Basic-Social Business Concept

8/12/2019 Basic-Social Business Concept

1/16

Social Business Concept


2/16

Session Objectives

Understanding Social Business Concept Philosophical grounding or underpinning

Failure of capitalism: externalities, inequality, pollution

Components of the Social Business Economic and Market

System


3/16

Understanding Social Business

What is Social

business

A. Business to solve

Social Problems

What is thedifference between

usual business and

Social business

Why we need to

call it business and

NOT social work or

charity

Should CITIZENStake actions?

Why not

foundation , or

NGO, or charity

fund

Isnt it the

governments job to

solve the social

problems andinfrastructures

Businesses are

already doing it

CSR, Isnt it?


4/16

What is Social Business

A social business is a social problem solving basedbusiness from which investors take out only theoriginal investment out of the profit generated and donot take any further dividend from it

The goal is to make it sustainable for the sake ofsolving a social or common citizen problem


5/16

A Social Business is a Business

A social business is also a business serving the market

but profit is NOT the bottom line (intermediate line)

Profit is just a means to be sustainable to continue on itsown

Bottom line is benefits to the society and poor

Products and services for the poor

Food, nutrition, shoes, water, cloth, mosquito net,education, health services

In a market oriented way, not a CHARITY

Indicators:

How many people get the benefit/ avoid a harm

how many people are employed


6/16

The Idea of Social Business An idea whose time has come

Capitalism II capitalism needs reformation and reengineering. Paradigm shift of economic theories from Adam Smith selfness to Yunus

selflessness Social business to take a place in the economic and market structure

Social business is a non-loss non-dividend business

Solving a social problem in a sustainable way investors will invest in the business as shareholders,

will get the dividend or return on investment up to the amount of original capital

they invest,

and then will not take any dividend beyond that.


7/16

SB concept: Why would anyone invest in a Social

Business People will invest because they believe in a cause a social problem that

needs to be solved.

For example, child nutrition, population or public health, hygienic toilet, clean

water, good food, youth employment and so on.

A lot of philanthropic money is already spent (some wasted) as one waygive away to many individuals and organizations.

Many give away just to avoid the hassle of fund seeker or face saving

A portion of this can surely be attracted to Social businesses

who will dislike to see their money keeps coming back whilebenefiting society and people

SB just combines the philanthropic intention of the investors with

the market sustainability spirit of business


8/16

SB concept: Why Cant NGOs and Nonprofits cans solve all

those social problems

NGOs and Trust and Charity and other non profit entities will be

there and continue.

But major problem with most NGOs

they depend heavily on external or donor funds which are uncertain to

find year on year and

they have to devote one major portion of effort in chasing fund ratherthan chasing the social goal itself.

Scope of corruption is evident.

Tight reporting (for accountability and corruption) hold back

creativity and dynamism.

Again, NGOs devote more time on reporting formats than goals itself.

So in many cases, NGO model can be replaced with more

sustainable social business model.


9/16

SB concept: Why NOT or shouldn't the Government do it? Isnt

government already doing it?

GOVERNMENT

Why it would mind if some SBs make their job easy

any sensible government would love it! Embrace it!

Yes, GOV is already doing many things

PPP, outsourcing, privatization

All to make GOV more efficient and effective/// to reduce load

Yet experience is less glorious in many cases

Confidence in government is declining // GOV is such a huge machine

to put management into work

Debate ongoing: what and how much government should do? Large

vs. minimal

The role of government is of enabler and facilitator of SB

The role of SB is to help government by solving some of the

common citizen and social problems in a market sustainable way//


10/16

SB concept: So what is the differences between PMB and SMB

Profit motivated selfishness

motivated by market gap driven

profit maximization for the investors

and shareholders

leaves the social problem to the

Government and NGOs. Businesses

should do business, they will take

care of the social stuffs.

Key Success Indicators or KeyPerformance Indicators are profits,

revenue, market share, payback

period, rate of return, and growth;

more of everything is good.

Social problem motivated -

selflessness

motivated by solution to a social or

community problem

A social business takes up the mission

of solving social problem in a

sustainable market oriented way

either separately or may partner with

PMB, government, or NGOs.

A SB KPIsare broadly two:

no of people benefited and

no. of people getting regular and

sustainable employment.


11/16

SB concept: So what is the differences between PMB and SMB

In a PMB CEOis always on the run for

achieving payback as fast as possible

on behalf of shareholders;

Shareholders are seeking ROI, capital

gains, higher the better (10 % isunacceptable, FD gives 10%)

follows the consumers from up

down,that is, they target who can

pay morefor their products andservices; focus on HNW high value

customers.

In SB, a CEO must ensure revenue

minus cost, a surplus to be self

sustained but fast ROI itself is not a

super goal, social impactis;

Shareholders seeking sustainablechange and development, rate of

return does not matter

follows the consumer from down up

who cannot afford to pay atprevailing market price (even at a low

end segmentation price of the

PMBs), so a SB wants to start at a

price the poorest can pay


12/16

Social Business: example 1

Need: nutrition for children Problem: poor people cannot afford

nutritional food for their children

Solution: Grameen Dannon company produces low priced yougurt for children. Now

poor people have access to nutrition.

Indicator:

how many children get access to nutrition, howmany escape diseases due to malnutrition


13/16


Need: water safe drinking water Problem: poor people cannot afford bottled

water; Arsenic and other problems in drinkingwater make it expensive to have safe water.

Solution: Grameen Veolia Water Company.

Water treatment plant in need area to supply safedrinking water to the poor.

Indicator: how many people get access to safe drinking water;

how many escape diseases due to unsafe clean water


14/16


Need: safety from mosquito

Problem: poor people cannot afford mosquito

nets and prone to malaria

Solution: Grameen BASF Chemically treated mosquito nets for the poor.

Indicator:

how many people escape malaria and other

diseases due to mosquito and other insects.


15/16


Need: access to healthcare Problem: poor people do not have access to

doctors consultation and health service advice.

Solution: Grameen Intel

Utilizing ICT to create sustainable model to ensureaccess to healthcare in remote areas.

Indicator:

how many people get access to healthcare servicesand advice. How many escape simple diseases due tolack of access to such services.


16/16


Need: cover the barefoot - shoes

Problem: poor people cannot afford good qualityshoes

Solution: Grameen Adidas No child or adult without shoes; its pleasant with

shoes to walk on dusty and shattered roads;

Also it protects people from parasitic diseases.

Indicator:

how many people get to buy such low cost shoes; howmany escape parasitic diseases due to walkingbarefoot and using latrine barefoot.

Basic-Social Business Concept

Documents

Transcript of Basic-Social Business Concept