Problem Solving Above Profit Making

Spanish Queen and Crown Prince among IESE audience


Problem Solving Above Profit Making

"People ask what was the crucial factor in developing the bank and the answer is that I know nothing about banking and if I did I would have followed their rules," said Muhammad Yunus, speaking at a special session of the Continuous Education Program held on IESE's Barcelona campus in the presence of Queen Sofia of Spain and Crown Prince Felipe.

Yunus, who with his Grameen Bank in Bangladesh more or less invented the concept of micro-credits and micro-finance, added: "I did the opposite of conventional wisdom and it worked. Conventional banks go for the richest, we go for the poorest. The poorest are our starting point, the person who has nothing."

During his talk, titled "Building Business with Social Impact," Yunus repeatedly stressed that business had taken a wrong turning by focusing entirely on making money and not on solving problems. He emphasized that the crisis was not just financial, but also environmental and social. He said everyone was in a hurry to exit the downturn, but it would be better to take this opportunity to fix the system.

"Economists built a whole business theory on selfishness, but as human beings we are also selfless. Why not create a business on the basis of selflessness, where everything is for others and nothing for me?" he said. He has started 40 companies aimed at solving problems as diverse as malnutrition, a lack of telecommunications and a shortage of nurses, and has never owned a single share in any of them.

He founded the Grameen Bank in 1976 and it now has over 8 million borrowers in Bangladesh - 97 percent of them women - and lends about €1bn. All funds are raised from within the bank, that is, they take deposits and lend money. He opened branches in New York City, where the locals scoffed, saying people would run off with his money. But he says 99 percent of the loans, which average around $1,500, are paid back, pointing out that the only option open to the millions of poor Americans who cannot open bank accounts is to resort to loan sharks who charge interest at up to 1,500 percent, and to check-cashing agencies.

"In profit-making companies, jobs are created, but the company exists to make money. In social business the sole purpose is to create jobs. One model is to make money, but our model is to change the world."