I just finished the latest book of Prof. Muhammad Yunus (founder of the Grameen bank and 2006 Peace Nobel Prize) called “Creating a world without poverty“.
I’d liked his analysis of capitalism and more precisely his vision on the far too simple way we are dividing the economic world: On one side companies with only on objective, maximizing profit and on the other side none profit organizations in charge of taking care of poor people & environment.
You, like I first done, will object that now big firms have sustainable development and CSR programs. that’s true but at the end of the day what is the one and only indicator the market will use to rate a company : PROFIT.
So if a CEO has to choose between profit and doing a good action, he will choose profit in 99% of the time because it’s what the market expects.
You know what it’s normal and Prof. Muhammad Yunus find that normal also.
That’s precisely what is liked in his approach, he is not an anti-everything kind of guy but a very practical and realistic one.
He proposes to create a new business concept: The social Business. A social business will be have the same mechanisms as a standard business but with two major differences it’s first goal is poverty reduction instead of making profits and propose products and services that’s enhance poor people life.
They will not distribute dividends, the investors will only get back their investment that’s all. So it will help to low products and services prices.
Social businesses and standard businesses will compete on the same market and at the end, consumers will decide.
I think it’s a brilliant idea it will give talented people another option than “profit companies” without sacrifing their revenues (remember a social business will be pay the same salary as a standard business) plus it will leverage the money given to non profit organizations by giving them the ability to get back their investment instead of just spending it.
My only concern about social business is how do we ensure social businesses keep their structural costs sharp without the profit pressure from the shareholders (really important to be able to keep the lowest prices). The board members will have to play hard on this otherwise it will turn into an inefficient administration and then back to beginning.
I strongly recommend this book and to think about this social business concept, if you have any input or comment, feel free.
On my side, I have a idea for a social business, I work on it and I keep you updated.
