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"In America, there
are powerful marketing devices to sell products
like Coca-Cola and hamburgers. All I want to
sell is good eyesight and there are millions
of people who need it."
—
Dr. Govindappa Venkataswamy
Commerce can be a powerful catalyst for social
change. While many in the social sector still
"shun trading" like the aristocrats of old, an
emerging group of innovators are developing exciting
new business models that use the mechanisms of
the marketplace to serve the greater good.
Employing the speed and vitality of capitalism,
these social entrepreneurs are building enterprises
that effectively deliver positive change. They
are delivering high quality health services to
the greatest number of people at the lowest possible
cost, while serving needy children and elders
virtually for free. They are providing loans to
entrepreneurs too poor to qualify for traditional
credit, allowing them to start small businesses.
They are tapping into local renewable energy sources—sun,
wind and water-to generate inexpensive power,
support self—sufficient communities and spur
sustainable economic growth.
The practitioners of these new business models
are transforming conventional notions of profit,
value and wealth. Instead of old-school capitalism's
narrow focus on the bottom line, which typically
shrinks business activity into short-term profit
making, social entrepreneurs are cost-effectively
creating ecological, social and economic revenue,
both in the short-term and for future generations.
In doing so, they are beginning the work of building
a truly regenerative economy whose benefits are
shared by all.
How Much Can We Give?
When the legacy of an enterprise—its long-term
value to the world—drives the business agenda,
it unleashes the power of commerce to create a
wide spectrum of positive effects. This is perhaps
best understood by the new social entrepreneurs,
whose value proposition is not "How much can I
get for how little I give?"-the mantra of the
old capitalism-but instead, "How much can we give
for all we get?" Rather than focusing on the quarterly
bottom line, this new question suggests a rich,
inspiring pursuit of life-affirming wealth and
productivity.
"How much can we give for all we get?" is fundamentally
a design question. Asked throughout the design
process it guides entrepreneurs toward products,
facilities and business models that grow ecological
and social revenue while generating economic health.
The goal is good growth for all. Instead of simply
seeking to reduce the negative impacts of economic
activity—the reductivist's attempt to be
"less bad"—we can develop businesses built
on a wholly positive agenda that aims to enhance
the human footprint, leaving behind wetlands and
clean water, prosperity and nutrition, fertile
farmland and healthy children.
 This
is not just wishful thinking. Enhancing the positive
effects of business is a fundamental outcome of
MBDC's work with its commercial clients, and it's
also one of the key goals driving the successful
ventures of today's social entrepreneurs.
Consider the business model developed by the
Indian ophthalmologist, Dr. Govindappa Venkataswamy.
At age 55, after a distinguished career as one
of the most admired cataract surgeons in India,
Dr. V, as he is known, began to wonder how he
could deliver sight-restoring operations to a
many more of those in need.
"In America, there are powerful marketing devices
to sell products like Coca-Cola and hamburgers,"
Dr. V told Fast Company's Harriet Rubin. "All
I want to sell is good eyesight and there are
millions of people who need it."
Indeed, in India there are 20 million people
without sight, most of whom suffer from cataracts.
To serve them, Dr. V opened Aravind Eye Hospital,
a twelve-bed clinic in his brother's home in Madurai,
India, and offered cataract surgery for free.
Today, Dr. V runs 5 hospitals that perform more
than 200,000 operations each year. Since opening
his first hospital in 1976, the Aravind clinics
have given sight to more than 1 million people.
If you think free surgery sounds like a bad business
proposition, well think again. At Aravind, a cataract
operation costs about $10; the same operation
in the United States costs nearly $1700. Aravind
keeps costs low, writes Rubin, with specially
designed equipment that allows surgeons "to perform
one 10- to 20-minute operation, then swivel around
to work on the next patient-who is already in
the room, prepped, ready, and waiting."
Using this effective system, Dr V's hospitals
give sight to more than 500 people each day. Roughly
one third of the patients pay nothing; one third
pay 65 percent of cost; and about 30 percent seek
out Dr. V and pay market rate for his services
"because the quality of his work is world class."
After nearly 30 years of operation, Aravind has
a gross margin of 40 percent and has never depended
on donations. It has done so, writes Rubin, by
inventing "a service so perfect that it created
its own market…without any significant resources,
and with a paying clientele that represented far
less than half of its customer base."
"We were not thinking of amassing money as our
goal," says Dr. V. Instead he asks, "How can my
work make me a better human being and make a better
world?"
Spreading the Aravind Model
Not everyone has Dr. V's gift for eye surgery,
but the business model he created allows his vision
to be applied worldwide. That's exactly what the
social entrepreneur David Green is doing. After
helping Dr. V expand the Aravind model for eye
hospitals, Green asked himself what he could give
to the world, and decided to offer affordable
medical products and services to developing countries.
Working with Dr.V, Green started Aurolab, which
pioneered the manufacture of high-quality, low
cost intraocular lenses to serve Aravind's needs
and is today the second largest provider of intraocular
lenses in the world.
 Green's
current project is aimed at providing affordable,
state of the art hearing aids. Hearing impairment
is the world's most common birth defect, affecting
some 250 million people in the developing world.
