Review: Building Social Business–The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs
July 14, 2010
Muhammad Yunus and Karl Weber
While I sympathize with those who feel that the book lacks reference to prior art, that social business has been around for a very long time, and that much of the book is somewhat similar to his first book that I also reviewed, Creating a World Without Poverty: Social Business and the Future of Capitalism, I am rating this book a five here and a “6 Star & Beyond” at Phi Beta Iota the Public Intelligence Blog, for the simple reason that he is not just doing it, but doing it on a global scale, pushing the envelope across all boundaries, and setting the stage for realizing what Nobel-candidate C. K. Prahalad articulates in The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits.
The Nobel Prize to Yanus was a righteous one–unlike the political idiocy of awards to Al Gore and Barack Obama. I can only hope that the Norwegian public shames its overly political Nobel Committee into getting back on track with awards such as this one.
My friend Howard Bloom has a new book out that complements this one: The Genius of the Beast: A Radical Re-Vision of Capitalism and of course there are others both recent and past, such as Capitalism at the Crossroads: Next Generation Business Strategies for a Post-Crisis World (3rd Edition).
Three things are changing that make this book a cornerstone book:
1) Earth is deteriorating at an alarming rate–changes that used to take ten thousand years now take three years. Climate change is a fraud, the UN at its very worst, but environmental degradation as understood by the UN High Level Panel, the UN at its very best, is real. See their report A More Secure World: Our Shared Responsibility–Report of the Secretary-General’s High-level Panel on Threats, Challenges and Change.
2) “Valuation” is changing is striking ways. “Intangible” value is coming to the fore, Open Money is surging, books such as The Hidden Wealth of Nations. We are starting to figure out that the only inexhaustible resource on the planet is the human brain; that dignity makes that brain work better; and that in the aggregate, humanity can create infinite wealth. Cf Collective Intelligence: Creating a Prosperous World at Peace.
3) The cell phone–and especially the Nokia cell phone charged by ambient energy and not needed an electrical power source, combined with Chinese cell towers powered by solar and air–and now the emerging private telephone networks such as will be displayed at Burning Man–is both restoring the mobility of humanity, and making possible the education of the five billion poor “one cell call at a time” as envisioned by the Earth Intelligence Network.
It is in that context that this book is “6 stars and beyond.”
QUOTE (p. 135). At its root, social business is about making the economy work for everyone, including the poor people at the bottom of the pyramid who are usually left out.”
Early on the author states that a key finding was that lending to women brought more benefits to families than lending to men.
QUOTE (p. xii). Poverty is not created by poor people. It is created by the system we have build, the institutions we have designed, and the concepts we have formulated.
QUOTE (p. xiv). All it takes to get poor people out of poverty is for us to create an enabling environment for them. Once the poor can unleash their energy and creativity, poverty will disappear very quickly.
This is all true, but will not happen absent one of two conditions:
a. The Rothchilds get out of the way and allow infinite wealth to happen; or
b. Enough people stop paying taxes to governments that have been captured by the Rothchilds, and turn instead to a combination of local to global one to one giving and more local trusts that refuse to fund national corruption.
The author speaks to credit as a human right, and this is provocative in part because he contrasts the failure of classical banking (which did not fail, it did what it was supposed to do and finished looting government treasures after first looting the public) with the rise of criminal loan-sharking. One can only speculate about a future in which all loans are transparent and profit in consonance with the Qu’an and the Bible.
Core points for me:
Poor are not the only demographic in need. Elderly, disabled, single moms, unemployed, prisoners and ex-prisoners, homeless, uninsured–this book and its practical reflections are relevant to everyone including former Wall Street executives in fear of mob lynching.
Particularly when empowering women, a local sales strategy is a cultural intelligence manifesto. Husbands and communities must be culturally engaged and must embrace the proposed initiative in cultural terms.
Culture is both a barrier and an enabler. Counter-culture needed (see my review of Counterculture Through the Ages: From Abraham to Acid House
Design and engineering MATTER–must pack the highest nutrition into the lowest cost container–inclusive of ecological and social costs.
Social business does not have the “luxury” of bad management.
Start small, learn fast. CONTINUOUS learning with respect to cost reduction. Plan for rapid replication. Social business is an “open”–see my online keytone to Gnomedex, “Open Everything.” On page 109 author is explicit on this point, emphasizing the sharing of information.
