The Nobel Peace Prize laureate upends the idea that the more money you have, the more you get, and shares how a reverse mindset can bring value to your life
For every action, there is an equal and opposite reaction, according to Newton’s third law of physics. Can the same be said of thought patterns? Could thinking opposite solve some of the planet’s greatest challenges?
Engaging an opposite mindset is at the heart of Muhammad Yunus’ business, the Grameen Bank (GB), and his pioneering work in the field of microcredit. The economist won the Nobel Peace Prize in 2006 for proving that lending money to the poor to run their own micro-businesses can transform lives. Yunus proposes a worldwide shakeup: solve problems by creating self-sustaining social responsible businesses.
Thinking opposite to conventional banks
Yunus’ own awakening came in 1974 when, as a Bangladeshi economist at Chittagong University, he took his students on a field trip to a remote village. When he met a bamboo-stool seller who was forced to pay back lenders at an interest rate as high as 10% each week, leaving her with pitiful profits, he realised that the kind of economics he taught was fundamentally wrong.
Against the advice of banks and government, Yunus arranged microloans at market interest rates and in 1983 formed the GB – “village bank” – founded on principles of trust instead of so-called collateral.
Yunus’ first battle was with other banks. “Bankers told me that lending to the poor was absurd. They said, ‘Banking is a process in which you lend money to people who need it’. But I replied, ‘You lend money to people who already have lots of money but you don’t lend money to people who have nothing’.”
Yunus learnt how conventional banks went about their business – and then he did the opposite. “I created a bank that was almost the mirror image of the traditional bank. They go to the rich, we go to the poor. They choose cities, we choose remote villages. They focus on men, we focus on women.”
And it worked. By 2015 in Bangladesh, GB had 2,568 branches with 21,751 staff serving 8.81 million borrowers in 81,392 villages. Of the borrowers today, 97% are women. The loans are paid back at a higher recovery rate (97%) than any other banking system.
Thinking opposite when solving problems
Yunus’ work in some of the poorest villages highlighted difficulties ranging from healthcare to education. Again, he tackled each issue in a radically opposite way. “Every time I solved a problem, I did so with a business engine behind it. I wanted to avoid the charity route. Charity money has one life. Social business money has an endless life.”
Conventional businesses are too quick to give away their CSR funds, he claims. He tells organisations, such as food giant Danone: “If you sign a cheque for an NGO you are giving money away! Charity programmes are excellent as temporary relief. If you create a social business fund, each year it will grow.”
His methods piqued Danone’s interest in 2005 and the two companies joined forces to combat malnutrition and provide employment opportunities with a yoghurt rich in essential micronutrients that are missing from many Bangladeshi diets. One yoghurt – called Shokti Doi, meaning ‘strong as a lion’ – covers 30% of their daily requirement of vitamin A, iron, zinc and iodine.
How do such different businesses work together? They zoom in on the social business goals first and out again to achieve financial sustainability. Yunus explained: “It is very cheap to make Shokti Doi. There are no frills. We market specifically to reach the poorest households. Then we have cross-subsidisation in cities where we sell at the conventional market price. We break even by putting it all together.”
Danone and GM entered into a $1 million 50/50 venture. But getting the project off the ground was not without challenges. Danone was slower than GM to put its $500,000 into the pot. As time passed, Yunus asked “Why?” He discovered Danone’s lawyers were concerned that investing shareholder money in another business would run counter to the shareholder mandate.
The ‘think opposite’ mentality kicked in when Danone wrote a letter to its shareholders explaining the idea behind the creation of a new company in Bangladesh to address malnutrition. Shareholders were asked to opt in and state the amount they would like to invest, if at all. Taking a transparent approach, the company told shareholders they would never receive a dividend payment from the new company.
This upfront tactic paid off. The project received €35 million (US$37.68 million) and 98% of shareholders signed up. Danone’s workforce, who also wanted to invest, eventually injected another €30 million (US$32.30 million). “Now every year Danone puts money into that social business fund. Today it’s worth €90 million,” said Yunus.
Thinking opposite to conventional education
What if an opposite mindset could have a positive impact on the uneven distribution of wealth, unemployment and living standards? A recent Oxfam report (‘An Economy for The 1%’) shows that the world’s wealth is becoming ever more concentrated, with 62 billionaires now holding as much wealth as the world’s poorest 3.5 billion. The total wealth of 99% of the global population today is equal to the wealth of the top 1%.
To upend a broken system that disadvantages the poor, people should use their creative energy to become entrepreneurs, said Yunus. In addition, the more people focus on solving problems with businesses, the more likely there will be a better spread of wealth. Most organisations still concentrate power in the hands of a few highly paid executives, leaving the young to climb the ladder or remain unemployed. It’s a system that Yunus intends to break.
“Turning five unemployed young people into entrepreneurs is not rocket science. But we’re so busy asking big businesses to expand that we don’t focus on individual entrepreneurial pursuits.
“All human beings are entrepreneurs. Wake up in the morning and say, ‘I’m not a job-seeker. I’m a job-creator.’ Behave like a job-creator. Act like a job-creator. You become small when you’re a job-seeker. Take a challenge, solve a problem. Be an entrepreneur.”
Yunus’s story demonstrates that it is easy to solve social problems when the mission is not hampered by making money for personal gain. This is a philosophy that has brought success to his bank for 40 years.
Put on new social glasses
“As long as we are in the money-making world, our eyes are fixed on money. Once you put the social glasses on, you see the world differently,” said Yunus. Social businesses have social goals. They work effectively when they are pointing in the right direction. First and foremost they must solve a social pain, such as poverty – just as a conventional product would solve a customer pain. Then they must become financially sustainable over time.
Wrapped up in the characteristics of a social business is a think opposite mindset. Are you able to close the loop on your product cycles? Should profit always be your first motive? Could you plough money into a social business instead of offering conventional aid? How could your business’s expertise help to tackle some of the world’s biggest challenges?
Yunus is often referred to as the “world’s banker to the poor”, but has anyone ever stopped to call a private wealth manager the “world’s banker to the rich”? The value in thinking opposite and what happens when you do is the gauntlet that Yunus has thrown down. Are you ready to take it on?