Monday, February 05, 2007

Yunus's Social Business--Something New Under the Sun

One of the highlights of our stay here in Bangladesh has been our trip to Bogra, a town some 225 kilometers northwest of Dhaka, to visit the newest creation of the Grameen family of companies: Grameen Danone, a joint venture between Grameen and the big French company that is best known for its Dannon yogurt and its Evian bottled water. This new company is the first experiment in what Professor Yunus calls "social business," which is the main theme of the new book we are writing.

Grameen Danone is extremely interesting from almost every perspective. In one sense it is a traditional business expansion for Danone: The company is already active in many Asian countries, including India and Indonesia, so it is natural for them to consider operating in Bangladesh.

But unlike virtually every traditional business, the company has been designed deliberately not to maximize profits. Instead, Danone has agreed to take a maximum profit of just two percent on its investment, with all remaining surpluses going to support development and expansion of the company. The driving purpose: To improve the nutritional status of rural Bangladeshis, especially children, who suffer from terrible deficiencies of calories, protein, vitamins--almost every key nutrient that supports growth and development.

To this end, Grameen Danone has unveiled their first product--Shoktidoi, a name that translates loosely as "strong yogurt" or "power yogurt." It's a slightly sweet yogurt, flavored with molasses made from dates (a favorite local fruit) and fortified with vitamin A, iron, protein, and other supplements. It will be packaged in cute 80-gram cups bearing the Shoktidoi mascot, a cartoon lion showing off his muscles, and the new Grameen Danone logo.

The yogurt will be manufactured in a remarkable factory--a tiny plant (just 700 square meters in size) that is equipped with state-of-the-art machinery and totally green (with solar panels, incoming and outgoing water treatment facilities, and a recycling system for used packages). We got a tour from the plant's designer, a Frenchman named Guy Gavelle, who has built factories for Danone in countries ranging from Brazil to China. Guy is very proud of his little baby and is working hard to train the local people who will run the plant after he leaves here in March.

The rest of the Grameen Danone value chain is also highly unusual. Milk will be supplied by local dairy farmers, many of them Grameen Bank members, who will be trained by the Grameen Agricultural Foundation in techniques for improving the quantity and quality of their milk production. The yogurt will be distributed by the local "Grameen ladies"--women borrowers who will sell cups of Shaktidoi either door-to-door, among their neighbors, or over the counter in the small shops many of them run in the villages.

Mary-Jo and I attended a workshop for some sixty of these ladies, at which they received a thorough explanation of how Shaktidoi is manufactured (including a tour of the plant), a description by a physician of its nutritional benefits, and a rousing sales pep talk from Imamus Sultan, the managing director of the company (and a longtime Grameen associate). The yogurt will retail for five taka per cup (about seven cents U.S.), with the ladies retaining half a taka as their profit from each sale. They seem excited about the possibility of increasing their family incomes by twenty to forty taka per day through this new business venture.

If the Bogra operation is successful, Grameen Danone will open more community-sized factories in other locations around Bangladesh. They figure it would take fifty such plants to serve the entire country. Eventually, other products may be added to the mix.

We'll soon see whether Shaktidoi has what it takes to win the hearts (and stomachs) of mothers and kids in Bogra, thereby producing the kinds of health benefits Grameen and Danone are hoping to achieve. If so, it could become a model for new kinds of companies in a wide variety of industries, from food to health care to education to communication--social businesses designed to benefit the community while generating sufficient revenues to support self-sustaining growth.

P.S. Here is a recent story about Grameen Danone by Sheri Prasso of Fortune magazine. She calls social business "a Big New Idea"--fairly meaningful validation from the world's most influential business magazine.

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