Social Business as a Sustainable Business Concept: Developed by Muhammad Yunus and the Grameen Bank

Grameen contributed its knowledge, local roots and local know-how to define the area for project experimentation. There was a local branch of Grameen Bank there, along with a well-established network of women who had received micro loans from the Grameen Bank. For its part, Veolia Water contributed its technical expertise in choosing the water treatment method using river water which is arsenic free rather than ground water a traditional technology producing water of a quality meeting the WHO standards and in building a treatment plant and supply network appropriate to the geography.

GVW chose a proven technology that would guarantee the best quality water possible for a limited cost. The joint-venture also benefited from Veolia Water credibility as a large French company in a country where the residents do not trust the quality of the goods and services produced by local businesses Blanchet, The Grameen Bank borrowers were employed and charged with opening the tap points and managing water distribution.

In spite of repeated urging from GVW staff and follow-up by the Grameen employees to encourage the villagers to use the tap points, the residents of Goalmari did not seem to change their habits and continued to use water from the wells, even when they were contaminated by arsenic and, in some cases, marked with a red cross.

Based on consultations with the residents of the different villages of Padua, decisions were made on tap point siting and the organization of service schedules, role of the dealers, payment, etc. The initial maximum distance of m between a tap point and the houses to be served was reduced to 50 m. More resources were assigned to analyze the obstacles to consumption of arsenic-free water. It would seem that, while a need for drinking water had been identified upstream of the project, it did not mean that there were a corresponding market Simanis, Thus, after planting the seed, a better process for community participation seemed necessary to help change habits and create demand and a market Hart, It was decided to initiate a process of mutual commitment and participation with the communities, combined with social innovation modeled on the principles of the BoP Protocol and other multidisciplinary approaches.

The BoP Protocol 2. The protocol - to be considered as a milestone for BoP movement more than a ready to use definitive tool Simanis, - is used by the IIES in combination with complementary deliberative approaches to multi-player, multi-criteria innovation and evaluation Vidal, The study revealed the origin of some of the obstacles and will enable GVW to embark on a comprehensive new and more-targeted action plan.

As in any research, the actions are evaluated for their effectiveness and pertinence and are then corrected, deployed or abandoned. They capitalize on the credibility of a large French company to promote GVW water. The women selling water from the tap points were also recruited with a view to promoting entrepreneurship franchise. The villages were too small, however, to identify the right people for project promotion: In a second period, different types of distribution were added and tested, for example, private individual and collective connections.

Revenue generated by sales of water containers in an active market will finance expansion of the rural market. It wanted to design a hybrid economic model called cross-subsidization that combines revenue-generating activities RGA: Thus, over time, investments that are too big for rural communities to bear can be financed through a sufficiently long amortization period and effective formulas for pooling or equalizing the costs and revenues. In this manner, Social Business is relying on a process of economic sustainability through economic stabilization. GVW is expected to break even rural and urban operations combined in In the mean time, profits from the urban segment can go to expanding the amount of water consumed in the rural Goalmari and Padua areas.

Muhammad Yunus

In the end, the performance level achieved in the rural areas and the viability of the business model would attract new outside investment to respond on a larger scale to the public health problems of rural communities in Bangladesh. A change in scale is possible because the structure will have learned from its initial experience and because the money to finance replication will be available once the capital initially invested is built up again. For a more efficient scale change, investors not chasing dividends must be allowed to invest in these structures.

We are convinced that such investors exist and that there are many possibilities Perron, These companies must be prepared to finance a pilot project and bear the costs capital investment, support, evaluation, etc. But aside from these requirements, there are gains for a company, even in the short term: Social Business puts a company on a learning curve.

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A company testing methods of action outside its habitual sphere will therefore find itself engaged in entrepreneurial learning that will change and improve its practices based on the principle of learning by doing. Aside from internal financial and strategic considerations, companies involved in Social Business projects are bound by their commitments. This implies discipline in carrying out the projects and serves as a stimulus for success and the creation of positive societal impacts. The local innovations it tests at the base of the pyramid in developing and developed countries today will give it the new knowledge and expertise it will need to meet its growth challenges tomorrow Nidumolu et al, However, even though a company has to understand and know much about new and complex social and anthropological situations, it is not supposed to be an NGO but definitely to act as a genuine company.

Companies have then to address this innovation issues and react with an entrepreneurial approach leading to a creative tension where Social Business can emerge. These are new forms of organization, combining social institutions and innovative companies seeking to provide solutions to the problems of poverty by developing inclusive approaches at the base of the pyramid.

