Five lessons the social entrepreneur has learned in his efforts to help the world discover a new kind of capitalism
By Hope Katz Gibbs
In his 2007 New York Times bestseller, Creating a World
Without Poverty, Dr. Muhammad Yunus said that a social business must be at least as well managed as any profit-maximizing business.
And with his new book, Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs, he shares his experience creating Grameen Danone (the yogurt company, which is known as Dannon in the US).
In the 226-page hardback, published by Public Affairs Books, Dr. Yunus explains that the challenge of creating Grameen Danone has not been made any easier by its status as a social business — if anything, just the opposite has been true.
“It is difficult to design a business that generates strong and growing sales of a useful product, so that the business can sustain itself,” he shares. “It is also quite difficult to design an organization that provides a clear, measurable benefit to society or to a significant segment of society — for example, better nutrition for the poor. It is even more difficult to design a social business that does both things at the same time.”
“GOD IS IN THE DETAILS,” Dr. Yunus believes
Those words were his advice to readers in Creating a World Without Poverty, and highly applicable, he shares, when it came to building Grameen Danone. In an effort to help others trying to create a social business — actually any business at all — he offers details about the five lessons he has learned.
1. Be flexible, yet never lose sight of your central goal.
Dr. Yunus says it was necessary to make changes in the business design with Grameen Danone, despite the fact that analysts spent months planning before ground was broken on the factory or a single cup was produced. “Life is just too complicated for anyone, no matter how farsighted, to predict every contingency,” he believes.
His advice: “Don’t be afraid to adjust your business plan when circumstances make it necessary. But to avoid becoming purely reactive, flitting from one program to the next, always remember the central goal for which you established the social business in the first place.”
2. Immerse yourself in the culture of the people you intend to serve.
“As every businessperson knows, understanding your customer is one of the indispensable keys to success,” Dr. Yunus explains. “And this means, among other things, understanding and empathizing with the culture of the people you serve: their values, dreams, desires, fears, aversions, likes, and dislikes.”
This is even more important when you build a social business, he adds, for the “do-gooders” drawn to this concept are impatient with weaknesses and flaws of the people they are trying to serve.
“When you ask, ‘what’s the matter with these people — why don’t they appreciate the things I’m doing for them?’” he says, “it’s a sign you are wandering down the wrong path. Stop and rethink your plan.”
3. Use help from allies wherever you may find them.
“As I have always said, human beings have a natural desire to help one another,” Dr. Yunus explains. “It’s a motivating force that is just as powerful as the desire for profit. Social business taps and satisfies this desire to do good.”
“Therefore,” he adds, “those who are building social businesses should not be surprised when they encounter people in unlikely places who want to help — nor should they be shy about accepting the support when it is offered.”
4. Take advantage of differing opportunities in different markets.
It’s important for a social business to be financially sustaining, Dr. Yunus emphasizes. While Grameen Danone is on its way to achieving that goal, “this might not be the case if it had insisted on seeing all its potential customers through the same lens.”
So while Grameen Bank’s experience has been in dealing with rural poor women, and since the worst problems with poverty exist in rural areas among the poor, Grameen Danone found its best approach was to tackle that market — as well as the needy in cities. But they market the product differently to each group.
“In the city, it can sell yogurt at a price that is slightly higher, but still affordable to the urban poor, building sales and production volume while generating profits to subsidize the less-affluent rural market,” he says. “Though very different, the two markets support one another and work together to make Grameen Danone a stronger, more sustainable business.”
5. Question your own assumptions.
Dr. Yunus explains that initially, Grameen Danone’s nutritionists thought that a serving of 80 grams of yogurt was needed to deliver the high dose of micronutrients or children would reject its taste. But a milk crisis caused them to reconsider, and as a result they found a smaller serving could be equally nutritious and delicious.
“If you are trying to build a social business, you should periodically look back at the assumptions you’ve made and consider whether they are still valid,” Dr. Yunus insists. “You may find that circumstances have changed or that your initial beliefs were simply wrong — which may open up new opportunities you never dreamed existed.”
Praise for Muhammad Yunus
“[Yunus’] ideas have already had a great impact on the Third World, and … hearing his appeal for a ‘poverty-free world’ from the source itself can be as stirring as that all-American myth of bootstrap success.” — The Washington Post
“Muhammad Yunus is a practical visionary who has improved the lives of millions of people in his native Bangladesh and elsewhere in the world.” — Los Angeles Times
“The [Grameen Bank] has become a mecca for development economists and is being copied around the world.” — The Economist
“It’s not just Yunus’ theories [Peter] Drucker would have admired; above all, it’s his effectiveness … See for yourself. Check out Yunus’ [books]. Not only are they inspirational, they are highly informational — fantastic case studies on how to manage a business the right way.” — Rick Wartzman, BusinessWeek
To buy your copy of “Building Social Business,” click here.
Learn more: Tips from Dr. Yunus, above, are based on details in Chapter 2, “Lessons from Three Tumultuous Years,” pages 49-53, in “Building Social Business.”
About the Grameen Foundation
Muhammad Yunus is the Director, Emeritus, of the Grameen Foundation, a nonprofit organization headquartered in Washington, DC, with an office in Seattle, Washington. It was founded in 1997 by friends of Grameen Bank to help microfinance practitioners and spread the Grameen philosophy worldwide.
“We share the ideas of 2006 Nobel Peace Laureate Muhammad Yunus, but the Grameen Foundation and Grameen Bank are independent organizations and have no financial or institutional links,” according to the introduction on the homepage of the website, www.grameenfoundation.org.
The mission: As a leader in the fight against poverty in Sub Saharan Africa, Asia, Middle East/North Africa, and the Americas, its cutting-edge programs and resources have helped more than 45 million poor people, mostly women and children, improve their lives.
How it works: The Grameen Foundation collaborates with local organizations and allies around the globe to provide products and services that allow them to:
• reach deeper into poor communities with microfinance and technology services;
• provide access to microfinance and technology services among the poor and poorest in harder to reach areas and currently unserved/underserved areas;
• measure who is being reached to ensure they are moving out of poverty over time.
For more information, visit www.grameenfoundation.org.