According to the World Health Organization, half
of those with hearing impairments would benefit
from hearing aids, which creates a need for 32
million hearing aids annually. Hearing aid companies
only produce 6 million annually, of which only
12 percent are shipped to developing countries.
Clearly, there is a pressing need for an affordable
alternative.
Green's strategy is to manufacture high quality,
programmable digital hearing aids for $40 and
sell them with a multi-tiered pricing model similar
to Aravind's for up to $200, about $1300 less
than the current market rate. He is putting this
strategy to work by:
- Hiring the former head of R&D at the largest
hearing aid company-getting the instant benefit
of long-term experience
- Finding high quality generic hearing aid chips
on the market and adapting them for particular
hearing aid designs
- Manufacturing at Aurolab in India, where overhead
and labor costs are low
- Negotiating discounts with component manufacturers
equivalent to those normally offered on purchases
of 500,000 units or more
In effect, Green is developing a business model
for ethical globalization. It offers affordable
pricing, local ownership of distribution and sales,
and the training required to establish a multi-tiered
pricing scheme, test patients for hearing loss,
and provide treatment, fitting, installation,
and maintenance of hearing aids. It is a model
that not only offers hearing to the world but
also builds the capacity of many locales for developing
sustaining enterprises. There is, after all, no
end to what the world needs.
Creating a Local Energy Industry
Anil Chitrakar has made an art of creating opportunities
out of pressing social needs. A tireless social
entrepreneur, he is helping to develop enterprises
in his native Nepal that build the nation's capacity
for sustainable, self-sufficient economic growth.
In the 1990s, for example, Chitrakar and four
other Nepalis led an effort to redirect into local
initiatives a $1 billion World Bank loan targeted
for a huge dam on the Arun Koshi River. For seven
years they asked the World Bank a fundamental,
often overlooked question: Is borrowing $1 billion
and then paying it to contractors from the developed
world to build a dam that generates only 200 MW
of energy really meeting Nepal's needs?
The answer, made obvious by Chitrakar and his
colleagues, was a resounding no. Instead of building
the dam, the World Bank loaned the money to Nepal
to support an alternate approach that would build
the country's industrial capacity and a more locally
based energy infrastructure.
Chitrakar's approach was built on three basic
principles:
- Invest in local capacity. Hiring western
firms to build a huge dam would take the place
of smaller hydroelectric projects that Nepalese
firms could build, bypassing and ultimately
destroying Nepal's existing industrial capacity.
- Maximize linkages to the local economy.
Making borrowed funds work both backward
and forward, the influx of capital builds existing
local capacity to generate power and creates
new capacity for economic growth. Small local
firms build capacity as they grow.
- Use natural resources wisely. In a
mountainous country with yearlong runoff, energy
needs can be effectively met with smaller, less
invasive hydroelectric systems.
Following these principles, local and government-owned
firms, along with international companies, have
built small and medium sized projects throughout
the country, which created twice the energy output
of the originally planned dam for half the cost
in half the time. The re-directed loan was also
used to establish a power development fund for
local companies. As Chitrakar has said, the world
needs a bank, but we must be able to direct the
bank's capital to projects that truly meet a nation's
needs.
Doing What Only You Can Do
Dr. V, David Green, and Anil Chitrakar are making
a difference because they are each doing what
only they can do. On a visit to California to
meet with other social entrepreneurs, Dr. V said
he was not going to apply his business model to
distributing hearing aids because that's not what
he does-restoring sight is what he does. David
Green, on the other hand, does hearing aids and
he's decided to take up the challenge of providing
hearing to the world. Anil Chitrakar, meanwhile,
is showing nations rich and poor how to build
sustainable enterprises-that's his calling and
his unique gift to the world.
 Jerry
Garcia, who has perhaps not been given the credit
he deserves for giving sharp business advice,
captured this confluence of calling, vision and
leadership quite well when he reportedly said,
"You don't have to be the best of the best. Just
do what only you can do."
What do you do? There are literally millions
of answers to that question. No single vision
or leader can possibly build a truly sustaining
world. It is going to take all of us.
It will take thousands of affordable hospitals,
an idea taken up by Lions Aravind Institute of
Community Ophthalmology, which is offering the
Aravind model to other eyecare organizations throughout
the world.
It will take institutions like the Grameen Bank,
which extends loans to entrepreneurs too poor
to qualify for traditional credit—$1 billion
lent to 2.4 million borrowers, 95 percent of whom
are women—and thereby offers an empowering
catalyst for community economic development.
It will take technological ventures like the
Benetech Initiative, which uses entrepreneurship
to harness the power of technology to meet social
needs, from removing land mines to safely storing
human rights data to providing an Internet library
for the blind.
It will take groups like Associacion ANAI, an
NGO helping Costa Ricans integrate people-centered
conservation and development initiatives that
strengthen local communities capacity to be economically
self-reliant while preserving the biological wealth
of their remarkable rain forests.
Ultimately, that is what we are all working for:
commercial activity that is economically profitable,
ecologically regenerative and socially empowering—a
regenerative economy whose benefits are shared
by all. And when we ask…
"What do I do?"
"How can my work make a better world?"
"How much can I give for all I get?"
…we can begin to become powerful catalysts for
change and take the first small steps toward creating
a world of fairness, hope and sustaining abundance.
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