Q & A

What are the two kinds of businesses mentioned in the script?
-The two kinds of businesses mentioned are profit-maximizing businesses and social businesses. Profit-maximizing businesses focus on making money, while social businesses aim to do good for people and the planet without any intention of financial gain.
What is the primary goal of social businesses according to the script?
-The primary goal of social businesses is to address social issues and problems without focusing on financial profit. They aim to create a positive impact on society and the environment.
Can you provide an example of a social business mentioned in the script?
-An example of a social business mentioned is Grameen Danone, a joint venture in Bangladesh modeled after the French yogurt company Danone. It produces fortified yogurt at an affordable price to combat malnutrition in children.
What is the social purpose of Grameen Danone as described in the script?
-The social purpose of Grameen Danone is to provide fortified yogurt containing essential micronutrients like vitamins, iron, zinc, and iodine to malnourished children in Bangladesh, helping them regain health.
How does the financial model of Grameen Danone differ from traditional profit-maximizing companies?
-Grameen Danone's financial model differs by not distributing dividends to investors. Profits are reinvested in the company to fulfill its social mission, and investors can only recoup their initial investment, not profit from it.
What is another example of a social business initiative mentioned in the script?
-Another example mentioned is a partnership with the French water company Violia to provide safe drinking water in villages in Bangladesh where people are affected by arsenic-contaminated water.
What is the financial approach of the social business with Violia?
-The financial approach is to make the water affordable for everyone while ensuring the company covers its costs, with the primary goal of solving the problem of arsenic contamination in drinking water.
Why do profit-maximizing companies not typically address certain social issues according to the script?
-Profit-maximizing companies may not address certain social issues, such as providing healthcare for the uninsured or producing vaccines for diseases that affect the poor, because they do not see the potential for significant financial returns from these ventures.
What is the proposed social business model for healthcare as mentioned in the script?
-The proposed social business model for healthcare involves creating a system that provides health insurance or healthcare services to the 47 million uninsured people in the country, which is seen as a social problem that profit-maximizing companies are not addressing.
What is the fundamental question raised in the script about the role of profit-maximizing companies in society?
-The fundamental question raised is whether society should leave everything to the decisions of profit-maximizers, where their benefits dictate the world, or if there should be an alternative approach that includes social businesses to address societal needs.

Outlines

00:00

🌍 Social Business for Social Good

The speaker introduces the concept of two types of businesses: one focused on profit maximization for personal gain and the other, termed 'social business,' aimed at benefiting society and the planet without seeking financial profit. The speaker emphasizes the importance of integrating social businesses into economic theory to create a more balanced and socially responsible economic system. Grameen Danone, a joint venture in Bangladesh modeled after the French yogurt company Danone, is highlighted as a successful example of a social business. This company operates without distributing dividends, reinvesting profits to combat malnutrition in children by providing fortified, affordable yogurt. The social purpose of Grameen Danone is to improve children's health, measuring success by the number of children freed from malnutrition rather than profit margins. The concept is extended to other potential social businesses, such as providing safe drinking water in arsenic-affected areas and addressing healthcare issues for the uninsured, suggesting that social businesses can effectively tackle social problems that profit-driven companies might overlook.

05:01

🔍 Questioning the Dominance of Profit Maximization

This paragraph poses a critical question about the current economic paradigm, which is largely influenced by profit-maximizing entities. It challenges the notion that the world should be governed solely by the interests of those who seek to benefit themselves, suggesting that there is a need for an alternative approach. The speaker implies that the focus should shift towards incorporating social businesses that address broader societal needs, thus promoting a more equitable and compassionate economic model. The paragraph ends with a rhetorical question that prompts reflection on the ethics of leaving all decisions to profit-driven entities, hinting at the necessity for a more balanced economic system that includes social businesses.

