Social innovation: Good for you, good for me
Friday, April 11, 2008
Big firms are joining the queue to follow in Muhammad Yunus’s footsteps by developing businesses designed to fix social ills.
Muhammad Yunus has for more than 30 years challenged business leaders to find radical ways of creating new markets in poor countries. The Nobel Peace Prize winner’s latest book, “Creating a World Without Poverty: Social Business and the Future of Capitalism”, is no less ambitious. It explores how big companies can invest in external partners to develop products and services that will benefit the poor.
Yunus outlines the concept of a “social business”, which he defines as a “no loss, no dividend” company with social objectives. Social business ventures are set up by a “social entrepreneur”, such as Yunus, who combines the risk-taking of enterprise with an explicit mission to address urgent problems, such as access to healthcare, sanitation, education and so on. The new products and services that these inventive individuals devise are examples of “social innovation”.
Unlike charities, social businesses do not need to keep applying to governments or foundations for grants. They support themselves by selling goods and services at cost, or at a small profit – all of which is reinvested to fund their expansion. But to do this, social entrepreneurs must find investors willing to help take a new idea to scale.