The lessons gained from experiences in local embeddedness and deep dialogue with communities in connection with Social Business show that the stakeholders can be the source of new solutions. Through Social Business, a company learns to see itself differently. The Lancet , No. Grameen Veolia Water Ltd: Assessment of a Social Business project with an anthropologist perspective. The Base of the Pyramid Protocol: Capitalism at the Crossroads: Human Centered Design Toolkit 2nd Version. Entreprises et Social Business: Reinventing strategies for emerging markets: Journal of International Business Studies 35, No.

Lessons learned from ventures serving base of the pyramid producers. Martinet, A-C and Payaud, A. Conception, application and further reflections. Why sustainability is now the key driver of innovation. Harvard Business Review 87, No. Promoting and developing Social Business: A French Perspective [typo dans la VF]. The Journal of Social Business 1, No. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.

Co-creation with local communities for water access in rural Bangladesh: Le Protocole BoP 2.

The Anatomy Of Market Creation: Innovation from the inside out. Top 10 Lessons on the New Business of Innovation: Ethically Conscious Consumers Pursue Sustainability 4. Public awareness of the Social Business concept 5. Expansion of the Third Sector to enhance its efficiency 5. Establishment of a sustainable infrastructure for SB 5.

Social Entrepreneurship at Business Schools 5. Social Competence among the Top Management 5. The combination of the traditional way of the capitalistic thinking company, which aspires to maximise its profits homo economicus , and the selfless approach of non-profit organisations, which contribute to society and are dependent on generous and periodic donations, create a new and sustainable business concept.

This concept has emerged — mainly during the last decade — within the broader context of Social Entrepreneurship and is defined as Social Business. Inspired by the energy of Muhammad Yunus and the time the author spent in Bangladesh, one of the poorest countries on a global scale, this research will provide a scientific approach to the sphere of Social Entrepreneurship and Social Business as a specific and innovative business model. Finally, the thesis conveys an outlook on the upcoming development of Social Entrepreneurship and especially Social Business as well as proposes steps to be taken in order to guarantee the sustainability of Social Businesses within a macroeconomic and microeconomic perspective, based on the academic research and expert interviews.

The crisis we are currently facing puts us in front of a new challenge. We have split the atom, walked on the moon, linked people all over the world in the blink of an eye with technological advances in communication. However, poverty, violence, discrimination, water scarcity, illness and climate change have become even greater challenges than those we have historically faced.

New and emerging problems, such as environmental and economic collapse, terrible disease, over-population, war, terrorism and menacing new forms of weaponry challenge us to think differently. There must be the emergence of new concepts promoting sustainability which goes far beyond the current system of capitalism or social market economy in order to deal with these. The future of humanity might lie in the power and effectiveness of socially motivated and highly empowered individuals who fight for changes and commit to the society in the way we live, think and especially behave.

The world is interconnected and due to globalisation, we cannot shut our eyes to what happens in the rest of the world. The Grameen Bank as institution and Yunus as outstanding individual, were both honoured by the Swedish Committee on account of two achievements: They created a new form of business which goes beyond the classical theory of the one-dimensional homo oeconomicus [4] economic human that tries to maximise profits.

The new model combines two aspects: First, it takes advantage of the profit generating approach from the traditional capitalistic company, and second, it adds the charity aspect of social contribution as we know it from a conventional not-for-profit company such as a Non-Governmental-Organisations or Philanthropic Institutions. This extraordinary merger between capitalistic and philanthropic ideologies is called a Social Business [5] and gives rise to a new perspective of a sustainable business concept.

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Social Business and Muhammad Yunus

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'We are all entrepreneurs': Muhammad Yunus on changing the world, one microloan at a time

The publishing website GRIN. Free Publication of your term paper, essay, interpretation, bachelor's thesis, master's thesis, dissertation or textbook - upload now! Register or log in. Our newsletter keeps you up to date with all new papers in your subjects. Request a new password via email. Critics on Social Business 4. Impressions on Social Businesses 8. Acknowledgements List of Figures Figure 1: Social Business Motivation Figure 2: Embedded Social Enterprise Figure 3: Integrated Social Enterprise Figure 4: External Social Enterprises Figure 5: The World Economic Pyramid Figure 7: Sustainability Triangle Figure 8: Framework of social needs underlying sustainable development Figure 9: