There was a lot of people at the “Theatre Marigny”, in Paris a few weeks ago. So many people that not everybody who wanted to attend managed to get a seat. It wasn’t the latest trendy show…or maybe yes. The first opus of a show that can be called “how to make business without breaking the machine” or “our present business must not destroy our future business”.
On scene : Martin Hirsch (membre of French gvt. active solidarities commissioner), George Pauget (President of the French Banks Fedeeraction and COO of Credit Agricole), Emmanuel Faber (COO Groupe Danone) and, last but not least, Muhammad Yunus (Peace Nobel Prize and Founder of Grameen Bank). First thought : when an economist receives the Nobel Prize for Peace, it makes you wonder about many things. This was organized by Danone Group and HEC Business School whom I thank for the invitation.
What’s social business ? According to Yunus “A social business is a company like the others. Excepted that a standard company has one and only goals : make money and make more money. Like any enterprise it will have to find how to make money and balance its accounts in order to be financially viable. But it’s not its main purpose and it won’t seek to maximize its profits to the detriment of the “social” purpose it set to itself“. The whole relying on a principle : the current system can’t support intiatives that aims at reducing gaps, avoiding that a part of the population fail to keep up. So this role fails to the Sates. Yunus idea is to make it possible to invest on such structures in order businesses can assume a social role without relying on wellfare states.
For instance, Danone just invested in such a projet at Bogra, in Bengladesh, besides Grameen Bank. Yunus : “On the business side you have an unexplored marked with a high business potential, on the social side you can see starving people who can’t afford buying a yogurt. Social business is to try to produce locally something at the price everyone cas afford, not for a rich elite“. It was an industrial challenge for Danone too, who had to conceive a whole new product adapted to these people nutritive deficiencies. So they also learned a lot from this experience. The Credit Agricole too is investing millions with the Grameen Fundation.
Trivial ? Grameen bank lends to the poorers more than 7 billions dollars. With a failure rate of 1% which is a lot better than all the classical banks. Is there a better solution to help those people to manage to get out by themselves. Yunus laughed when he talked bout the recent opening of Grameen in New York. “We did as we did in Bengladesh and it works ! Other banks don’t care about us because our clients are the poeple they don’t want to lend to.”
But why is this so important ? Franck Riboud, CEO of Danone, told it clear and loud : “if people get poorer and poorer and can’t by goods anymore, my business is in danger. We must stop to think “short term“”. He’s the worthy son of his father, who founded Group Danone decades ago (formely called BSN) and keep his feets ont he ground : growth is key and you can’t do anything social if you don’t make money. Growth is the onlu mean to fight against poverty. But at a time when even growth creates poverty, that financial result become a goal for few people instead of being a mean for many others, that’s the very existence of our companies and jobs that is threatened. Quite the same reasonning as what made me write that logic without good sense was leading to catastroph. That’s also the evidence that, both inside and outside their walls, companies must be careful of the compatilibity between their promises to the market and preserving their ressources (also human).
Of course these are noble ideas but any manager will tell you it’s very very far is day to day job where he’s asked to break the limits every day. I’v always thought than the only way to make people adopt a given behavior is to assess and reward him on a coherent and aligned basis. At Danone, Director’s bonuses is made of three equal parts : one depends on the results, the second on their management, the thirt on their activity societal impact. QED.
Things heard…
Martin Hirsch
• Business Schools changed their discours toward their students about social and societal responsability.
• Many companies are aware of their social role. Unfortunately their initiatives in this domain are the opposite of what they do in their core business : trivial and tinged with amateurism. What we need are structured and replicable projects.
Georges Pauget :
•Too many barriers have been raised to prevent microfinance in order to protect the banking system. With the effects we all see…
Emmanuel Faber
• Beyond the financial crisis there’s an human crisis.
• Everything is about tuning between the necessary profit and the societal investment. But new tuning needs a new vision. [Note to myself : it’s the same for management and organization which are closer to my day to day job..]
• Believing than markets and processus were upper forces that exist regardless too people was a big mistake. It took away people’s sense of responsability because they thought they could not impact them although it was their own responsability.
• Putting Human at the center of the company is not a matter of value or humanism. It’s about humans as living beings.
A good news is that HEC is launching a social business chair. Things are on their way.
PS : the video is available here (mostly in French…but Yunus part is in english)
