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Your Turn The B-School and Social Business Today's turbulent economy has under- scored the fact that capitalism isn't perfect. Even when capitalism is functioning well, there are chronic problems of hunger, poverty, home- lessness, malnutrition, economic disparity, pollution, unemployment, illiteracy, and lack of healthcare for millions. I believe it is time to save the world from the undesirable con- sequences of unbridled consumerism and globalization. It's time to look at alternate models of business— businesses that sustain themselves and the planet, instead of existing merely to maximize profit. It's time for business schools to teach social business. A social business is one that addresses an unmet need of the poor or is owned to a significant degree by the poor, or both. It works with the people it serves, helping them as they improve their own lives. Examples of social businesses are outlined in Cre- ating a World Without Poverty: Social Business and the Future of Capitalism, by microfinance pioneer and Nobel Prize winner Muhammad Yunus. Yunus expects that, eventually, entrepreneurs will found a range of social businesses, financed by both individual and institutional inves- tors. The idea is to complement profit-maximizing businesses (PMBs) and nonprofit organizations with firms whose core missions revolve around redressing a societal problem. Although average investors seek high returns, that's not the case for social investors, who typically are willing to receive a smaller return for the chance of doing good in the world. To me it seems clear that PMBs, 62 BizEd JULY/AUGUST 2009 by Munir Quddus nonprofits, and the public sector all are at a disadvantage compared to social businesses. PMBs often draw short-term investors who care too much about maximizing wealth and too little about the environment, consumer safety, and the larger com- munity. While some PMBs have start- ed to remake themselves into socially conscious corporate citizens, their eventual gains are uncertain. Mean- while, nonprofits and nongovern- mental organizations (NGOs) have done a wonderful job addressing many social problems and attracting international support for their work. But their impact is often limited if they're underfunded or inefficient. Finally, while the public sector is large and often effective, it has typically lagged in innovations and efficiencies. In contrast, social business has as its primary mission the goal of solving a social problem. Like a for- profit, it is designed to be competi- tive and succeed as a business, while it benefits from private investors. Unlike a charity, it treats its beneficia- ries as customers, not victims. Successful social businesses already exist around the world. An example is Grameen-Danone, established in 2007, which produces and sells nutritionally enriched yogurt for children in low-income households in rural Bangladesh. From design to operations, its mission has been to maximize social impact—improve the health of poor children, create jobs for women, add to the income of small farmers, and be environmentally friendly—while ensuring the com- pany makes enough profit to grow. Grameen Health Care Services Ltd., patterned after India's Aravind Eye Care, is also designed to serve both the paying patient and the poor. Both hospitals perform thousands of eye surgeries a year, using a "Robin Hood" pricing scheme in which regular patients pay market prices, but poor patients receive high-quality care at a nominal cost. There are other examples, but, in my mind, too few of them. That might be because there are three key challenges in developing hybrid busi- nesses that have dual missions: n Their concepts, theories, and practices remain largely untested, and no legal framework exists to support them. n Social entrepreneurs have few role models and case studies to guide their efforts. n It's difficult to determine what constitutes success, if the prime mea- surement is not going to be profits. For the social business, what would be the equivalent of stock returns? Yunus suggests that equity markets worldwide follow the example of the French stock exchange, which recently agreed to list "social business development fund" as a mainstream money market fund. Even in the most receptive environment, how- ever, sometimes these new outcomes are not as measurable; they may take decades to come to fruition. At least the first two of these challenges could be addressed by business schools with a bent toward social enterprise. If b-school deans take up the mantle of thought lead- ership in regard to social business, they can lead the way for an idea that might well transform both busi- ness and society. Some schools are already bring- ing social concerns into the business curriculum. Today's niche programs focus on sustainability, corporate social responsibility, and the phil- anthropic sector, which includes traditional charities and NGOs. But