Muhammad Yunus: Nobel Peace Prize Winner
Business VisionariesMuhammad Yunus won the Nobel Peace Prize in 2006 along with his Grameen Bank for pioneering the concept of micro-finance in his native Bangladesh--a financial model that has now spread across much of the Third World and intrigued large segments of the business communities of the developed world as well.
In this interview with Forbes.com Executive Editor David A. Andelman, he talks about his model, his dream and his new book-- Creating a World Without Poverty: Social Business and the Future of Capitalism, Public Affairs 2007, 261 pages, $26.
Muhammad Yunus: A human being wants to be useful to others. They want to reach out to help others. They are caring human beings, but not within the business framework that we have built (within the framework). So I am suggesting that if you want to take care of the multidimensional human being, within the business framework of the capitalist theory, then we should have one more, at least, kind of business--business to do good to people, business to do good to (the) planet, and these will be non-loss, non-dividend companies with a social objective.
Today, there is only one kind of business in the capitalist system, in the design of the theoretical framework--business to make money, and profit maximization is kept as the goal, the mission of business. And in my way of looking at it, this interprets human beings in a very narrow way. Human beings are much bigger than just a narrow moneymaking pursuit, a narrow moneymaking machine, if you want to call it. So, other aspects of human beings are ignored within the theoretical framework.
The distinction between the two kinds of business will be the first kind of business, which is already known, what is being practiced, is all centered towards me. Everything about me. I want to profit, I want to achieve, to maximum possibility. In the process, I ignore or I become indifferent to others. The second category that I'm suggesting is all about others, nothing about me. I want to do something for others without any caring that this thing should benefit me too. No, it should explicitly benefit others. So both together, kind of brings a balance and also reflects the human being in a much better way. We can create these companies within that framework, and once we create the door, sort of, within the theory, then many people would like to take this door and make use of it.
There is no compulsion. I am not arguing that everybody has to do this. No, it's up to you. If you feel like it, this is one option.
The difference between charity and social business is very important. In charity, you use the money only once. You achieve whatever goal you wanted to achieve. You achieved it! But if you want to repeat this, you need fresh money. It always has to be externally done. If you can design the whole thing in a social business way, social business has endless life--it recycles. So, you create institution, you create a body, which has this life of its own, and it's an opportunity--it can go.
And it turns by itself. Once you have gotten it started, you don't need any fresh infusion, unless you want to expand, unless you want to do some more, but within that it can take care of itself, so your objective of reaching a social goal is better served in most of the cases. In some cases, maybe it cannot be designed as a social business; it can remain as a charity. I'm not against charity. I'm giving an option to the charity to make it more effective as a social business.
Anybody can feel, "Oh, I made enough money, and I want to do something that I feel good about, that is touching people's lives. So from now I will spend some money on social business." Money can come from the business itself.
In both worlds, in the developing world or the developed world, we are talking about the poor people. Their situation is the same. They are rejected by the system. Nobody comes and stands beside them. What you are going to do can follow the same way. You start small, you reach out to individuals. If you can help 10 people, why not? If I can design something for 10 people in New York City, that is as good as 10 people in Bangladesh. If you want to add more than 10, it will be 20. You can build it up step by step.
The important thing is if you can build a prototype, it is now a question of replication. That is the beauty, also, of social business. All you need to do is build one prototype and a very effective one, if you can do that. Then you just repeat that, and it has its own self-life; it keeps on doing. Charity is not like that. Charity has to be repeated by fresh money at every goal. That way, it has a limited application. Social business has endless application.
Help the poor people organize themselves into a business, and then hand it over to them in a way that they can handle it, so future problems can also be addressed. This will be a possibility because lots of things that we do, particularly when it comes to foreign aid, people, governments are giving something as free to a recipient government, and the recipient government owns everything. (I said ) if you want to reach out to the poor people, a better alternative would be to create those things and create institutions where poor people collectively can own it and benefit directly. That will be a much more direct, much more effective mechanism than leaving it to the government--you don't know how poor people would benefit from that. Maybe, just because governments are influenced by the rich people in the country, it will be to the benefit of the rich people instead of the poor people. That is what I was drawing attention to.
