I am not a non-profit guy not because I have any issues with them but because I'm just not wired for that. As a career corporate business strategist (trained in three business schools and I can dissect any complicated business in 15 mins), I am probably too deep into the modern day capitalism. My idea has always been if I can help large corporations make as much economic profit as they can and let them decide how to give back to the society. Having worked in many industries and non-profit is probably one of the very few that I have little experience. I also don’t work for the "involuntary non-profit", these are the people who have no idea how to run a financially sustainable business.
My view has changed over the years and I am quite eager to help companies to develop a social component (double or triple bottom line) as part of their business strategies. I think this is shaping the future of organizations. I am still not a pure NGO guy.
Here’s a conversation I overheard in an airport lounge that I wanted to share with you here:
“Let’s be clear, we are a non-profit, but non-profit is also a business.” The man said to the two younger persons travelling with him. One of two persons responded, “But we don’t make a profit and we aren’t meant to make a profit. Not to make a profit is our missions, isn’t it?” The older man responded, “The real purpose of any business is not about making money or providing jobs, it is to provide goods and services to fultil customers’ needs. The profit is only something that permits them to stay in business and attract investors and capital.” The two guys went away thoughtful. The older man turned over and looked at me and said “Do you agree?”
He is right. Businesses’ number one goal is to satisfy customers and provide value. Monopolies are only temporarily (thank God) and duopolies last a little bit longer. And if satisfying customer means more than fulfilling their physical needs, then business should try to think beyond products. That’s where social innovation crosses over with business innovation.
During the past week, I’ve talked with some entrepreneurs from India (tea), Scotland (spirits), Toronto (online mkt and travel), Stockholm (communications) and New York (media). They all have some disruptive elements in their business strategies. A few of them have a social component in there too and that’s makes their business ideas powerful. Just look at microcredit, I think it may eventually become just something that every business does in one shape or another. Microcredit has attracted untold billions of dollars. Grameen Bank alone disbursed $4 billion in microloans over the last 10 years, and it now has 7 million borrowers in Bangladesh. In India, about 1,000 microcredit organizations and 300 commercial banks lent $1.3 billion to 17.5 million people in 2006. Worldwide, 3,133 microcredit institutions provided loans to 113.3 million… a growth industry.
Microfinanciers use innovative contractual practices and organizational forms to reduce the risks and costs of making loans, such as lending to groups, rather than just to one person. Some microcredit organizations give their clients more than loans, offering education, training, healthcare, and other social services. Typically, these are NGOs or owned by customers or investors who are more concerned about the economic and social development of the poor than they are with profits. There is no reason this cannot be a business.
Not sure you’ve heard about Kallari Rainforest Chocolate (70% Cacao—medium dark) and it was made by the Kichwa people in the Amazon in Ecuador. Through it’s 50 X 15 initiative, to connect 50% of the world’s population to the internet by 2015, AMD has been working in small villages in Latin America and Africa and they helped set up the Kallari cooperative in Ecuador. The wrapper reads “the only indigenous cooperative that harvests, processes and markets our very own line of chocolate.”
By linking the people to the net (here's where Web 2.0 can be very powerful0, AMD also helped establish a global market for their incredible product. The Kichwa of the Kallari villages are using their own form of collaborate innovation and social networking to create organically-grown (no GMOs), delicious chocolates that people can by and feel great about it. If they can do it with chocolate, why can't you do that with hundreds other things. Let's start with tea.