Innovations and social business

I have been reading up a bit on Dr. Yunus' work. He writes and talks about "social business" and "non-loss" as a missing piece of business. Only focusing on profit maximization creates one-dimensional people and organizations, he says, and I fully agree with him.

"Many of the problems in the world remain unresolved because we continue to interpret capitalism too narrowly. In this narrow interpretation we create a one-dimensional human being to play the role of entrepreneur. We insulate him from other dimensions of life, such as, religious, emotional, political dimensions. He is dedicated to one mission in his business life ---- to maximize profit."
Social Business Entrepreneurs Are the Solution, Dr. Muhammad Yunus

While reading this I came to think of another thing. A while back I was at a lecture by Curtis R. Carlson, President and CEO SRI International, where he talked about innovation being the next competitive edge for businesses (the first two being cost and quality). This creates a situation where every company should/will have a "labs"-department to which employees can bring their innovations and get what they need to realize them (if they pass screening, that is). This is what Way Group has done by creating Waylabs. What happens if the innovation, like in my case, is non-profit innovation or social innovation?

If a profitable company invests money in innovations, they expect the successful once (about 8/10 fail miserably) to be moneymakers. This fits perfectly with the profit maximization-model, but if the innovation will make the world better rather then generate money, what then? I see that there are two options here:

1. The company gives/donates money to the project without anything to show for it but their involvement. This generates positive publicity, which works well with profit maximization.

2. The company decides on a "non-loss" strategy and loans the money to the project. This may not be as noble, but the risk is still about 8/10 that the project fails so the nobility is still significant. This also generates positive publicity, and works even better with profit maximization since the investment hopefully is returned.

Why not just give the money if the company wants to do good? Well, the next time someone comes up with a non-profit project the cost is equally high. This will create a situation where the company wont go for some projects since they have already given money to others (read this article on a similar subject). With the non-loss strategy the company can have a dedicated amount of money that goes in and out of these projects over time. But what if 8/10 non-profit projects fails? When it comes to profitable innovations, the once that succeed pays of in multitude for the once that doesn't. The non-profit innovations could follow the same principals; they share a collective responsibility to regenerate the non-loss investments that the company has put in. This means that the 2/10 projects that succeed will pay back all losses made on failed non-profit projects.

I think that this model has another effect as well. It ensures a healthy economic strategy for the do-good projects. When a project is released it has to, according to me, be self reliant. If the project relies on charity, once that charity stops coming the project sinks. With this model, the project will only see the light of day if there is a financial model that can support the project as well as pay back the investment made in it.

The project I work on will be self reliant. This means that if anyone would like to make a non-loss investment in it, just give me a call or send me a mail and I'll tell you all about what it is we want to do and how we intend to do it!