Sunday, May 16, 2010

Book ... Building Social Business ... by Muhammad Yunus

Dear Colleagues

Dr. Muhammad Yunus is now associated with three important books: (1) Banker to the Poor; (2) Creating a World Without Poverty; and now, (3) Building Social Business. These books chronicle a remarkable journey from academic to pragmatic ... and they chronicle remarkable accomplishment.

Some time ago I drafted a manuscript for a book tentatively titled "Turning Development Upside Down" still unpublished ... but it was encouraging to see so many of the conclusions that I had drawn based on my own experience being supported by the writings of Dr. Yunus.

The sub title of Dr. Yunus's second book "Creating a World Without Poverty" was "Social Business and the Future of Capitalism" and this book set the stage for social business to be a key organization type to improve the performance of "development". The arguments for social business were argued well, and from my perspective as an accountant, and from the perspective of the emerging Community Analytics (CA) community, the conclusion that a better system of metrics was needed to support the social business model and the broader social business exchange, was an important conclusion which we understood and welcomed.

In a conversation in January 2008 in New York, the idea of CA and this better system of metrics was briefly discussed with Dr. Yunus. Since then CA has progressed considerably, and there will be formal publications forthcoming. But it is a little disappointing to find that the role of metrics is less prominent it seems in this latest book, even though the book is totally focused on Building Social Business ... the new kind of capitalism that serves humanity's most pressing needs!

I thought that the need for a better system of metrics was going to be described in this book ... perhaps in Chapter 5 where Legal and Financial Framework for Social Business is discussed, but this was more about legal constructs for social business and not about the essential metrics ... or maybe in Chapter 7 where Creating a Global Infrastructure for Social Business is discussed ... but I was disappointed.

It can be argued that the idea of a Social Business has merit, but validating this argument needs the appropriate metrics ... and so far, these metrics are not deployed sufficiently. The good news is that there is a broad acceptance of the need for metrics that go beyond money profit, but not much agreement on the precise way in which these metrics will be done.

The CA community can argue that the CA methodology is the best approach, but this is not yet proven. The CA community can also argue that the alternative approaches that more closely resemble enhanced monitoring and evaluation or more expensive randomized sampling techniques cannot answer important questions, but this cannot be proven either.

Many books published over the past few years have pointed at problems with the performance of (socio-economic) development ... this book more than most identifies a practical solution. The identification of an organizational framework for substantial initiatives in development that ensures that poor beneficiaries actually benefit is important. It is a major step.

But this step needs metrics in order to get the traction it probably deserves. As I have said before "If you change the way the game is scored, you change the way the game is played". The need for value accounting is obvious ... but Dr. Yunus is quiet on this issue. Instead all we have are limits on the way capital is deployed and repaid ... and a limit on how profits flow into the balance sheet and then get deployed. The huge potential for building value in an organization because there is value building in society is being missed ... I think ... unless I am missing something!

The fact that there are networks emerging that are embracing Social Business is good news. The challenge for CA is to make it possible for these networks to become users of the CA approach so that there are meaningful metrics for a smart society ... and so that in turn there are better decisions and more sustainable socio-economic progress.


Peter Burgess

No comments:

Post a Comment