Today was a very special day in Copenhagen for the people looking for ways to make a better world through business, since we had no less than three different events on Base of the Pyramid and Social Business, and with prominent people like the Danish Minister of Foreign Affairs and Dr. Muhammad Yunus. Let me hear tell you a bit about the conferences and this interesting field that is developing in the intersection of business, development and humanity.
The first conference was organized by UNDP and the Danish Ministry of Foreign Affairs about doing business with the Base of the Pyramid (the 4 billion people living on less than 4 usd a day). This conference marked that the Danish Government is now launching a special department that will provide advise and knowledge for private companies and other organisations that would like to enrol in business ventures with both a social and a financial bottom line (www.pppprogramme.com). As the minister Ulla Toernaes said: “We need to challenge the conventional perceptions in business of poor people not being attractive as customers, not needing modern technology, and that developing countries are not interesting as markets. This is about addressing the unmet needs of poor people while making a profit. To help improve the quality of life and living conditions”.
The second conference was nothing less than Dr. Muhammad Yunus visiting Copenhagen at an event organised by the Danish thinktank Monday Morning, in collaboration with a handful of other organisations from both privat, public and NGO sector – amongst others We Collaborate and Center for Socioeconomic Enterprise. The topic of this conference was Social Business and its relevance for the Danish society and for solving the global challenges. As Yunus said: “There is nothing wrong with poor people! There is something wrong with the structures, the policies and the systems. Take a look at the world right now and tell me whom is it that is not credit worthy? It is not the poor! They pay back their loans better than anyone in the system”.
The third event was a workshop organised by the Danish company Designit in collaboration with Niti Bhan from Emerging Futures Lab in Singapore. This smaller workshop was introducing the concept of Base of the Pyramid as a business opportunity for Danish companies, and how they can build new solutions based on insight into the needs and everyday lives of people in the base of the economic pyramid. Unfortunately this event was at the same time as Muhammad Yunus, so I had to make a tough choice, and decided to take advantage of the opportunity to meet mr. Yunus.
The intersection of business and development
The concept of Base of the Pyramid was coined by the Indian management professor CK Prahalad with his article “The Fortune at the Bottom of the Pyramid”, which was followed by a book in 2004. The key message is intended to reach the ears of business and tell, that although the poor half of the world’s population don’t have very much money, they actually do have some money, and they very much need all kinds of products and services. So seen from a business perspective, there is a market. Or at least an emerging market. The challenge is to develop products and business models that meet the need of poor people, that are affordable, and that can be distributed. So the aim is to improve people’s lives and at the same time make a business. There are many cases and examples of this. To mention just a few Danish ones… The Danish company Fanmilk in Ghana are providing disabled people the opportunity of becoming micro-entrepreneurs by purchasing a three-weeler with a cooling box and start selling ice cream. Or another famous Danish company MyC4.com, who provide an online platform where people with money can invest in entrepreneurs in Africa and thereby supporting a social and economic development.
Seen from a development perspective, the aim is of course to create development and work towards a better world – for example by working towards the UN Millenium Development Goals. And it is about enabling people to live a life that they value. Being poor is so much more than just a matter of income. It is characterized by a lack of opportunities to choose for oneself and ones family, and to have wellbeing and a happy life. And we must admit, that despite a lot of effort from the developing institutions and organisations, they haven’t really been able to solve the challenges of the world in terms of poverty, health problems, discrimination of women, lack of clean water and electricity, etc. So it is time to try out new models and new ways of achieving development – and a development that is sustainable both in terms of social factors, environmental factors, and financial factors. This is why the developing sector is also welcoming more initiatives from the private sector. UNDP has recently launched the initiative Growing Inclusive Markets, which is a base of insight and resources for building products and business models, which not only meet the needs of poor people, but also involve them in producing the products, thereby creating an income and hopefully improved living standards.
A new kind of business?
At these conferences today we heard the Minister of Development talk about the importance of the private sector as a strategy to achieve development; we heard NGO’s talk about ways to collaborate with private sector; and we heard companies talk about their ambitions of bringing improved nutrition, clean water, and local economic activity to rural or urban areas in developing countries. So this seems to be a new kind of business awakening here. The question is, if this kind of business will be good enough.
Will the existing business models be suitable for solving some of the world’s challenges? What are the implications of communities being dependant on private companies for the supply of clean water? Well, you might argue that this ought to be the responsibility of the government. But what if the government is not able to or willing to provide this basic infrastructure? Then there is not much human right involved in being a citizen. Then maybe the role of being a consumer with the right to choose is a more powerful position. At least it provides clean water.
This question about ways of doing business is what Yunus is raising. Based on his amazing and inspiring work in Bangladesh and with the Grameen Bank, he advocates for a new kind of business called social business. “Is the purpose of human beings only to make money? Are we that one-dimensional?” he asks, and quickly answers himself with a no. He finds that capitalism is only half developed. That it only got the selfish part right about maximum gain, but that there is also another part of humankind that has not been reflected in the existing economic system. This is the caring and altruistic part of people, where the purpose is not just to make money, but to be able to help another living person. And to use money for that purpose. Maybe you can twist it around and say, that the question is whether you have people working for money or money working for people. Yunus is not opposed to business as usual. He doesn’t want to make a revolution and tear everything down. His point is that the profit model of business is to busy making money to care about the social aspects. And that in order to solve social and environmental challenges it is important to take off those profit-maximising glasses and instead think in terms of how to maximize the social benefits and only using the profit as a means to drive the engine.
I must say, that in the panel discussion after Dr. Yunus’ presentation, the participants from the business sector and the Minister herself had a bit of difficulty seeing the relevance of a pure social business to their work, but they did see the relevance of business focusing on meeting the needs of the world, and of making products and business models that are not exploitative, but supportive of a sustainable development.
There is no conclusions to this discussion… Only the exciting news that the world is now seeing a new development of collaboration between all sectors to find solutions to the needs of the world. Some of the challenges are how to collaborate across sectors; how to balance the purposes of people, planet and profit; how to ensure that globalization is making room for the diversity of people in the world; and how to actually understand what is needed to create a sustainable development for people and planet.