micro presentation What is social business?

What is social business? – The basics A new branch of capitalism… a structure featuring Motivation to address market failures Self sustaining business model Reinvests surplus funds or returns dividend Pays market competitive wages and above market employee conditions Moving away from profit maximisation as being the sole mission of commercial activity… Founded in sustainability, economic, social and environmental. Concept has been championed by nobel prize winner M Yunus and is now his main focus having moved away from micro-finance. Reinvests all surplus monies (profits) into growing business to serve more people/solve more issues or provides a small dividend to poor owners of the company. Must pay market or above rates of pay for many positions in order to attract and retain skills, experienced and talents employees. No point operating a business that can only afford to pay tiny wages as this will severely handicap the success of the business.

What is social business? – The details Conjecture of the definition inclusions/exclusions of social business/entrepreneurship… Prof. Yunus “Reinvest all surplus funds, investors seek SROI not ROI, type 1 and type 2” Elkington & Hartigan “Can return some profit, 3 models for SE – leveraged non-profit, hybrid non-profit, social business” The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business. Yunus - Types of Social Businesses Type I: focuses on businesses dealing with social objectives only. Eg. The product produced is for the benefit of the poor. Type II: can take up any profitable business so long as it is owned by the poor and the disadvantaged, who can gain through receiving direct dividends or by some indirect benefits. Eg. The product could be produced by the poor but exported to an international market while net profits would go towards workers benefits. Elkington – Three models of social entrepreneurship 1. Leveraged non-profit ventures: creating partnerships in the community to provide a service/good for the disadvantaged. Often strong religious ties. Not revenue generating, often more like a movement that relies on support from external parties. 2. Hybrid non-profit ventures: many modern philanthropists are in this category. Business model includes revenue generating and donations. All areas for funding, though not normally attracting investors seeking anything other than a social return (SROI). Often has some sort of marketing of products or services. Returning some profit is not out of the equation. More like a 50/50 split between charity and for-profit. 3. Social business: generates profits which are reinvested to serve more people (similar to Grameen). Target investors seeking a combination of financial returns and social returns. Better to achieve scale. Targets investors seeking a mix of SROI and ROI. An example given in book is SKS (though not so sure about that!)

What is social business? – My twist Social business as an ethical approach to business… Not only suitable for BOP “poor people” Part of a wider sustainability shift in capitalism Business that tackles social & sustainability issues Creates shared value Self-sustaining business model Often multi-sided business model for strongest economic sustainability, legitimacy and reach Why not combine this social business ideal with any number of possibilities from government, NGO, charity and corporation. As part of a wider shift towards sustainability in capitalism. NGOs and charities can develop self-sustaining business models that generate revenue, therefore not reliant on donations. Corporations can channel their CSR spend towards social business model foundations or divisions of their organisation. Or corporations to adopt elements of slide 2… such as above market conditions for staff or solving a Shared value - Make profit and benefit all stakeholders. This can often re enforce for-profit business models through the creation of relevant sustainability projects e.g. tourism.

What is social business? – Examples Aravind eye care http://www.aravind.org/ Naandi safe water http://www.naandi.org/straight_from_heart/safewater_15c.aspx Grameen Adidas http://www.thedailystar.net/newDesign/news-details.php?nid=130925 Grameen Bank http://www.grameen-info.org/ Star Shea http://www.starshea.com/ & http://www.grameencreativelab.com/live-examples/social-business-initiative-in-ghana-starshea-ghana.html

Further reading M. Yunus “Building Social Business”, Public Affairs J. Elkington & P. Hartegan “The Power of Unreasonable People”, Harvard Business Press U. Haque “The New Capitalist Manifesto”, Harvard Business Review Press http://www.yunuscentre.org/ http://www.grameencreativelab.com/ http://www.skollfoundation.org/ http://www.ashoka.org http://bamboozling-bombay.com/social-business/