Why Yunus likes to be known as promoter of 'social business'

Nobel Peace Prize winner, Muhammad Yunus was in India recently to promote the concept of social business and to discuss ways to tackle social problems ranging from poverty to poor healthcare.

Mohammed Yunus is no longer known as the pioneer of micro finance or even a Noble Laureate. He prefers to be now known as a promoter and founder of 'social business.' This is a concept that Prof Yunus believes will help him fulfill his mission -- to remove poverty in a way that its traces are only found in museums.

Speaking to a small group of business professionals in Mumbai on Monday, Prof Yunus explained that his emphasis now is on devising ways by which there is more 'value' creation rather than just making profits.

Talks like these explain why Yunus was honoured by the Nobel committee with a Peace Prize, rather than one in economics.

For what he is proposing, and putting in action on the ground, runs counter to the most basic assumption of modern economics. Why would anyone run a business except to make a profit for themselves?

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For those who want to concentrate large amounts of money wealth in their own hands the answer will be an emphatic 'no'.

But some people are willing to make a distinction between 'operating profit' and amassing wealth. They are responding to Yunus' appeal and launching social businesses.

According to Yunus' colleague Hans Reitz, of the Grameen Creative Lab, the same tools that are used to make money can be used for social business.

But just what is a social business? For Yunus the concept evolved as he sought to go beyond the limits of micro finance -- which left unemployment untouched.

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Yunus set about asking how the job seekers might become job givers. Many of the unemployed youth had seen their mothers run successful micro-livelihoods on the basis of the loans given to them by the Grameen Bank which Yunus founded over three decades ago.

This gave birth to the Grameen Phone Company, now the largest cell phone enterprise in Bangladesh.

As a social business the company makes an operating profit that enables it to keep expanding its services but the 'profit' it generates is in terms of social value.

So Yunus' definition of social business is a no-dividend company that sets up an enterprise for the purpose of solving a social problem and ensures that the investment is returned but no surplus is generated for the investors.

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For example, the French food products multi-national Danone has come on board to support this idea and launched a joint venture with Grameen Bank in 2006.

Yunus invited the company to find a way to address the problem of chronic malnutrition in Bangaldesh. Danone came up with a micro-nutrients rich yogurt that is now sold both in cities and villages of Bangladesh.

What was Danone's role? After all, yogurt has been made at home for centuries in Bangladesh. The trick lies in making the yogurt tasty after the chemical micro-nutrients have been added which, Yunus says, is not possible with the home-made yogurt. That's when Danone comes into the picture.

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This venture satisfies Yunus' criteria of a social business in many different ways. The yogurt is made at small plants by acquiring milk from the vicinity. The supply chain remains short and thus it avoids having to create a cold chain -- which would increase the costs.

It is cross-subsidised by charging more in cities and selling it for half the price in villages.

Many problems look like they cannot be overcome, said Yunus, but still we need to defy those difficulties by asking "why not" and start somewhere.

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He is quite clear that promoting social business does not imply that the rest of the economy should close down.

Instead, said Yunus: "We are saying there are problems we can solve through social business which otherwise was done through charity."

Thus his emphasis on encouraging conventional companies, including multi-nationals, to make social business ventures a part of their enterprise.

Yunus has his own problems back home in Bangladesh, where he is at odds with Prime Minister Sheikh Hasina, which has resulted in turmoil at some of the institutions set up by him.

But his mood at the small gathering in Mumbai was upbeat, futuristic and entirely focused on promoting social business innovation.

Let us compete for doing good and making people happy, said Yunus: "Profit has become a habit, an intoxication. We keep doing it because there's no other game in town."