Leading a business without the ‘motive’ of earning profit sounds like a myth but in practice it is happening and is termed as ‘Social Business’. According to Wikipedia, A social business is a non-loss, non-dividend company designed to address a social objective within the highly regulated marketplace of today. The theory is profits are used in a manner in which they may expand the company’s reach and improve the product or service to a greater extent than a traditional for-profit corporation.
Social business is a cause-driven business and is driven by the following seven principles:
(1) Business objective will be to overcome poverty, or one or more problems such as education, health, technology access, and environment which threaten people and society; not profit maximization
(2) Financial and economic sustainability
(3) Investors get back their investment amount only. No dividend is given beyond investment money
(4) When investment amount is paid back, company profit stays with the company for expansion and improvement
(5) Environmentally conscious
(6) Workforce gets market wage with better working conditions
(7) Do it with joy
Two classic examples of social business are Grameen Bank in Bangladesh and Aravind Eye Hospital in Tamilnadu, India.
The Grameen Bank is a microfinance organization and community development bank in Bangladesh created by Nobel Peace Prize laureate Prof. Muhammad Yunus that makes small loans known as microcredit to the impoverished without requiring collateral. The name Grameen is derived from the word gram which means ‘rural’ or ‘village’ in the Bengali language. The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied which utilizes the peer-pressure within the group to ensure the borrowers follow through and use caution in conducting their financial affairs with strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services, and runs several development-oriented businesses including fabric, telephone and energy companies. Another distinctive feature of the bank's credit program is that the overwhelming majority (98%) of its borrowers are women. Grameen Bank, which today serves more than 8.3 million people across Bangladesh and is functioning successfully for the past 35 years.
Aravind Eye Care Hospital is an ophthalmological hospital with several locations in India. It was founded by Dr.Govindappa Venkataswamy. The hospital is named after Sri Aurobindo, one of the 20th century’s most revered spiritual leaders. Given the magnitude of blindness and the challenges faced in a developing country, the Government alone cannot meet the health needs of all. Realising this predicament, Dr. Venkataswamy wanted to establish an alternate health care model that would supplement the efforts of the Government and also be self-supporting. Hence, upon his retirement from Government service in the year 1976, he established the Aravind Eye Hospitals.
Today, Aravind is more than an eye hospital. It is a social organisation committed to the goal of elimination of needless blindness through comprehensive eye care services. It is also an international training centre for ophthalmic professionals and trainees who come from within India and around the world. It is an institute for research that contributes to the development of eye care and to train health-related and managerial personnel in the development and implementation of efficient and sustainable eye care programmes.
Aravind also is a manufacturer of world class ophthalmic products available at affordable costs through the Aurolab. Aravind keeps its surgical equipment in operation 24 hours a day, which reduces the cost-per-surgery. Also, doctors focus only on performing surgery, and nurses handle pre-op and post-op care, which increases doctor productivity. These actions allow the company to give away free surgeries to the poor while still earning a profit. The hospital performs high-volume and high-quality eye surgeries inexpensively to address the needs of the 12 million blind people in India.
From April 2009 to March 2011 alone, Aravind treated over 5.5 million out-patients and performed over 700,000 surgeries for poor Indians. Aravind is a financially-viable healthcare system in India. One of the hospital’s investors is the Acumen Fund, the non-profit venture fund that invests in companies delivering critical goods and services to developing countries.
Aravind is strongly marching on its 35th year of service in giving vision to the poorest of the poor of our country which deserves salutes from all of us.