Grameen Bank - the mother of social businessWhat is a social business?
In the capitalist system, two extreme types of corporate bodies can be distinguished. On the oneHand, companies can be seen as profit-maximizing businesses, whose purpose is to createshareholder Value. On the other, non-profit organizations exist to fulfill social objectivesitshows how a social business borrows from both these entities: it has to cover its full costs fromits Operations, and its owners are entitled to recover their invested money, but it is more causethan Profit-driven. Its position in the lower right quadrant shows that it has both the potential toact as a change agent for the world, and sufficient business-like characteristics to ensure itSurvives to do so. In organizational structure, this new form of business is basically the same asprofit-maximizing Businesses: it is not a charity, but a business in every sense. The managerialmindset must be the same as in a business: when you are running a social business, you think andwork differently than if you were running a charity, even though your objective is different froma profit-maximizing Company. At the same time as trying to achieve their social objective, socialbusinesses need to recover their full costs so they can be self-sustainable. Their owners neverintend to make profits for themselves (there are no dividends), but they are entitled to get theirmoney back if they wish. Rather than being passed on to investors.Grameen bank, founded in 1976, has both pioneered the development of micro-finance,And created nearly 30 businesses designed to alleviate poverty. The article traces theGradual
development of Grameen’s expertise in formulating social business models, which
Require new value propositions, value constellations and profit equations, and as such,Resembles business model innovation. The article presents five lessons learned from thisExperience: three are similar to those of conventional business model innovation eChallenging conventional thinking, finding complementary partners and undertaking