“In America, there are powerful marketing devices to
sell products like Coca-Cola and hamburgers. All I want to sell
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
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. When asked throughout the design process it
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 our ongoing work with our
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 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, 20 million people in India are without sight, most of whom
suffer from cataracts. To serve them, Dr. V opened Aravind Eye
Hospital, a 12-bed clinic in his brother’s home in Madurai,
India, and offered cataract surgery for free. Today, Dr. V runs
five 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 one 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 $1,700.
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 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 six 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
$1,300 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
- 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;
- and negotiating discounts with component manufacturers
equivalent to those normally offered on purchases of 500,000
units or more
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.
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 year-long 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
each is doing what only he 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
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 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
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.
William A. McDonough, FAIA, and Michael Braungart are founders of
McDonough Braungart Design Chemistry, a consultancy that works with
a wide variety of companies to implement eco-effective design and
commerce strategies. For more information, visit www.mbdc.com.