A kinder business model

Here’s the thing about traditional capitalism and why it will never produce a prosperous society: Profit positively correlates with problems. The more problems there are in this world, the more money there is to be made off them. Think about it:

1. The more car accidents, the more money mechanics make
2. The more unhealthy people, the more money drug companies make
3. The more crime, the more money prisons make
4. The more bombed cities, the more money Exxon makes fixing them

Now I’m not saying that your local mechanic is leaving marbles on the road. But business is business and the responsibility of managers is to ensure profits, jobs and growth for their companies. So theoretically, in the context of my previous examples, this would discourage these companies from actively seeking disease prevention, rehabilitation and peace. I’m going to give the local grease monkey a break 🙂 (Just in case they are reading this)

Well here’s what we can do about it. We can start making businesses who’s core values are to positively impact on society instead of profit off it. Instead of developing products that provide material value, we will develop ones that provide for the core needs of people. And the key point is that we will measure the success of the business based on the social impact, NOT profit.

The core difference between this and a charity is that it is self sustaining. They don’t take donations, rather they earn money on the products and services they sell. It is a business. However, decisions are based upon the core goal to remedy a problem and any profits made are invested right back into helping reach the business goal.

For example, you could offer your services in helping set up vegetable gardens for schools. The schools could use the garden as a learning resource and even use the crops for food. Your staff would be paid a reasonable wage and any profits would go into helping reaching more schools, improving your services or lowering your fees.

This may not seem revolutionary but here’s why it’s important. In attempting to think of an example, I focused on brain storming services that could better society. Normally, I would have thought of products that would be profitable. Maybe a utensil that would unnecessarily use up natural resources to make a trivial kitchen task easier. If we all start to think like this we will start to solve problems and reduce this culture of selling superficial products for money.

This isn’t an original idea. And yes it works! It’s an idea presented by Nobel Peace Prize winner Muhammed Yunus. The concept is termed Social Businesses and he cites examples of such businesses that he has created in his book ‘Creating a World Without Poverty’. For example, he recounts in detail the creation of a cheap, nutritious yogurt to sell to poor villagers in Bangladesh. The company created was an off-shoot from French food manufacturer Danone and as a result has improved the health of thousands of poor
villagers.

So my bright, enlightened and entrepreneurial peers. When you go off into the world of business consider this. Are you in it to rake in a bit of cash? Or help steer your world in the right direction and bask in self satisfaction not profit?

Advertisements

3 thoughts on “A kinder business model

  1. Love it! Absolutely agree. It’s something I’ve thought a lot about too.

    Personally my hate is for corporations/companies. Companies are legal fictions – treated as people but with certain keen advantages over real humans – and they’re profit driven machines. They can bend and break rules, command tremendous resources, and cover up wrongdoing, all in the search for extra profit.

    They’re governed by law, and basically they can’t be for anything other than profit. Companies don’t owe obligations to society at large – they’re true icons of capitalism, that is, they’re greedy and focussed only on getting profit for itself and its shareholders. Directors – those who control companies – are a kind of employee bound to seek profit for the shareholders. They have the most power in companies, but are powerless to turn them toward social goals (generally speaking). Not that any of them would want to, anyway, since to become a company director you’d normally be a greedy capitalist pig.

    What’s my preference? Ban incorporation for profit-driven businesses. Incorporation is the devil, but those sorts of protections and legal constructs could be very useful for social projects, so I don’t think it should be banned outright. We currently do have incorporation not-for-profit – that’s what incorporated societies are. But in my opinion if a business wants to go for profit it should take a more personal form (like partnerships or sole trader forms) and thus there should be strong elements of personal involvement and personal responsibility. Less of a legal fiction, less able to hide wrongdoing, less able to build massive resource bases and control the lives of thousands, and less likely to be constrained to forever seek that extra bit of profit at the expense of society as a whole.

    To summarise:
    Incorporation for anything-but-profit
    No incorporation for profit

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s