The Grameen Danone story told by R.Branson: “Profit is not all that matters”

Summary

Grameen Danone is a joint venture between Danone, the international health and nutrition company, and Grameen Bank, a micro-finance and community development organisation based in Bangladesh, based on the idea of Muhammad Yunus and Franck Riboud. Here is the project told in a quirky and inspiring way by famous Richard Branson.

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Richard Branson is an entrepreneur. His biography on Wikipedia mentions the 400 businesses he created. On Business Day, he tells the story of the beginning of Grameen Danone Foods Ltd, the first social business of danone.communities, based on the idea of Muhammad Yunus and Franck Riboud. It is very interesting to see how such an entrepreneur describes the early weeks and months of GDFL. This is why we decided to publish a large part of the article. (Find the original article here).

“SCREW it, let’s do it,” is my mantra. When you are throwing out the rule book and starting afresh — particularly if you’re focused on doing social and environmental good, and not just on profits — sometimes you just have to leap. One successful business that took this approach is Grameen Danone, a joint venture between Danone, the international health and nutrition company, and Grameen Bank, a micro-finance and community development organisation based in Bangladesh.

In October 2005, Muhammad Yunus, the founder of Grameen Bank and a creator of the concept of micro-credit, was invited to meet with Franck Riboud, the CEO of Danone, along with seven other high-level officers at the company. Yunus was not told what the agenda would be, but he hoped this leading entrepreneur might want to help with the goal of eradicating poverty, which Grameen Bank was working to accomplish by lending small sums of money to small enterprises and to individuals, to help people launch businesses and otherwise improve their situations.

At the meeting Riboud gave Yunus a brief rundown of his company. Danone was founded in 1919, producing yoghurt that was sold at pharmacies to treat intestinal disorders. Other kinds of food businesses were developed and the company expanded.

When Franck inherited the chairmanship from his father, Antoine Riboud, in 1994, he was mindful of a speech in which his father had said: “

There will not be sustainable economic value creation if there is no personal development and human value creation at the same time.

At times Franck thought Danone’s board put pure profit above sustainability and doing good.

Franck explained to Yunus that Danone yoghurt was an important source of nutrition in many parts of the world, including many developing countries. But, he said,

We don’t only want to sell our products to the well-off people in those countries. We would like to find ways to help feed the poor. We hope you can help us find a way to do this.

Yunus grasped the scale of the opportunity being presented. Danone was a major international corporation, worth tens of billions. He immediately proposed that, between them, Grameen and Danone could develop a food packed with nutrients that could be sold door to door in Bangladesh for pennies, a cupful at a time. The hungry, especially children, would be nourished, and the company would recover its expenses.
 

Riboud said: “Let’s do it.” And they shook on the deal.

 
Yunus was confused. Had Riboud understood that Danone would be committed to building a huge new organisation that would need at least €1m in funding? An organization that would make no profit, but would use Danone’s core strengths?

That very afternoon, Yunus received a telephone call from Emmanuel Faber, the head of Danone’s operations in Asia. He asked Yunus to send his initial ideas on the enterprise so that they could start immediately.

“I couldn’t believe how fast they were moving!” Yunus said to me. “We created something new under the sun: the world’s very first consciously designed multinational social business.”

“Business as usual” went out of the window. In place of Danone’s huge factories, engineers designed a small model to suit conditions in Bangladesh, where roads were poor and power supplies too erratic for dependable large-scale refrigeration.

BANGLADESH: Grameen-Danone Yogurt Factory, Bogra.

What was particularly exciting about the enterprise was that a great deal of milk was needed — and over the years many Grameen clients had used their loans to buy a few cows. These local farmers already sold milk door to door, and selling fresh yoghurt wouldn’t be that different. Sales people would make a 10% commission. Turnover would be quick, so the yoghurt would stay fresh despite the heat.

Bangladeshis tend to like very sweet drinks and desserts. To make the yoghurt more appealing and to disguise the taste of the added vitamins, a little molasses and some cane sugar was added — both of which just happened to be locally produced and grown. The yoghurt was named Shokti Doi — which means “strong as a lion” — with a motif of a cartoon lion that appealed to children.

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Exactly a year later, in October 2006, Grameen Danone was up and running, nourishing and providing jobs for many Bangladeshis. The yoghurt was sold for pennies a cup so even the poorest could afford to buy it regularly. That month, Yunus and Grameen Bank jointly received the Nobel Peace Prize, “for their efforts to create economic and social development from below”.

While Yunus has since been forced to leave Grameen Bank, he remains an authority on micro-finance and social business, and continues his fight to eradicate poverty.

The fact that this revolutionary business was launched within a year shows just how powerful a good idea can be. And many aspects of this Grameen Danone model can be applied by existing businesses. Is profit always your first motive? Look closely at your resources, and all that you have to make change happen, from your people to your products and services to your suppliers.

Because it’s time for change — for your business to support the communities and environments in which it operates.

Reblogged from Danone.Communities:

(Adapted from Screw Business as Usual by Sir Richard Branson.)