Dividends are social, not financial. Social business goal is problem-solving not profit-making. Intended to provide employment, help consumers, enable entrepreneurship (local to global wealth creation), provide stability.
Advertising and petroleum-based packaging have no place in social-business. The author says “re-think the entire value chain.” I have a note: Hack the value chain.
A MAJOR aspect of this book that many will miss it the author’s focus on leveraging dormant technologies, patents that are lying idle, by innovating applications for the poor that were not monetizable in the “high end” version of capitalism. I am very impressed by the SASF and Intel examples. Addidas also, striving to create shoes that can sell for no more than one euro–I learn more about the preventive health role of shoes.
A HUGE point for me is that this book also provides an alternative investment for donor countries that now lose half or more of their investments when seeking to help governments whose corrupt intermediaries cripple the investment from day one. Local trusts, the conversion of traditional companies or state companies, the establishment of social business labs, all are begging for donor country investment.
Aided by the Nobel Prize, the author has helped many for-profit companies establish social business arms that leverage the very high-value expertise in the for-profit, in essence creating intangible value outside that rewards employees inside.
Social business is NOT about personal sacrifice by the employees–pay and benefits must be comparable to for-profits, it is the objective of the business that is different.
Information technology is having a double-positive impact on disease: on the one hand aggregating information on rare diseases that are proliferating for lack of focus; and on the other, allowing the cost-effective treatment of rare diseases widely distributed by allowing remote intervention by limited experts.
Western medicine costs ten times what the same medical procedures cost in Third World (and recall, PriceWaterHouseCoopers has documented that 50% of every US medical dollar is WASTE).
Training entire medical teams in Third World instead of one doctor (only) in the West is new model.
MISSING LINK is financial and legal infrastructure for social business; this is important because it has implications for how money is raised and managed.
HUGE POT OF MONEY to be found in all Corporate Social Responsibility (CSR) funds.
To my surprise, the author feels that social businesses should be organized as FOR-PROFIT and should pay taxes. Buy the book to learn why.
He discusses emergent options including the Community Interest Company (CIC) in the UK and the Low Profit Limited Liability Company (L3C) in the US, and I am especially fascinated by the Chicago New Cooperative, journalists with integrity that want to do what corporate media in the US refuses to do: honest informative reporting.
CORE POINT: The global humanitarian crisis has not been solved by existing non-profits (including the Red Cross–Haiti is a “2% delivery” failure and also a crime against humanity).
Role of universities as monitoring entities.
Water as the next frontier for capitalism, but I am personally dubious that any existing for-profit can combine the integrity and vision needed.
Grameen Labs becoming multi-functional. Social Business Summit is something to keep an eye on, I would like to see it come to Central America, which in my view is on the verge of a political and socio-economic “break-out.”
Grameen Employment Services (GES) seeking to protect and provide migrant workers.
Major flaw among governments are the subsidies for businesses that would not otherwise survive. I recall a comparison of the healthy foods pyramid with US government subsidies in which the US government subsidies are for the worst food groups and so out of balance as to call into question the integrity of the US government.
Author speaks of “financial engineering” and how excessive profits have skewed capitalism. See William Greider’s Come Home America: The Rise and Fall (and Redeeming Promise) of Our Country to learn that financial engineering (a fancy term for fraud) multiplied financial “product” values by seventeen times against physical asset values that multiplied only five times in the same period. That makes Wall Street guilty of financial fraud to the tune of twelve times.
The author ends the book with a list of eight personal goals that are completely consistent with the Millennium Goals of the United Nations–the problem we all have, which Earth Intelligence Network has solved, is that there is no “strategic analytic model” in effect that allows for the rigorous evaluation of all expenditures; and the UN has not yet found the internal fortitude to get into the intelligence analysis business, to include the creation of a Global Range of Gifts Table that can harmonize one trillion a year in giving (see my own recent book, also free online, INTELLIGENCE for EARTH: Clarity, Diversity, Integrity, & Sustainability, for the game plan).
I must end by noting that Karl Weber, co-author of both of Muhammad Yunus’ books, has made a signal contribution that merits more work. We need many more books like this, Karl Weber clearly understands the total vision, and for that I salute him.