Thinking outside of the box yields good results

Perhaps it’s time to build our policy and practices on the basis of pushing wealth up, writes Pierre Heistein.

At the One Young World (OYW) summit in Bangkok last month, Muhammad Yunus laid down an interesting challenge to the delegates – when looking for a business opportunity, do the opposite to what business is doing now.

The OYW summit is an annual gathering of 1 600 young leaders from 196 countries. The purpose of the summit is to expose these young leaders to the guidance and experience of counsellors such as Kofi Annan, Bob Geldof, Fatima Bhutto, John Landau, and John Simpson and Liya Kebede. It is not a talking shop – delegates are encouraged to take action to address major social issues in their own lives.

Muhammad Yunus – one of the counsellors – is a Nobel Peace Laureate from Bangladesh. He is the inventor of microfinance as a banking system which he built into popularity as the founder of the Grameen Bank. Grameen’s business model of lending to the poor and requiring no collateral when doing so – an idea once thought of as banking heresy – is now a common service offered by banks across the world. Capitec is the largest example of such lending in South Africa.

But Yunus was not at OYW to talk about banking. Rather, he wanted to unsettle the delegates’ view of how business can work.

He explained his strategy with vigour. “I looked at the banks and how they do it, I learned how they did it, and I did the opposite. They went to the rich, I went to the poor. They went to men, I went to women. They wanted collateral, I didn’t ask for collateral. They went to the city centre, I went to the rural villages. You don’t have to follow the rules – you turn it around and suddenly you can do things you could never do before.”

Inequality

Now Yunus has turned to a different challenge, more controversial and with even higher positive potential than his banking upset. He asks why business always has to make money? He points out that inequality is the ugliest consequence of our current business practices and economic system. The wealth creation engine works, but it naturally sucks wealth to the top instead of spreading it across all role players in the economy.

Yunus did something else. “I started businesses with the goal of improving human lives without the goal of making money, for myself or for anyone else.”

Yunus did something else. “I started businesses with the goal of improving human lives without the goal of making money, for myself or for anyone else.”

“It works – when you take out the business engine and use it to solve human problems suddenly it becomes a very powerful engine,” says Yunus.

While the concept is not his own in its pure form, he is considered the father of the movement he coined “social business” and is responsible for bringing it to the fore among large and small companies across the world. Some countries have special registration options for firms declaring they will operate as a social business.

‘Trickle-down effect’

Yunus does not campaign for all businesses to switch to this model, he knows full well that some people will always be motivated by personal financial profit. But he proposes that the assumption that all humans are selfish and will only work for personal gain is wrong. Humans are also selfless and many will start businesses to solve the problems of the world if the right model can be taught – their income will be their salaries and their profit will be the change that they see happening.

Poverty and unemployment is a creation of the system we have built. If we change the system, we can change its consequences and even those who still have their eyes on the financial bottom line can gain. Current economic policy and business practices often fall back on the “trickle-down effect” – the idea that as long as wealth is being created it will trickle down to all areas of the economy. We can see all around us – and especially in South Africa – that this doesn't work.

Perhaps it is time – as Yunus says – to turn the system on its head and build our policy and practices on the basis of pushing wealth up and measuring business success by different outcomes.

* Pierre Heistein is the convener of UCT’s Applied Economics for Smart Decision Making course. Follow him on LinkedIn /in/pierreheistein.

** The views expressed here do not necessarily reflect those of Independent Media.

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