Mindmap

Keywords

💡Profit Maximizing Business

A profit maximizing business is an organization primarily focused on generating the highest possible financial returns for its owners or shareholders. In the context of the video, this type of business is contrasted with social business, highlighting the traditional economic model where the primary goal is to make money. The video suggests that while this model is prevalent, it is not the only way to structure a business, as it may not always align with social or environmental goals.

💡Social Business

Social business refers to a business model that aims to achieve social objectives alongside, or instead of, financial gain. The video emphasizes that social businesses are designed to solve social problems and improve communities without the intention of financial profit for the investors. An example given is Grameen Danone, a company created to address malnutrition in children by selling fortified yogurt at an affordable price.

💡Economic Theory

Economic theory encompasses the study of how economies work and how economic agents interact. The video suggests that by integrating the concept of social business into economic theory, the way we understand and structure economic activities could change. It proposes a shift from traditional profit-centric models to include models that prioritize social good.

💡Investment

In the video, investment is discussed in the context of social business, where investors put money into a company not to receive dividends but to achieve a social goal. The return on investment is measured by the social impact rather than financial gain. This is exemplified by the Grameen Danone model, where investors can only recoup their initial investment, with profits staying within the company to further its social mission.

💡Malnutrition

Malnutrition is a state where a person's diet lacks the necessary nutrients for optimal health. The video uses malnutrition as a key social issue that the Grameen Danone social business addresses by creating a fortified yogurt product to combat malnutrition in children. The success of the company is measured by the reduction of malnourished children, not by profit margins.

💡Fortified Yogurt

Fortified yogurt is a product enriched with essential micronutrients like vitamins, iron, zinc, and iodine to help address nutritional deficiencies. In the script, Grameen Danone's fortified yogurt is a central example of a product designed to improve health outcomes, particularly among malnourished children in Bangladesh.

💡Arsenic Contaminated Water

The term refers to water that contains high levels of arsenic, a toxic element that can cause severe health problems. The video discusses a social business initiative to provide safe drinking water in regions where arsenic contamination is prevalent, highlighting the need for business solutions to environmental health crises.

💡Healthcare

Healthcare in the video is highlighted as a significant social issue, with many people lacking health insurance. The speaker suggests that social businesses could play a crucial role in providing healthcare services, especially in areas where traditional profit-maximizing businesses are not active due to lower profit potential.

💡Pharmaceutical Company

Pharmaceutical companies are businesses that research, develop, and market drugs or pharmaceuticals. The video points out that these companies may not produce vaccines for diseases that primarily affect poor populations because it is not profitable. This situation underscores the need for social businesses to fill the gap and address these unmet medical needs.

💡Vaccines

Vaccines are biological preparations that provide active acquired immunity to certain diseases. The video discusses the existence of vaccines for serious diseases that are not being produced by pharmaceutical companies due to lack of profitability. This highlights an area where social businesses could intervene to ensure that preventive healthcare is accessible to all, regardless of ability to pay.

Highlights

The necessity for two types of businesses: profit-maximizing and social businesses.

Social business is defined as a business model focused on social good without financial benefit for the investors.

The concept of inserting social business into economic theory to transform the economic landscape.

Demonstration of social businesses through examples like Grameen Danone.

Grameen Danone's mission to combat malnutrition in children through fortified yogurt.

The unique business model of Grameen Danone where profits are reinvested for social purposes.

The success of a social business is measured by its social impact, not financial returns.

Introduction of another social business model with French water company Violia.

Addressing the arsenic contamination problem in Bangladeshi drinking water through a social business.

Healthcare as a potential area for social business due to the lack of health insurance for many.

The challenge of pharmaceutical companies not producing vaccines for diseases affecting the poor.

The ethical question of leaving world decisions to profit-maximizers and the need for alternative models.

The potential for social businesses to address any social problem, including serious diseases.

The importance of creating businesses that are dedicated to social purposes beyond profit.

The concept of social business as a reverse of traditional business models.

The idea that social businesses can be created in many directions to solve various social issues.